October 5, 2015
Federal Court Orders Alexander Glytenko and His Company, Direct Investment Products, Inc., to Pay a Monetary Penalty and Restitution Totaling More than $3.8 Million in Connection with Commodity Pool Fraud
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Cynthia Bashant of the U.S. District Court for the Southern District of California entered a default judgment Order against Alexander Glytenko of Carlsbad, California, and his company, Direct Investment Products, Inc. (DIP). The Court’s Order requires Glytenko and DIP jointly to pay $2,459,633 in restitution and a $1,392,000 civil monetary penalty for fraudulently operating a commodity pool in violation of the Commodity Exchange Act (CEA). The Order also permanently enjoins Glytenko and DIP from further violations of the CEA and CFTC Regulations, as charged, and imposes permanent trading and registration bans on them.
The Order arises from a CFTC Complaint filed on December 5, 2013, which charged Glytenko and DIP with fraudulently soliciting approximately $3.9 million from approximately 761 individuals residing in Russia and various former republics of the former Soviet Union to invest in a commodity pool known as DIP Capital Partners (the Pool) (see Complaint and CFTC Press Release and Complaint 6791-13).
In the Order, the Court found that, from approximately 2005 through approximately 2010, Glytenko and DIP, either directly or through their agents, knowingly misrepresented the Pool’s performance history to both prospective and actual pool participants by 1) presenting profitable performance figures for various of the Pool’s funds for years in which they knew the Pool did not even exist, 2) presenting hypothetical trading performance without labeling it as such, and 3) presenting at least two years of profitable performance results for one of the Pool’s funds when, in fact, that fund had experienced losses during those years. In addition, the Court found that in 2009, at a time when Glytenko and DIP had imposed a freeze on the withdrawal of participants’ funds as a result of substantial losses incurred by the Pool, Glytenko used participants’ funds to make a loan of $464,000 from DIP to himself.
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 CFTC thanks the National Futures Association, the Cyprus Securities and Exchange Commission, and the Bermuda Monetary Authority for their assistance in this matter.
CFTC Division of Enforcement staff members responsible for this case are Alan I. Edelman, James H. Holl, III, Michelle Bougas, Dmitriy Vilenskiy, and Gretchen L. Lowe.
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CFTC’s Commodity Pool Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud that involves individuals and firms, often unregistered, offering investments in commodity pools.
Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.
Last Updated: October 5, 2015