Rodney Scott Phelps, formerly of Tennessee, has been ordered to pay over $1.17 million in restitution and a $420,000 civil monetary penalty after a U.S. District Court ruling on March 16, 2022, in the Middle District of Tennessee. The Commodity Futures Trading Commission (CFTC) announced the judgment on March 22, 2022, as part of an ongoing case involving fraudulent commodity trading practices.
The court found that Phelps, along with Jason T. Casteniro of Kentucky and their company, Maverick Asset Management of Tennessee, operated a commodity trading pool that defrauded investors. In 2013, the group solicited over $1.2 million from investors with false claims of Phelps’s successful trading history and promises of “guaranteed returns” exceeding 100% annually, while falsely claiming limited risk.
However, less than $400,000 of the invested funds was actually used for trading, with the remainder misappropriated. Despite substantial losses in commodity trading, Phelps, Casteniro, and Maverick sent investors fabricated account statements indicating remarkably high gains. Phelps also failed to register with the CFTC as a commodity trader despite engaging in regulated activities.
In addition to Phelps’s penalties, Jason T. Casteniro and Maverick Asset Management were jointly assessed a $2,461,301 civil monetary penalty and required to pay $1,172,800 in restitution. The orders impose permanent trading and registration bans, along with a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations.
Notably, Phelps was previously convicted on September 20, 2019, of 13 counts of fraud and conspiracy related to this same scheme, following a jury trial. He was sentenced to 108 months in prison, followed by three years of supervised release. The total penalties and restitution imposed on all parties exceed $5 million.
The CFTC cautions that victims may not fully recover their losses due to the potential lack of funds or assets held by the defendants. The agency states it will continue to pursue accountability for those who violate commodity trading laws.
Source: CFTC.gov
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