FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
June 20, 2013
Federal Court in North Carolina Orders Toby D. Hunter, Prestige Capital Advisors, and D2W Capital Management to Pay over $11.7 Million for Fraud and other Violations in Commodity Pool and Managed Foreign Currency (Forex) Schemes
Washington, DC -The U.S. Commodity Futures Trading Commission (CFTC) announced that it obtained federal court orders requiring Defendants Toby D. Hunter, Prestige Capital Advisors, LLC (Prestige), and D2W Capital Management, LLC (D2W), all of Charlotte, North Carolina, together to pay more than $4.3 million in restitution to defrauded pool and managed account clients and imposing civil monetary penalties of approximately $7.5 million. The court’s grant of default judgment against Prestige and D2W and a Consent Order of Permanent Injunction against Hunter stems from a CFTC enforcement action filed September 6, 2011, charging Defendants with fraudulent solicitation, misappropriation, and regulation violations (see CFTC Press Release 6110-11). The Orders also impose permanent trading and registration bans against the Defendants and prohibit them from violating the anti-fraud and other provisions of the Commodity Exchange Act (CEA) and CFTC Regulations, as charged.
The Honorable Max O. Cogburn, Jr. of the U.S. District Court for the Western District of North Carolina entered an Order of Default Judgment and Permanent Injunction against Defendants Prestige and D2W on January 25, 2013, imposing civil monetary penalties of approximately $6.9 million on Prestige and $280,000 on D2W. The court entered a subsequent Order on February 22, 2013, requiring Prestige to pay restitution of over $4.1 million and D2W to pay restitution of $85,250.
The court found that Prestige fraudulently solicited and accepted more than $4.7 million from multiple pool participants for investment in one or more commodity pools that traded among other things, commodities and futures contracts. The court specifically found that in soliciting pool participants, Prestige posted false trading returns on a website called BarclayHedge, where fund managers could post unverified historical returns for prospective clients to view, sent false trading results to at least one Prestige pool participant, and issued false account statements. Furthermore, according to the Orders, approximately $2.3 million of pool participant funds was misappropriated by Prestige, and D2W, a managed forex account service, sent false account statements to at least one client.
Subsequently, on June 13, 2013, Judge Cogburn entered a consent Order of Permanent Injunction settling charges stemming from the same violations of the CEA and CFTC Regulations against Hunter. The Order requires Hunter to pay approximately $85,000 in restitution to D2W’s clients, $40,000 in restitution to Prestige pool participants, and also imposes a $280,000 civil monetary penalty.
Hunter was indicted by the U.S. Attorney’s Office for the Western District of North Carolina (Charlotte office) for criminal activity related to the Prestige matter.
The CFTC thanks the British Columbia Securities Commission and the U.K. Financial Conduct Authority for their assistance.
CFTC Division of Enforcement staff members responsible for this case are Eugenia Vroustouris, Daniel Jordan, Michael Loconte, Erica Bodin, Rick Glaser, and Richard Wagner.
