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Screenshot of a breaking news alert e-mail from Q2 2017
The U.S. Commodity Futures Trading Commission (CFTC) has announced that Judge Loretta C. Biggs of the U.S. District Court for the Middle District of North Carolina entered an Order of Final Judgment by Default against Defendants Tracy Lee Thomas (a/k/a Treyton L. Thomas, a/k/a Trayton L. Thomas, a/k/a Trey Thomas, a/k/a Tray Thomas, a/k/a T.L. Thomas), formerly of Naples, Florida, and Marbury Advisors Inc., a Cayman Islands corporation.
The Court’s Order finds that the Defendants had fraudulently solicited over $ 1.1 million from customers, lost those funds trading, and provided customers with false reports or statements indicating their investments were profitable.
The Court’s Order, entered on April 11, 2017 and stemming from a CFTC complaint filed March 22, 2016, requires Thomas and Marbury, jointly and severally, to pay restitution of $1,110,413 and a civil monetary penalty of $3,331,239, which represents triple the monetary gain to Defendants. The Order also imposes permanent trading and registration bans and prohibits Defendants from further violations of the Commodity Exchange Act, as charged.
The Court’s Order finds that between February 2011 and August 2012, Defendants engaged in a fraudulent scheme by soliciting approximately $1,189,000 from customers by misrepresenting they would invest in Treasury Bills on customers’ behalf, misrepresenting Defendants’ prior investment and trading success, and misrepresenting that Thomas, who was a Managing Director of Marbury, would invest in a conservative manner. The Order also finds that Defendants failed to disclose that they used customers’ funds to trade Chicago Mercantile Exchange E-mini S&P 500 futures contracts, and Chicago Board of Trade 2-Year Treasury Note futures contracts.
According to the Order, Defendants also failed to disclose 1) the substantial risk of loss associated with futures trading, and 2) the net losses Defendants sustained while trading futures.
Further, according to the Order, Thomas solicited his father-in-law by falsely representing that the Defendants were successful in their prior business and trading activities and the funds would be used to invest in “safe” and “conservative” T-Bills. The Order found that Thomas’ father-in-law made several investments with Defendants, wiring an approximate total of $594,000 to an account controlled by Thomas and which he used to trade commodity futures without disclosing this fact. The Order also finds that Defendants attempted to conceal their fraudulent conduct by providing fabricated account statements to customers and to a bank where Thomas controlled a trust account owned by his late father.
On November 22, 2016, in a related on-going matter, Thomas was indicted for fourteen counts of wire fraud in the U.S. District Court for the Eastern District of North Carolina (see U.S. v. Thomas, case no. 16-CR-298).
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 and to ensure wrongdoers are held accountable.
The CFTC thanks the Cayman Islands Monetary Authority for its assistance.