Federal Court Drops $20 Million Fine on Ponzi Scheme Trader

<p>A federal
court has mandated an Illinois man and his entities to pay upwards of $20
million for conducting a Ponzi scheme in the commodity pool sector. Phillip
Galles and his Chicago-based Tyche companies have been found liable for
defrauding investors and violating regulatory laws, according to the Commodity
Futures Trading Commission's (<a href="https://www.financemagnates.com/tag/cftc/" target="_blank" rel="follow">CFTC</a>) announcement.</p><p>Court Penalizes Illinois
Man $20 Million for Commodity Pool Scam</p><p>Galles, who
portrayed himself as a managed futures hedge-fund magnate, falsely claimed
extraordinary annual returns exceeding 200% for his firms, including Tyche
Asset Management LLC and several affiliated entities.</p><p>These
assertions, however, were a facade for a <a href="https://www.financemagnates.com/terms/p/ponzi-scheme/">Ponzi scheme</a>. The CFTC found that
Galles had diverted investor funds for personal use rather than the promised
commodity trading, resulting in 65 individuals suffering losses totaling
$5,327,173.</p><p>“The CFTC
cautions that orders requiring repayment of funds to victims may not always
result in the recovery of lost money because the wrongdoers may not have
sufficient funds or assets,” the Commission warned in the official statement.</p><p>Further
exacerbating the situation, Galles and the Tyche entities lied to
regulatory bodies. They falsely assured the National Futures Association (NFA),
the body overseeing futures and derivatives regulation, of their non-engagement
in soliciting or accepting funds, a claim repeated to NFA examiners in April
2023. This judgment penalises them financially and imposes a permanent trading
ban on regulated markets to prevent future violations.</p><blockquote><p lang="en" dir="ltr">Federal Court Orders Illinois Man and His Entities to Pay Over $20 Million in Restitution and Penalties for Commodity Pool Ponzi Scheme. Learn more: <a href="https://t.co/lGMoDkXgex">https://t.co/lGMoDkXgex</a></p>— CFTC (@CFTC) <a href="https://twitter.com/CFTC/status/1724905236790497290?ref_src=twsrc%5Etfw">November 15, 2023</a></blockquote><p>CFTC Tightens the Regulatory
Screw</p><p>According
to the newest <a href="https://www.financemagnates.com/cryptocurrency/cftc-tightens-the-cryptocurrency-screw-in-fy23-50-of-cases-were-crypto-related/" target="_blank" rel="follow">CFTF’s enforcement report for the fiscal year 2023</a>, the Commission
conducted a record number of cases, especially in the digital asset sector. The
institution launched almost 100 actions against a range of malpractices, including
Ponzi schemes.</p><p><a href="https://www.financemagnates.com/forex/ponzi-scheme-definition-and-how-to-avoid-them/" target="_blank" rel="follow">A Ponzi
scheme</a> is a fraudulent investing scam that promises high rates of return with
little risk to investors. The scheme generates returns for older investors by
acquiring new ones. This is similar to a pyramid scheme in that both are based
on using new investors' funds to pay the earlier backers. For both Ponzi
schemes and pyramid schemes, the schemes collapse when the flood of new
investors dries up and there isn't enough money to go around. </p><p>"At a
time of great uncertainty and <a href="https://www.financemagnates.com/terms/v/volatility/">volatility</a>, healthy U.S. commodity markets are
paramount to ensuring a strong economy. The CFTC will continue to take all
necessary action to protect customer funds and ensure fair prices for U.S.
consumers. I thank the Division staff for their hard work over the last fiscal
year," Rostin Behnam, the CFTC Chairman, commented. </p><p> For example, some time ago, <a href="https://www.financemagnates.com/forex/cftc-busts-44-million-ponzi-crypto-investment-scheme/" target="_blank" rel="follow">the CFTC busted a $44 million Ponzi crypto investment scheme</a>. The alleged perpetrators defrauded at least 170 investors, targeting investors since January 2021.</p>

This article was written by Damian Chmiel at www.financemagnates.com.