December 6, 2018
CFTC Wins Judgment against Commodities Trader for Commodity Pool Fraud, Including Misappropriating Funds
Washington, DC — The Commodity Futures Trading Commission (CFTC) announced today that Defendant Mark R. Slobodnik of Libertyville, Illinois, has been ordered to pay approximately $370,000 in fines in connection with a $1.76 million commodity pool fraud operated under the name Blue Guru, LLC.
Judge Manish Shah, of the U.S. District Court for the Northern District of Illinois, entered a Consent Order for Permanent Injunction on November 9, 2018 that requires Slobodnik to pay restitution totaling $280,000, disgorge $45,342.44 of ill-gotten gains and pay a civil monetary penalty of $45,342.44. The Order also imposes a five year trading and registration ban on Slobodnik and prohibits him from violating provisions of the Commodity Exchange Act as charged.
The Order stems from a CFTC Complaint filed on January 12, 2018 (see CFTC Complaint and Press Release 7672-18), which charged Slobodnik, a former member of the Chicago Mercantile Exchange (CME), and co-defendants Richard D. Carter and Blue Guru, LLC with fraud, misappropriation and failing to register with the CFTC. The Order finds that from April 2014 to the filing of the Complaint, Slobodnik willfully misrepresented material facts to participants and prospective participants of Blue Guru concerning the profits they were making on their participation interests in the commodity pool. Among the misrepresentations, Slobodnik told prospective and actual participants that Blue Guru would use their money to trade futures, including the Dow Jones E-mini and the S&P 500 E-mini contracts on the CME, when, in fact, the defendants used less than two-thirds of the $1.76 million they solicited and received for trading. According to the Order, Slobodnik informed prospective participants that they would earn 8 percent per year on their investment plus 50 percent of any gross net trading profits, and was present or aware of communications advising participants that their funds were earning consistent trading profits. In fact, the Order finds that Slobodnik was responsible for approximately $249,000 of the $501,000 in trading losses incurred by Blue Guru.
The Order also finds that Slobodnik misappropriated $45,342.44 of participants’ funds and that when participants requested to withdraw their funds from Blue Guru, Slobodnik and his partner ignored their demands, engaged in delay tactics, and lied about conditions that purportedly prevented them from making disbursements.
Earlier in the litigation, Judge Shah entered an Order for Injunction, Civil Monetary Penalties, And Other Statutory and Equitable Relief Against Defendant Blue Guru, LLC by default on May 1, 2018 and ordered Blue Guru to pay restitution of $1,400,076.78, disgorgement of $1,400,076.78 and a civil monetary penalty of $4,200,230.34. The case remains pending against Carter.
The CFTC cautions that Orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
The CFTC thanks the U.S. Attorney’s Office for the Northern District of Illinois and the Federal Bureau of Investigation for their assistance.
CFTC Division of Enforcement staff members responsible for this action are Susan Gradman, Joseph Patrick, Brigitte Weyls, Scott Williamson and Rosemary Hollinger.
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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.