Aggregated News From Investment Management Regulators

CFTC Charges Unregistered Commodity Pool Operator and Its Chief Executive Officer with Solicitation Fraud and Misappropriation

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Washington, D.C. The Commodity Futures Trading Commission today filed a civil enforcement action in the U.S. District Court for the Eastern District of New York against defendants Craig L. Clavin and his company Lighthouse Futures, Ltd., both of New York. The complaint charges the defendants with fraudulent solicitation of commodity pool participants, misappropriation of pool funds, commingling pool funds with other funds, and failing to register with the CFTC as a commodity pool operator, as required.

According to the complaint, from at least 2015 until 2019, the defendants fraudulently solicited and misappropriated at least $345,000 from U.S. residents for pooled investments in commodity futures contracts. The defendants, however, failed to trade the vast majority of pool participants’ funds as promised, misappropriated most of their money, and concealed their fraud by sending false performance reports and account statements to pool participants.

As alleged in the complaint, in order to entice prospective pool participants, the defendants falsely represented that they were running a successful commodity pool, that the pool would participate in the commodities markets, that the pool was exempt from registration with the CFTC, and that upon request pool participants could withdraw the funds they had deposited and their purported profits at the end of any given year. As further alleged, the defendants used pool funds to pay Clavin’s personal expenses, including items such as travel, meals, the purchase of patio furniture, and debit card purchases. The remaining funds were used to pay purported profits to some pool participants in the manner of a Ponzi scheme. 

The complaint also alleges that in soliciting and receiving funds for a pooled investment vehicle for the purpose of trading commodity futures contracts, Lighthouse illegally operated as an unregistered commodity pool operator and Clavin acted as an unregistered associated person of Lighthouse, which Lighthouse unlawfully allowed Clavin to do.

In its continuing litigation against the defendants, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act, and CFTC regulations, as charged.

Related Criminal Indictment

Earlier today, the District Attorney of Suffolk County, New York announced the filing of a criminal indictment against Clavin and Lighthouse in the Suffolk County Supreme Court. The CFTC appreciates the assistance of the Suffolk County District Attorney’s Office.

The Division of Enforcement staff members responsible for this action are Mark A. Picard, Christopher Giglio, David Acevedo, Lenel Hickson, Jr., and Manal M. Sultan.

CFTC’s Commodity Pool Fraud Advisory 

The CFTC has issued several customer protection Fraud Advisories 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) or file a tip or complaint online.

Regulator Information

Abbreviation: CFTC
Jurisdiction: USA

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