Travis Capson of Utah, Arnab Sarkar of California, and their company, Denari Capital, LLC, are facing charges of fraud after allegedly misappropriating over $8.3 million from at least 28 investors, the Commodity Futures Trading Commission (CFTC) announced today.
The CFTC filed a complaint in the U.S. District Court for the Northern District of California, alleging that the defendants ran a pooled investment scheme involving leveraged off-exchange foreign currency (forex) trading. Funds were allegedly commingled and used for forex trading, real estate, securities, and personal expenses, beginning as early as 2012.
Capson and Sarkar are accused of fraudulently soliciting investors by making false claims about the profitability of Denari Capital’s forex trading and the returns being generated for participants. They allegedly provided fabricated account statements to inflate the perceived success of the investment pool. The defendants failed to properly register with the CFTC; Denari and Capson registered only in May 2019, while Sarkar never registered at all.
By July 2019, Denari Capital reportedly owed its investors over $5.2 million, with insufficient assets to cover the debt. Furthermore, Capson is charged with making false statements to the National Futures Association (NFA) during an examination on July 15, 2019. He allegedly misrepresented that Denari only traded proprietary funds and concealed the use of customer funds.
The CFTC is seeking disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations. The NFA has also taken action, summarily suspending Denari and Capson from membership and prohibiting them from soliciting further investment.
The CFTC acknowledged the assistance of the NFA in the investigation. The case is being litigated by Carlin Metzger, Joy McCormack, Matt Edelstein, Susan Gradman, and Scott Williamson of the Division of Enforcement.
Source: CFTC.gov
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