OMAHA, NE – Michael B. Kratville, a licensed attorney, along with Jonathan W. Arrington, Elite Management Holdings Corp., and MJM Enterprises LLC, have been hit with hefty penalties for a multi-million dollar commodity pool fraud scheme, according to a judgment issued by the U.S. District Court for the District of Nebraska on February 11, 2014.
Chief Judge Laurie Smith Camp entered a summary judgment against Kratville and a default judgment against Arrington, Elite, and MJM. The court found the defendants defrauded at least 130 investors out of more than $4.7 million through a variety of commodity pools between August 2005 and July 2008. More than $700,000 of these funds were allegedly misappropriated for personal expenses, including country club memberships and travel to Europe.
The court’s orders mandate a total of $4,368,368.71 in restitution to the defrauded investors. Additionally, Kratville, Arrington, Elite, and MJM must collectively pay $5,729,142.87 in civil monetary penalties. All four defendants are permanently banned from trading and registering with the CFTC, and are prohibited from future violations of anti-fraud and disclosure provisions.
The scheme involved false claims that the proprietary trading program consistently generated monthly gains of up to six percent with limited risk. Defendants falsely claimed to have received multi-million dollar offers to purchase their trading system, according to court documents. Kratville, personally and through his involvement with Elite and MJM, actively participated in the fraudulent solicitations, false statements, and concealment of investor losses.
The court found that Kratville was aware of the illegal activity and attempted to conceal it, stating in an email that he feared losing his law license and facing federal charges if the scheme were exposed. When the Nebraska Department of Banking and Finance began investigating, Kratville and Elite allegedly lied about the identity of the pools’ traders. After the NDBF ordered the Elite-operated pools to shut down, Arrington and Kratville allegedly formed MJM to continue the fraudulent scheme, failing to disclose the new operation to regulators.
Source: CFTC.gov
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