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Screenshot of a breaking news alert e-mail from Q2 2017
The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Cynthia Bashant of the U.S. District Court for the Southern District of California entered a default judgment Order against Alexander Glytenko of Carlsbad, California, and his company, Direct Investment Products, Inc. (DIP). The Court’s Order requires Glytenko and DIP jointly to pay $2,459,633 in restitution and a $1,392,000 civil monetary penalty for fraudulently operating a commodity pool in violation of the Commodity Exchange Act (CEA). The Order also permanently enjoins Glytenko and DIP from further violations of the CEA and CFTC Regulations, as charged, and imposes permanent trading and registration bans on them.
The Order arises from a CFTC Complaint filed on December 5, 2013, which charged Glytenko and DIP with fraudulently soliciting approximately $3.9 million from approximately 761 individuals residing in Russia and various former republics of the former Soviet Union to invest in a commodity pool known as DIP Capital Partners (the Pool) (see Complaint and CFTC Press Release and Complaint 6791-13).
In the Order, the Court found that, from approximately 2005 through approximately 2010, Glytenko and DIP, either directly or through their agents, knowingly misrepresented the Pool’s performance history to both prospective and actual pool participants by:
1) presenting profitable performance figures for various of the Pool’s funds for years in which they knew the Pool did not even exist,
2) presenting hypothetical trading performance without labeling it as such, and
3) presenting at least two years of profitable performance results for one of the Pool’s funds when, in fact, that fund had experienced losses during those years. In addition, the Court found that in 2009, at a time when Glytenko and DIP had imposed a freeze on the withdrawal of participants’ funds as a result of substantial losses incurred by the Pool, Glytenko used participants’ funds to make a loan of $464,000 from DIP to himself.
To see the official full release from the CFTC, click here.