Victor Eugene Cilli, formerly of Hackensack, New Jersey, has been ordered to pay $717,000 in restitution and penalties for operating a Ponzi scheme that defrauded investors of over $500,000. The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court consent order on May 29, 2012, outlining the charges and penalties.
Cilli, along with his company Progressive Investment Funds LLC, solicited $506,000 from four individuals between September 2006 and September 2007, promising to trade commodity futures, primarily E-mini S&P 500 futures contracts. However, only approximately $263,000 of the funds were actually used for trading, resulting in net trading losses of around $201,168. Rather than disclose these losses, Cilli fabricated statements showing false profits to investors.
The scheme involved using funds from new investors to pay purported profits to earlier investors – a hallmark of a Ponzi scheme. Cilli also filed false IRS Form 1099s, reporting profits instead of the actual losses incurred. Furthermore, the defendants failed to provide investors with required reports and maintain accurate books and records.
In addition to the financial penalties – $243,000 in restitution and a $474,000 civil monetary penalty – the court’s order permanently prohibits Cilli and Progressive from engaging in any commodity-related activity, including trading or registering with the CFTC. Judge William J. Martini of the U.S. District Court for the District of New Jersey (Newark) issued the injunction.
Cilli previously pled guilty to criminal securities fraud on October 3, 2011, and agreed to pay $243,000 in restitution in that case. The CFTC’s consent order gives Cilli credit for any payments already made towards the criminal restitution. The case was investigated by the CFTC’s Division of Enforcement, with assistance from the U.S. Attorney’s Office for the District of New Jersey and the National Futures Association.
Source: CFTC.gov
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