Release Number 8687-23
Federal Court Orders Florida Man and His Two Entities to Pay Over $16 Million for Fraud, Misappropriation, and Making False Statements to the CFTC
April 12, 2023
Washington, D.C. — The Commodity Futures Trading Commission today announced the U.S. District Court for the Southern District of Florida entered a consent order against Damian Castilla on December 6, 2022, and an order for final judgment against DCAST Capital Investments LLC and Five Traders LLC on April 6.
The orders resolve the CFTC’s May 17, 2022 lawsuit and find the defendants liable for defrauding over 50 pool participants by fraudulently soliciting investments and misappropriating pool participants’ funds. The orders also resolve CFTC charges that the defendants made false statements to the CFTC during its investigation.
The orders require the defendants to pay $2,687,440 in restitution to those defrauded as well as $3,350,000 in disgorgement. The orders also require Castilla to pay a $3 million civil monetary penalty and DCAST Capital and Five Traders, collectively, to pay a $10,050,000 civil monetary penalty. Additionally, the orders enjoin the defendants from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged, and impose permanent trading and registration bans against defendants.
The orders find that, from January 2014 to May 2022, the defendants made various material misrepresentations to solicit pool participants, including that they earned significant profits trading futures for pool participants. The defendants’ limited futures trading was unprofitable, and instead of trading as promised, they misappropriated the vast majority of pool participant funds. The defendants used pool participant funds for car payments, home remodeling, lawn services, clothing, dining, and other personal expenses. The defendants continued their fraud by issuing false account statements that showed profitable trading in nonexistent trading accounts and by using a portion of the funds obtained from pool participants to pay fake profits to earlier pool participants. The orders also find the defendants failed to register with the CFTC, as required. Finally, the orders find the defendants made false statements in responding to a subpoena the CFTC’s Division of Enforcement issued during the investigation into their conduct. For example, in response to a subpoena, the defendants provided false information about their customers—failing to disclose over 40 pool participants that collectively provided almost $2 million.
The CFTC cautions victims that restitution orders may not result in the recovery of 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 Division of Enforcement staff members responsible for this matter are Elsie Robinson, Paul Flucke, Nicholas Sloey, Thomas Simek, Christopher Reed, and Charles Marvine.
CFTC’s Commodity Pool Fraud Advisory
The CFTC has issued several customer protection including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud involving individuals and firms, often unregistered, offering investments in commodity pools. The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found using NFA BASIC.
Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.