CFTC Charges Magee Family in $3.2m Commodity Pool Fraud Scheme

The U.S. Commodity Futures Trading Commission (CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term) has announced that a US court has ordered a default judgment and permanent injunction against Ryan Magee, his wife Dalyne Magee and his father David Magee in connection with a commodity pool fraud that targeted US and Canadian participants.

Commodity Pool Fraud

This is one of several cases for which the CFTC has issued a customer protection advisory. These advisories provide the warning signs of fraud and include the Commodity Pool Fraud Advisory, which cautions customers about a type of fraud that involves individuals and firms, often unregistered, offering investments in commodity pools. Finance Magnates reported on such a case in March this year in which a Virginia-based man was charged $1.2 million for his involvement in a Commodity Pool Scheme.

The new world of online trading, fintech and marketing - register now for the Finance Magnates Tel Aviv Conference, June 29th 2016.

Penalties

The court’s order requires that the Magees jointly pay back $715,069 in misappropriated customer funds and Ryan Magee to pay restitution of $1,324,490.

Further penalties of $840,000 have been imposed on Ryan Magee and $140,000 each on David and Dalyne Magee. Furthermore, the Magees are also permanently banned from trading or registering with the CFTC.

Details of the case reveal that from March 2010 to August 2013, Ryan Magee operated a fraudulent scheme that solicited at least CAD $2 million from at least 30 individuals from the U.S. and Canada to trade commodity futures and other products on participants’ behalf.

Ryan falsely told participants that he had achieved gains of 100-200 percent in prior years, and promised annual returns of 200 to 300 percent, when in reality he had always lost money trading. Furthermore, it was found that Ryan Magee sent pool participants false account statements that reported non-existent profits.

David and Dalyne Magee meanwhile, had solicited funds for the pool and handled participant monies without being registered with the CFTC.

Further Violations

Last year, in an enforcement action brought by the ASC, the Magees were also found liable for violating the Alberta Securities Act, and Ryan Magee was found liable for perpetrating a fraud and making misleading or untrue statements contrary to the Alberta Securities Act.