ENCINITAS, CA – Scott Bottolfson, 41, is facing charges of commodity fraud following a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) in the U.S. District Court for the Southern District of California on January 11, 2011. Bottolfson, along with his companies Spirit Investments, Inc. and Increase Investments, Inc., allegedly defrauded approximately 30 individuals out of $14 million between 2002 and August 2010.
The CFTC alleges Bottolfson lured investors with false promises, including a guaranteed 20 percent fixed-rate return and claims that commodity futures trading was risk-free. Investigators claim Bottolfson misrepresented the profitability of the investment pools, despite suffering approximately $845,000 in trading losses on the nearly $3 million actually used for trading.
The complaint further alleges Bottolfson operated a Ponzi scheme, misappropriating around $11 million in customer funds to cover personal expenses and pay earlier investors with money from new participants. This practice masked the underlying losses and maintained the illusion of profitability.
The CFTC is seeking restitution for the defrauded investors, recovery of any ill-gotten gains, civil monetary penalties, and trading/registration bans. The agency also seeks permanent injunctions to prevent further violations of federal commodities laws. The investigation received assistance from the National Futures Association, the U.S. Attorney’s Office for the Southern District of California, and the Federal Bureau of Investigation.
As of today, the potential penalties Bottolfson faces remain undetermined pending the outcome of the litigation. He is currently residing in Encinitas, California.
Source: CFTC.gov
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