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CFTC Shuts $14 Million Commodity Pool Ponzi
October 20, 2011
The CFTC obtained a permanent injunction against an individual and a pair of companies that allegedly ran a $14mn commodity pool Ponzi scheme. Scott Bottolfson and Spirit Investments of Encinitas, CA, and Increase Investments of Reno, NV also were ordered to pay a civil penalty of $6.8mn.
In January the CFTC filed an enforcement action that charged the 3 entities with running the Ponzi as well as misappropriating $11mn of customer funds from at least 2002 through 2010.
CFTC Allegations. The injunction finds that Bottolfson solicited pool participants to trade commodity futures in two commodity pools through his companies, Increase and Spirit. After soliciting some $14mn from participants to be traded in the pools, he instead deposited less than $3mn into trading accounts - the remaining $11mn went into his personal accounts and used for his personal expenses, for so-called profit payments to participants, or otherwise simply misappropriated. Of the $3mn that was deposited into trading accounts, Bottolfson took trading losses of about $845,000.
Fines and Sanctions. In February, Bottolfson was found guilty of wire fraud and sentenced to 60 months in jail. He also was ordered to pay $6.8mn in restitution to investors.
CFTC Enforcement Staff Credits. Jason Mahoney, George Malas, Paul Hayeck, and Joan Manley. [CFTC PR 6125-11, 10/19/11]

