Robert J. Cannone, of Orange County, California, has been ordered to pay over $1.8 million in restitution and penalties for commodity fraud, according to a federal court order issued on April 11, 2013, and announced by the U.S. Commodity Futures Trading Commission (CFTC) on April 15, 2013. Cannone, the principal of National Equity Holdings, Inc., was charged with fraudulently soliciting over $1.4 million from investors to trade commodity futures contracts.
The CFTC complaint, originally filed November 8, 2011, alleged fraudulent solicitation, misappropriation of funds, and registration violations against Cannone, National Equity, Francis Franco, and Thomas B. Breen. The court found that between June 2009 and April 2010, Cannone and National Equity misrepresented the expertise of their trader, the potential for profits, and the risks involved in commodity futures trading. They also failed to disclose that they were not registered with the CFTC as a commodity pool operator.
Investigators determined that Cannone and National Equity only traded a portion of the investor funds, incurring significant losses. The majority of the funds were then misappropriated, used to make monthly “profit” payments to investors, and for Cannone’s personal use. False account statements were issued to conceal the trading losses and fraud. Despite the depleted funds, Cannone allegedly promised and even provided written guarantees to return the invested capital.
In addition to the restitution of $1,059,096, aligning with a related criminal action (U.S. v. Cannone, SACR 11-263), Cannone faces a civil monetary penalty of $800,000. National Equity Holdings, Inc. is also penalized $2.8 million. Both Cannone and National Equity are permanently banned from trading and registering with the CFTC. The CFTC’s case against Thomas Breen remains ongoing, and litigation continues regarding penalties for Francis Franco, who is already barred from certain commodity-related activities.
Source: CFTC.gov
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