On March 19, the Commodity Future Trading Commission (CFTC) Whistleblower Office posted a Notice of Covered Action (NCA) for a case against an unregistered Florida commodity pool operator. The NCA signals that the CFTC is now accepting whistleblower award claims for the case.
On March 15, the CFTC announced a consent order for a permanent injunction, restitution, and civil monetary penalty against Empires Consulting Corp. totaling over $64 million for offering fraudulent commodity pools under the name EmpiresX.
According to the CFTC, starting around September of 2020, Empires Consulting used the company’s website and social media accounts to solicit individuals, referred to as “pool participants,” to trade commodities futures, options, and digital assets with Empires X. This would allegedly allow them to participate through a private investment pool managed by the company or their automated bot.
The CFTC order found that Empires Consulting fraudulently obtained around $100 million from pool participants by knowingly making false claims to prospective participants regarding its registration status, the use of funds, sizes of pools, and participant returns. They also allegedly commingled and misappropriated participant funds and stopped honoring withdrawal requests.
The CFTC’s litigation against the individual defendants continues.
The Securities Exchange Commission filed a parallel action for related conduct on the same day the CFTC initiated its enforcement action, but resolved its claims against Empire Consulting in 2023. The Department of Justice also filed a parallel criminal matter against a few employees and officers
The CFTC has several customer protection Fraud Advisories and Articles, including the Commodity Pool Fraud Advisory, to provide information about fraud involving unregistered individuals and firms offering investments in commodity pools.
The CFTC strongly urges members of the public to verify a company’s registration with the Commission before committing funds. If unregistered, a customer should be cautious to engage. A company’s registration status can be found using NFA BASIC.
The CFTC Whistleblower Program offers monetary incentives and anonymity protections for individuals to provide tips about possible violations of the Commodity Exchange Act. If their information leads to a successful enforcement action, the whistleblower may be entitled to an award ranging from 10-30% of the recovered funds.
The CFTC Whistleblower Program is facing a financial crisis: the fund used to pay awards and finance the program is facing depletion.
Introduced in July by a bipartisan group of senators, the CFTC Whistleblower Fund Improvement Act of 2023 addresses the funding crisis undermining the CFTC Whistleblower Program. “The bipartisan Whistleblower Fund Improvement Act will ensure that the CFTC whistleblower program will not be a victim of its own success and can continue to help root out fraud in the U.S. derivatives markets,” wrote whistleblower attorney Stephen M. Kohn in a previous article calling for the passage of the bill.
Kohn sees the passage of the CFTC Whistleblower Fund Improvement Act as one of the seven most urgently needed whistleblower reforms. National Whistleblower Center (NWC), where Kohn serves as Chairman of the Board, has issued an Action Alert calling on Congress to pass the bill.
Join NWC in Taking Action:
Save the CFTC Whistleblower Program
Further Reading:
Notice of Covered Action No. 2024-005 – Empires Consulting Corp.
Leading Whistleblower Attorney: Congress Must Pass CFTC Whistleblower Funding Law