For Release: October 1, 2008
CFTC Charges Michael Derrick Peninger and His Company, CSA Trading Group, Inc., With Fraud and Misappropriation in $1 Million Commodity Pool Scam
Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) filed an enforcement action against CSA Trading Group Inc. (CSA) and Michael Derrick Peninger, individually and doing business as the Cooper River Group, charging them with fraudulently soliciting and misappropriating more than $1 million of commodity pool participants’ funds, and with issuing false statements to pool participants. The action also charges four relief defendants with illegitimately receiving misappropriated funds.
The CFTC complaint, filed in the United States District Court for the District of South Carolina on September 29, 2008, alleges that, from at least October 2002 through January 2007, defendants CSA and Peninger, doing business as Cooper River Group and as an officer, employee, or agent of CSA, fraudulently solicited and accepted more than $1 million from at least 20 individuals to participate in purported commodity pools.
Defendants’ allegedly fraudulent solicitation practices include misrepresenting Peninger’s prior trading success, guaranteeing profitable returns, claiming that Peninger’s trading system eliminated the risks of trading commodity futures, falsely representing that individual funds would be pooled and traded, and failing to disclose the risk of trading commodity futures.
Contrary to defendants’ representations, as alleged, Peninger and CSA failed to open a single commodity pool account, but instead misappropriated almost all of the approximately $1 million of pool participants’ funds. Defendants used the misappropriated funds to pay back pool participants and to pay for personal expenses and other business ventures. Defendants concealed their fraud by issuing false account statements reflecting profitable returns and providing oral assurances to participants that they were making money, according to the complaint.
The complaint also charges the defendants with failing to register with the CFTC as commodity pool operators and failing to operate the commodity pools in accordance with federal commodities law.
The CFTC is seeking permanent injunctive relief, return of funds to defrauded participants, repayment of ill-gotten gains, civil penalties, and other equitable and ancillary relief.
In addition, American Middle School Athletic Association, Inc., The Blooming Village Florist, Inc., Daniel Island Builders, LLC, and Palmetto State Commodities, Inc. are named as relief defendants for having received pool participants’ funds to which they have no legitimate entitlement.
The CFTC wishes to thank the U.S. Securities and Exchange Commission for assistance in this matter.
The following CFTC Division of Enforcement staff are responsible for this case: Kara Mucha, Michelle Bougas, James Garcia, Michael Solinsky, Gretchen L. Lowe, and Vincent A. McGonagle.
Last Updated: October 1, 2008