The CFTC has secured a court order requiring two commodity pool operators and their principal Michael J Siegel to pay restitution of USD104,684.47, disgorgement of USD86,503.36, and a civil monetary of USD259,510.08 over the misappropriation of funds.
The commodity Pool operators – TOTE Fund and MJS Capital Management – are also jointly and severally required to pay disgorgement of USD105,185.89 and a civil monetary penalty of USD315,557.67. The court order further imposes permanent trading and registration bans against all Defendants.
The order finds that Defendants violated the Commodity Exchange Act by misappropriating funds totalling approximately USD191,689 from Monarch Futures Fund LLC (Monarch) and QEP Futures Fund LLC (QEP), two commodity pools operated by TOTE and MJS, respectively, by withdrawing money from the pools for non-pool expenses and taking fees to which they were not entitled. According to the order, despite earning incentive, management, and administrative fees of USD319,909 based on his trading, Siegel transferred approximately USD511,598 from bank accounts in the names of Monarch, QEP, and TOTE to his personal bank accounts, to a credit card account, and to at least one individual and used some of these funds to pay personal expenses.
The order further finds that MJS and Siegel misappropriated funds by failing to return funds to at least two pool participants who sought to withdraw their funds from QEP. Also, TOTE, acting through Siegel, failed to provide Monarch pool participants with copies of monthly statements received by TOTE from Futures Commission Merchants, as required by a CFTC Regulation, the Order finds.
The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.