The Commodity Futures Trading Commission (CFTC) today announced the U.S. District Court for the District of Arizona entered a consent order, imposing monetary sanctions against Purvesh Mankad and his affiliated entities CTAX Series, LLC, a CFTC-registered commodity pool operator, and CTAX Partners, LLC, a CFTC-registered introducing broker.

The order resolves a CFTC action filed in October 2021 and finds the defendants liable for fraudulent solicitation, misappropriation of pool participant funds, and making false statements to the National Futures Association (NFA) regarding the fraud.

The order requires the defendants to pay $1,631,072.29 in restitution to victims and to pay a $727,588.91 civil monetary penalty. The court also permanently prohibited the defendants from further violations of the Commodity Exchange Act (CEA), as charged, and imposed permanent registration and trading bans.

The CFTC charged the defendants in connection with the CTAX Series 1, LLC commodity pool (CTAX pool). The complaint alleged, and the court found, that during the relevant period from approximately July 25, 2014 to March 22, 2019, Mankad and CTAX Series

1. represented to pool participants that only experienced commodity trading advisors (CTAs) would trade funds in the CTAX pool, when in reality Mankad, who was not a CTA and had limited, unsuccessful experience trading futures, engaged in much and eventually all trading in the CTAX pool;

2. misrepresented and omitted material facts regarding brokerage commissions that would be charged to the CTAX pool, when in fact Mankad and CTAX Partners misappropriated pool funds by extracting excessive commissions triggered by Mankad’s own unauthorized trading;

3. beginning in July 2018, recklessly traded the CTAX pool’s assets in a manner that resulted in a loss of approximately 89 percent of the CTAX pool’s assets, resulting in significant losses to pool participants;

4. concealed those losses from pool participants by intentionally delaying the provision of monthly account statements to pool participants; and

5. submitted false emails to the NFA, in connection with an NFA audit of CTAX Series and CTAX Partners, to make it appear that the defendants provided timely account statements to all pool participants. As a result of this conduct, pool participants lost more than $1.9 million.

The CFTC previously issued an order simultaneously filing and settling related charges against Paul Ohanian, an SEC-registered investment advisor based in Scottsdale, Arizona, and his advisory firm Scottsdale Wealth Planning, Inc., for intentionally or recklessly omitting material facts from communications with their clients who were pool participants contributing funds to the CTAX pool and for failing to register with the CFTC as CTAs.

That order required Ohanian and Scottsdale Wealth to pay $338,000 in restitution and a $169,000 civil monetary penalty, among other things.