January 11, 2011
CFTC Charges California Resident Scott Bottolfson with Operating a $14 Million Commodity Pool Ponzi Scheme
Bottolfson allegedly misappropriated $11 million of customer funds.
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it charged Scott Bottolfson and Spirit Investments, Inc. (Spirit), both of Encinitas, Calif., and Increase Investments, Inc. (Increase) of Reno, Nev., with fraudulently soliciting approximately $14 million from 30 individuals to invest in two commodity pools to trade commodity futures contracts and options on commodity futures. Spirit and Increase allegedly operated the pools.
The CFTC’s complaint, filed in the U.S. District Court for the Southern District of California, charges that, from approximately 2002 through August 2010, Bottolfson lured prospective participants with false or misleading representations, including promising a 20 percent fixed-rate return on investments, that his investments were protected and guaranteed and that investing in commodity futures was risk-free. Bottolfson allegedly told participants that his investments were profitable when, if fact, he suffered approximately $845,000 in trading losses on the approximate $2.97 million that was actually put into commodity pool trading accounts. Bottolfson is also charged with misappropriating approximately $11 million of customer funds for personal expenses and to pay existing pool participants purported profits, as is typical of a Ponzi scheme.
In its continuing litigation, the CFTC seeks restitution to defrauded participants, a return of ill-gotten gains, civil monetary penalties, trading and registration bans and permanent injunctions against further violations of the federal commodities laws.
The CFTC appreciates the assistance of the National Futures Association, the U.S. Attorney’s Office for the Southern District of California and the Federal Bureau of Investigation.
The CFTC Division of Enforcement staff members responsible for this case are George Malas, Jason Mahoney, John W. Dunfee, Paul G. Hayeck and Joan Manley.
Last Updated: January 11, 2011