Robert Lee Roane of Chester, Virginia, has been ordered to pay $739,000 in restitution and penalties for defrauding investors in a commodity pool, the U.S. Commodity Futures Trading Commission (CFTC) announced on January 24, 2008.
The CFTC found that beginning in the fall of 2005 and continuing through 2006, Roane solicited approximately $780,000 from the public to invest in the commodity pool. He allegedly made false representations about his past success as a futures trader and claimed to possess a “foolproof” trading system. However, the CFTC determined Roane’s prior commodity futures trading had not been successful.
According to the order, Roane lost the majority of the invested funds through trading. Furthermore, he misappropriated approximately $166,500, using $137,900 for personal expenses and $28,600 to repay other investors – effectively operating a Ponzi-like scheme.
The CFTC found Roane violated the Commodity Exchange Act and related regulations by operating as an unregistered commodity pool operator and defrauding participants. Additional violations included failing to maintain the pool as a separate legal entity, commingling pool funds with his personal accounts, accepting funds in a name other than the pool’s, and failing to provide required disclosure documents to investors.
As a result of the settlement, Roane is required to pay roughly $609,000 in restitution to the defrauded pool participants and a $130,000 civil monetary penalty. He is also permanently banned from trading and is prohibited from applying for registration with the CFTC in the future. The CFTC’s Enforcement Division collaborated with the Richmond Division of the Federal Bureau of Investigation on this case.
Source: CFTC.gov
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