A United States district court in Arizona has imposed monetary sanctions of more than $2.3 million against Purvesh Mankad and two of his affiliate companies, CTAX Series, a commodity pool, and CTAX Partners, which is an introducing broker. Both companies are registered with the Commodity Futures Trading Commission (CFTC).
The consent order came in response to charges filed by the CFTC that found Mankad and his companies liable for fraudulent solicitation, misappropriation of pool participant funds, and making false statements to the National Futures Association (NFA) regarding the fraud.
Fraudulent Activities
The press release of the CFTC detailed that between July 2014 and March 2019, Mankad and CTAX Series offered pool trading services. They claimed the pool participants would be represented only by experienced commodity trading advisors (CTAs). In contrast, Mankad, who did much and eventually all trading in the pool, was not even a CTA and had limited and unsuccessful trading experience.
The defendants additionally misrepresented and omitted facts regarding the charged pool commissions, Mankad and CTAX Partners. Further reckless trading of pool funds from July 2018 resulted in a loss of 89 percent of CTAX pool’s assets. However, the defendants hid the losses from pool participants by delaying monthly account statements.
They even submitted falsified emails to the NFA to showcase a timely distribution of account statements to pool participants.
The order requires payment of more than $1.6 million towards the victims' restitution, along with a monetary penalty of $727,588.91.
Moreover, the court order permanently prohibited Mankad and his entities from further violating the Commodity Exchange Act (CEA). The defendants have also been permanently banned from registration and trading.
The name of CTAX is connected to another charge from the CFTC against SEC-registered investment advisor Paul Ohanian and his advisory firm, Scottsdale Wealth Planning. Its clients were pool participants contributing funds to the CTAX pool. Ohanian and Scottsdale Wealth have been ordered to pay $338,000 in restitution with a fine of $169,000.
