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RELEASE: pr5643-09

  • Release: 5643-09
    For Release: April 7, 2009

    CFTC Charges Two Florida Companies and Three Florida Men with Operating a Fraudulent Commodity Pool that Solicited Approximately $17 Million from about 100 Investors

    Capital Blu Management, LLC, DD International Holdings, LLC, Donovan Davis. Jr., Blayne Davis, and Damien Bromfield Allegedly Defrauded Investors Seeking to Invest in Foreign Currency (Forex)

    Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that it charged Donovan Davis, Jr. (D. Davis) of Palm Bay, Florida, Blayne Davis (B. Davis), of Naples, Florida, Damien Bromfield, of Ocoee, Florida, Capital Blu Management, LLC (Capital Blu) of Melbourne, Florida, and DD International Holdings, LLC (DDIH) of Palm Bay, Florida with operating a fraudulent commodity scheme involving about 100 investors and approximately $17 million solicited purportedly to invest in foreign currency (forex) futures and options.

    The complaint was filed under seal on March 23, 2009, in the U.S. District Court for the Middle District of Florida. On the same day, the Honorable John Antoon II entered an order freezing defendants’ assets and preserving books and records.

    As alleged, defendants told prospective investors that their funds would be pooled in the CBM FX Fund, LP (FX Fund), a commodity pool established by Capital Blu. Rather than pool investor funds, the defendants split the funds into trading of both off-exchange and on-exchange forex futures and off-exchange forex options. In addition, the defendants allegedly deposited millions of dollars into multiple Capital Blu bank accounts, where funds were commingled and misappropriated for personal use, including luxury automobiles, private jet charters and, a two-night $40,000 spree at a “gentlemen’s club.”

    Ultimately, as alleged, of the $17 million solicited, $7 million was lost in trading, and millions of dollars remain unaccounted for.

    To hide their fraud, the complaint alleges, D. Davis, B. Davis, and Bromfield provided investors with phony account statements misrepresenting the earnings in their accounts by showing consistent monthly profits as high as 7 percent for 12 straight months (September 2007 through August 2008). In fact, as alleged, defendants’ actual trading resulted in net losses every month.

    Nakano Capital Partners, LP, Nakano Capital Advisors, LLC, and/or Nakano Capital Management, LLC Named as Relief Defendants

    According to the complaint, B. Davis withdrew more than $135,000 of the pool participants’ funds and deposited those funds into accounts held in the name of one or more of Nakano Capital Partners, LP, Nakano Capital Advisors, LLC, and/or Nakano Capital Management, LLC, all of whom have been named in the CFTC complaint as relief defendants. None of these entities provided legitimate services to the FX Fund and have no legitimate entitlement to the funds they received.

    In its continuing litigation, the CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties, and permanent injunctions against further trading.

    The CFTC’s Division of Enforcement would like to thank the National Futures Association and the State of Florida Office of Financial Regulation in Orlando, Florida for their assistance.

    The following Division of Enforcement staff members are responsible for this case: Daniel Jordan, Kenneth McCracken, Michael Loconte, and Rick Glaser.

    Media Contacts
    Robert Holifield
    202-418-5080

    Dennis Holden
    202-418-5088

    Last Updated: April 7, 2009

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