Chicago Man Charged With Commodity Trading Fraud

Chicago Man Charged With Commodity Trading Fraud

Chicago, IL – The U.S. Commodity Futures Trading Commission (CFTC) filed a complaint against a Chicago man, Christopher Varlesi, for operating a fraudulent commodity pool that traded commodity futures and foreign currency contracts.  Other charges leveled by the CFTC were misrepresentations to investors, not registering as a commodity pool operator and misappropriating investors’ funds.

The complaint, filed on 7 March 2012 against Varlesi individually and also his business, Gold Coast Futures and Forex (Gold Coast), alleges that during the period of February 2008 through at least April 2011, Gold Coast persuaded at least eight persons to invest US $1,074,000 in return for the issue of promissory notes that paid interest on a monthly basis.

Varlesi convinced investors to deposit funds with him by painting a false picture of his so-called trading experience and the profits generated in the pool, alleges the complaint.  Varlesi, however, diverted some of the funds for his own use, says the complaint, and admitted to a participant that most of that investor’s funds had been spent on paying other pool investors and on expenses, both personal and business-related.

Varlesi allegedly sustained the fraud by making false verbal claims regarding his trading prowess in respect of forex and commodity instruments.  He is also alleged to have shown to a pool participant false statements of the performance of investments made by him, and which concealed his misappropriations and trading losses.

Varlesi was unable to continue payments of interest on the promissory notes from around March 2011 and then admitted after a few weeks to at least one investor that there was no money left in the pool, according to the complaint.  He is alleged to have since reneged on several promises to repay the investors.

In its action the CFTC is looking for injunctions against Varlesi for further violations of securities laws and for penalties, disgorgement, restitution, rescission and a ban on trading and registration.

Meanwhile, on March 8, 2012, U.S. District Court Judge Robert M Dow, Jr issued an emergency order that froze Varlesi’s assets and restrains him from destroying books and records, or altering them in any way.

A hearing date is set for March 15, 2012.

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