Tracy Lee Thomas, formerly of Naples, Florida, is facing significant penalties after a federal court found him and his company, Marbury Advisors Inc., guilty of defrauding customers out of over $1.1 million. Judge Loretta C. Biggs of the U.S. District Court for the Middle District of North Carolina issued a default judgment against Thomas and Marbury on April 11, 2017, following a complaint filed by the Commodity Futures Trading Commission (CFTC) on March 22, 2016.
The court found that between February 2011 and August 2012, Thomas and Marbury engaged in a fraudulent scheme. They falsely claimed to invest customer funds in safe Treasury Bills while actually using the money to trade risky Chicago Mercantile Exchange E-mini S&P 500 futures contracts and Chicago Board of Trade 2-Year Treasury Note futures contracts. They misrepresented their investment success and failed to disclose the substantial risks associated with futures trading, as well as the losses they were incurring.
The judgment requires Thomas and Marbury to jointly pay $1,110,413 in restitution to the victims and a civil penalty of $3,331,239 – triple the amount of monetary gain they illegally obtained. Both are permanently banned from trading and registering with the CFTC, and are prohibited from future violations of the Commodity Exchange Act.
The scheme specifically targeted Thomas’ father-in-law, whom he convinced to invest approximately $594,000 based on false claims of prior business and trading success. Thomas then used these funds to trade commodity futures without disclosing this to his father-in-law. He further attempted to conceal the fraud by providing fabricated account statements to customers and a bank controlling a trust account belonging to his late father.
This CFTC action is related to a separate criminal case. On November 22, 2016, Thomas was indicted on fourteen counts of wire fraud in the U.S. District Court for the Eastern District of North Carolina (case no. 16-CR-298). The CFTC notes that while the order mandates repayment to victims, full recovery of losses is not guaranteed due to potential limitations in the defendants’ assets.
The CFTC expressed gratitude for the assistance provided by the Cayman Islands Monetary Authority in this case. The investigation was led by Michael R. Berlowitz, W. Derek Shakabpa, Judith M. Slowly, and Dav from the CFTC’s Division of Enforcement.
Source: CFTC.gov
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