June 4, 2013
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) filed an amended complaint on May 28, 2013, in its pending action, CFTC v. Arista LLC, et al. (U.S. District Court, Southern District of New York, 12-CV-9043) (see CFTC Press Release 6460-12, December 13, 2012). The CFTC’s amended Complaint adds a charge of making false statements to the CFTC against the defendants, Arista LLC (Arista), a registered Commodity Pool Operator (CPO) based in Newport Coast, California, and its principals, Abdul Sultan Walji (a/k/a Abdul Sultan Valji) and Reniero Francisco, both residents of California.
The amended Complaint adds allegations that, in September 2011, the defendants misrepresented certain Arista account balances, asset values, and fee calculations in a letter sent to the CFTC’s Division of Enforcement. The amended Complaint further alleges that the defendants misrepresented their purported basis for transmitting statements to investors and falsely asserted that they had no intention to provide inaccurate or misleading information to the Arista investors.
The CFTC amended Complaint alleges, as did the original complaint filed on December 12, 2012, that from at least February 2010 through January 2012, the defendants carried out a fraudulent scheme to misappropriate millions of dollars from investors in commodity futures and options. The defendants allegedly collected funds from 39 investors totaling more than $9.5 million, of which the defendants paid themselves $4.125 million in purported fees while losing over $4.8 million trading. In order to perpetuate their scheme, the defendants allegedly provided false quarterly statements to investors and filed false quarterly reports with the National Futures Association (NFA). For example, the NFA, as a result of its examination, determined that Arista’s September 2011 pool quarterly report (PQR) had falsely reported a positive 99 percent rate of return in September 2011, when in reality Arista’s rate of return was negative 46.98 percent. NFA also determined that Arista’s PQR had falsely reported a net asset value (NAV) of $8,421,139 as of September 30, 2011, when in reality Arista’s NAV as of that date was approximately $523,000, according to the Complaint.
In its continuing litigation, the CFTC seeks restitution and a return of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the federal commodities laws, as charged. The U.S. District Court previously, on December 12, 2012, entered an ex parte restraining order freezing the defendants’ assets, authorizing expedited discovery by the CFTC, and prohibiting the defendants from destroying or concealing books and records.
A parallel criminal action has been filed by the U.S. Attorney’s Office for the Southern District of New York − U.S. v. Abdul Walji, a/k/a “Abdul Valji,” and Reniero Francisco (U.S. District Court, Southern District of New York, 13 CRIM 217).
The CFTC appreciates the assistance of the U.S. Department of Justice, the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, and the NFA.
CFTC staff members responsible for this case are Michael P. Geiser, Laura A. Martin, Douglas K. Yatter, Philip D. Rix, Ricardo Smalls, Manal M. Sultan, Lenel Hickson, Jr., Stephen J. Obie, and Vincent A. McGonagle.
Last Updated: June 4, 2013