For Release: May 9, 2006
Washington, D.C.— The U.S. Commodity Futures Trading Commission (CFTC) announced today that the United States District Court for the Eastern District of New York entered a consent order settling the CFTC’s charges in a hedge fund fraud case against Stuart Pippin of Kerrville, Texas.
The consent order stems from a CFTC complaint filed on August 29, 2005 (see CFTC News Release 5112-05). The CFTC complaint charged that, between June 2004 and August 2005, Pippin received more than $1.9 million dollars from approximately 35 commodity pool participants to trade crude oil commodity futures contracts in a hedge fund, and transferred that money to his own personal bank account rather than trade the funds in the commodity futures markets, as promised.
In the consent order, the court specifically found that Pippin knew that the hedge fund he operated never had a trading account or conducted any trading, and falsely represented to fund participants that he was trading commodity futures on their behalf and that the value of their accounts had increased to more than $4 million, while knowing those statements to be untrue. The order also finds that Pippin misappropriated approximately $106,500 of participants’ funds.
The court order requires Pippin to pay $1.68 million in full restitution to defrauded fund participants and a $106,500 civil monetary penalty. The order also permanently enjoins Pippin from engaging in fraud in violation of the Commodity Exchange Act and CFTC regulations, and permanently bans Pippin from trading on markets subject to the Commission’s jurisdiction or registering with the Commission.
The order recognizes Pippin’s cooperation in this matter.
The CFTC would like to thank the National Futures Association for its assistance. The following CFTC staff members were responsible for this case: Sheila Marhamati, Phil Rix, Steven Ringer, Lenel Hickson, Stephen Obie, Richard Wagner, Angelina Guiriba, and Ronald Carletta.
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The CFTC encourages members of the public to bring to our attention any suspicious activities involving futures or commodity options, including matters involving foreign currency (forex) investments or suspicious Internet websites.
In addition, the CFTC publishes a series of Consumer Advisories alerting the public to warning signs of possible fraudulent activity and offering precautions individuals should take before committing funds.
Last Updated: September 29, 2011