Penalty of $11 Million imposed for fraudulent commodity pool trading schemes 

The Commodity Futures Trading Commission (CFTC) announced an Order of default judgment and permanent injunction has been issued against defendants Scott Allensworth (d/b/a Capital Growth Group Associates and Cobra Development Group LLP), of Newhall, California, and his California company E-Slate, Inc. (d/b/a Cobra Development Group LLP), Robert J. Fusco, of Henderson, Nevada, and David Weddle of Prospect, Kentucky, in connection with two separate fraudulent commodity pool trading schemes.

The Order, entered by Judge Consuelo B. Marshall of the U.S. District Court for the Central District of California, finds that the fraudulent schemes spanned over four years and deprived as many as 76 victims of almost $3 million. Most of the victims were existing tax and retirement-planning clients, who had their relationship of trust, along with their intimate financial information, exploited. In carrying out the schemes, the defendants fraudulently solicited pool participants, misappropriated pool participant funds, and fabricated trading statements to prolong and conceal their misconduct.

The Order requires Allensworth, E-Slate, and Fusco, jointly and severally, to pay $268,000.00 in restitution to defrauded pool participants and a civil monetary penalty of $804,000.00; and requires Allensworth, E-Slate, and Weddle, jointly and severally, to pay $2,527,874.44 in restitution to defrauded pool participants and a civil monetary penalty of $7,583,623.32. The Order also imposes permanent trading and registration bans on all the defendants and prohibits them from committing further violations of the Commodity Exchange Act and CFTC Regulations, as charged in the Complaint filed on October 2, 2017 (see CFTC Complaint and Press Release 7628-17).

The CFTC cautions that orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers to ensure the wrongdoers are held accountable.

The CFTC acknowledges and appreciates the assistance of the U.S. Securities and Exchange Commission Los Angeles Regional Office, which filed a related action in the U.S. District Court for the Central District of California against Allensworth, Weddle, and JustInfo LLC; the U.S. Attorney’s Office and U.S. Marshals Service for the Central District of California; and the City of Henderson, Nevada Police Department.

CFTC Division of Enforcement staff members responsible for this case are Tom Simek, Jeff Le Riche, Elsie Robinson, James Humphrey, Joyce Brandt, Christopher Reed, and Charles Marvine.

Source: CFTC

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