December 19, 2018
Federal Court Orders Commodity Pool Operators to Pay More Than $23 Million in Restitution and Penalties for Fraud and Misappropriation of Investors Funds
Washington, DC — The Commodity Futures Trading Commission (CFTC) announced today that on December 3, a federal court in New York entered an Opinion and Order ( Opinion and Order) against defendants Haena Park, her companies Phaetra Capital GP LLC, Phaetra Capital Management LP, and Argenta Group LLC (collectively, Pool Defendants), requiring the firms to pay $22,917,551 in restitution to defrauded investors and the Pool Defendants to pay, jointly and severally a $100,000 civil monetary penalty in a CFTC enforcement action, filed on June 2, 2016 and charging Park Defendants with fraudulent solicitation and misappropriation of funds, among other charges. [See CFTC Complaint and Press Release 7382-16] This ruling resolves CFTC’s litigation against the defendants.
The December 3, 2018 Order, issued by Judge Valerie E. Caproni of the U.S. District Court for the Southern District of New York, supplements a previous Consent Order entered by the Court on February 7, 2018 (Park Consent Order). As found in the Park Consent Order, from at least January 2010 through June 2016, Pool Defendants fraudulently solicited at least $23 million from approximately 50 members of the public (pool participants) to participate in a commodity pool. The Park Consent Order found that, in her solicitations, Park made material misrepresentations and omissions concerning her trading expertise and the purported profits she generated from her trading.
The Park Consent Order further found that, in order to perpetuate the fraud and conceal their trading losses and misappropriation, the Pool Defendants made and issued false documents, including monthly account statements that contained fabricated trading data and profits, and made false statements to the National Futures Association (NFA). The Park Consent Order also found that the Pool Defendants failed to operate their commodity pool as a separate legal entity; received pool participant funds in a name other than that of the pool; and commingled pool funds with non-pool property.
Finally, the Park Consent Order found that Park, as the agent and officer of Argenta Capital LLC, duped an investment firm to authorize Park to manage the firm’s investment account.
In another Consent Order entered in the same case on April 23, 2018 (Kaseman Consent Order), the court found that Park’s co-defendant Yul Kaseman made false statements to the NFA and imposed a $75,000 civil monetary penalty on Kaseman. The Kaseman Consent Order also imposed a five-year trading and registration ban on Kaseman.
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 appreciates the assistance of the NFA, the United States Attorney’s Office for the Southern District of New York, the U.S. Department of Homeland Security and the Securities and Exchange Commission.
The CFTC Division of Enforcement staff members responsible for this case are Greta G. Gao, Dmitriy Vilenskiy, Luke B. Marsh, and Paul G. Hayeck.