Release Number 7712-18
April 13, 2018
CFTC Charges The Kane Capital Investment Group, LLC and Amrit Chahal of Virginia with Operating a Commodity Pool Ponzi Scheme
Washington, DC –The Commodity Futures Trading Commission (CFTC) yesterday filed a civil enforcement action in the U.S. District Court for the Eastern District of Virginia against Defendants The Kane Capital Investment Group, LLC (Kane Capital), a commodity pool organized in Virginia, and its principal, Amrit Jaswant Singh Chahal (Chahal) of Fairfax, Virginia. The CFTC Complaint charges Defendants with commodity futures fraud, commodity pool fraud, and illegally commingling Kane Capital’s funds with Chahal’s personal funds. The Complaint also charges Chahal with failing to register with the CFTC as a Commodity Pool Operator, as required.
Material Misrepresentations, Omissions, and Doctored Account Statements
According to the Complaint, from at least January 1, 2015, through December 31, 2017, Defendants fraudulently solicited more than $1,200,000 from approximately 50 members of the public (pool participants) for the Kane Capital commodity pool, which traded E-mini Nasdaq 100, E-mini S&P 500, Cboe Volatility Index, and NYMEX West Texas Intermediate Light Sweet Crude Oil futures contracts, among others.
The Complaint alleges that Defendants’ trading was on balance unprofitable, causing deep losses that Defendants attempted to conceal by making material misrepresentations and omissions to pool participants. As alleged in the Complaint, Defendants touted annual averaged trading profits of between 28% and 34%, and sometimes higher, despite knowing at the time that Kane Capital made no profits and was suffering losses. The Complaint also alleges that Chahal used a .pdf editing tool to doctor trading account statements for the purpose of concealing losses and attracting additional pool participants.
Misappropriation of Pool Participants’ Funds
As alleged in the Complaint, Defendants misappropriated funds entrusted to them by using new deposits to make Ponzi scheme-like payments to certain pool participants. The Complaint also alleges that Defendants misappropriated pool participants’ funds to pay Chahal’s personal expenses, including his rent, utility, and credit card bills. In so doing, Defendants commingled Kane Capital’s funds with Chahal’s own personal funds.
In its continuing litigation, the CFTC seeks full restitution to defrauded pool participants, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against future violations of federal commodities laws, as charged.
Related Criminal Action
Chahal is subject to a nine-count criminal indictment in a related action brought by the United States Attorney’s Office for the Eastern District of Virginia. Among other charges, Chahal has been indicted on four counts of commodities fraud. See United States v. Amrit Jaswant Singh Chahal, No. 18-cr-152 (E.D. Va. Apr. 11, 2018).
The CFTC appreciates the assistance of the U.S. Attorney for the Eastern District of Virginia, the Virginia State Corporation Commission, and the SEC Division of Enforcement.
CFTC Division of Enforcement staff members responsible for this action are Daniel J. Grimm, Dmitriy Vilenskiy, Jonah E. McCarthy, John Einstman, Richard P. Foelber, and Paul G. Hayeck.
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CFTC’s Commodity Pool Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud that involves individuals and firms, often unregistered, offering investments in commodity pools.
Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.