The US Commodity Futures Trading Commission (CFTC ) announced on Thursday that it imposed sanctions against an unregistered commodity pool operator, who was ordered to pay over $13 million.
According to the press release, David Seibert from Lakeway, Texas, is accused of running a commodity fraud and was found liable for solicitation fraud and the misappropriation of client funds. A permanent registration ban and trading ban were also imposed by the court, which prohibited him from violating the Commodity Exchange Act in the future.
Over $10 million was fraudulently solicited and accepted by Seibert from 11 participants from March 2016 to April 2019. During the time, Seibert claimed to use participant funds for short-term, high-interest, secured 'bridge loans' to third-party borrowers for the purpose of making property repairs while they sought permanent financing.
According to Seibert, he would find the lending opportunities, confirm that the borrower was qualified, and then close and service the loan. However, no loans were originated by Seibert. As a result, Seibert used most of the funds to trade commodity interests in his personal trading account, where he lost over $8.3 million. Funds from other participants were used for personal expenditures by him.
Seibert has been ordered to pay $10,794,508 in restitution to victims of his scheme and $2,278,853 in civil penalties.
Recent Investigations
Recently, the US regulator announced that it had filed a civil enforcement action against a South African man, Cornelius Johannes Steynberg, and an unregistered commodity pool operator, Mirror Trading International Proprietary Limited (MTI).
Both parties were charged with fraud and registration violations before the US District Court of the Western District of Texas. This action comes a few days after the CFTC slammed a $1.37m fine on Starberry Limited for acting as a futures commission merchant without a permit.
