Michael Justin Hoopes of Rexburg, Idaho, has been ordered to pay over $11.8 million in restitution and penalties for operating a Ponzi scheme that defrauded residents of Idaho and others, the U.S. Commodity Futures Trading Commission (CFTC) announced on July 30, 2012. The federal court order, entered on July 26, 2012, by Judge Edward J. Lodge of the U.S. District Court for the District of Idaho, also includes permanent trading and registration bans.
The CFTC initially filed a complaint against Hoopes on October 25, 2011, alleging solicitation fraud and misappropriation of funds related to a commodity futures scheme. The investigation revealed that from September 2007 through October 2011, Hoopes fraudulently obtained $2,068,103 from ten individuals, primarily Idaho residents, to invest in stock index commodity futures through his company, Aspen Trading, LLC.
Hoopes also accepted an additional $9.68 million from other Idaho residents for various investments, which he commingled with his personal funds and those designated for futures trading within Aspen Trading. The CFTC found that Hoopes misappropriated at least $151,694 of these commingled funds for personal expenses, including payments for a car, credit cards, and his mortgage.
Between October 2006 and May 31, 2011, Hoopes incurred net losses exceeding 90% of the $2,280,550 he traded in futures contracts. To conceal these losses and maintain the appearance of profitability, Hoopes operated a Ponzi scheme, paying out $594,339 in purported profits to investors. He also fabricated account statements, falsely indicating monthly profits as high as 83.52% for the Aspen Trading account. The CFTC discovered Hoopes never actually opened a trading account under Aspen Trading’s name, instead manipulating his personal account statements to create the illusion of successful trading.
The total penalty includes a civil monetary penalty of over $1.4 million and more than $10.4 million in restitution. Hoopes is permanently prohibited from violating the Commodity Exchange Act and CFTC regulations. The CFTC acknowledged the assistance of the United States Attorney’s Office for the District of Idaho in the case.
Source: CFTC.gov
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