For Release: September 25, 2008
CFTC Sues Boca Raton Resident Michael A. Meisner and His Company, Phoenix Diversified Investment Corp., in Commodity Pool Anti-Fraud Action
Defendants Charged with Defrauding Commodity Pool Participants; Pool Suffered Trading Losses of Approximately $5.8 Million Over Four Years
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) sued Michael A. Meisner, who resides in Boca Raton, Florida, and his company, Phoenix Diversified Investment Corp. (Phoenix), charging defendants with commodity pool fraud.
Specifically, the CFTC complaint filed on September 23, 2008 in the U.S. District Court for the Southern District of Florida, charges Meisner and Phoenix with fraudulently soliciting customers to participate in the Phoenix commodity pool, which traded exchange-traded commodity futures, and misappropriating pool participants’ funds. The accounts associated with the commodity pool allegedly suffered net losses of approximately $5.8 million between May 2003 and March 2008.
According to the CFTC’s complaint, Meisner solicited pool participants by claiming that Phoenix owned a valuable software program that dictated trading patterns in the futures markets and guaranteed high profits. Meisner allegedly made several material misrepresentations and failed to disclose material facts to induce prospective and current pool participants to invest or remain invested in the pool. These included false representations about the past profitability of the pool and the actual value of the pool. The CFTC alleges that, according to Phoenix account statements provided to pool participants dated March 31, 2008, those participants had a cumulative balance of over $4 million in the pool. However, between March 31, 2008 and the present, Phoenix refused to honor pool participants’ requests to withdraw funds and several Phoenix checks were returned for insufficient funds.
Allegedly, on April 21, 2008, Meisner sent letters to some or all pool participants advising them that “[D]ue to an unanticipated cash flow situation, Phoenix will be ceasing its regular day to day business activities.” He allegedly followed up with a second letter the next day, in which he indicated that Phoenix was out of cash and had no money available in any trading account because it was used to pay distributions to pool participants and to support his lifestyle.
In addition to fraud and misappropriation allegations, the CFTC complaint also charges Phoenix with operating without being registered with the CFTC as a commodity pool operator, as required by federal commodities law.
Additionally, Victoria R. Meisner, Meisner’s wife, also of Boca Raton, is named in the complaint as a relief defendant for receiving at least $1 million of funds to which she was not entitled.
In its continuing litigation against Meisner and Phoenix, the CFTC is seeking a statutory restraining order, preliminary and permanent injunctive relief, the return of funds to defrauded participants, the repayment of ill-gotten gains, and civil monetary penalties.
Disgruntled pool participants brought an involuntary petition in bankruptcy court against Phoenix, and Meisner filed for bankruptcy protection individually.
The CFTC appreciates the assistance of the State of Florida, Office of Financial Regulation, Bureau of Financial Investigations in this matter.
The following CFTC Division of Enforcement staff members are responsible for this case: Ava M. Gould, Donald Nash, Scott Williamson, Rosemary Hollinger, and Richard Wagner.
Last Updated: September 25, 2008