The Commodity Futures Trading Commission (CFTC) today announced that the U.S. District Court for the Eastern District of New York entered a consent order finding Harris Bruce Landgarten, a resident of Old Brookville, New York, defrauded pool participants.

He also commingled pool funds with his own funds in violation of the Commodity Exchange Act (CEA) and CFTC regulations.

The order requires Landgarten to pay $91,000 in restitution to defrauded pool participants and imposes a $91,000 civil monetary penalty along with permanent trading and registration bans as well as a permanent injunction against further violations of the CEA and CFTC regulations, as charged.

The order finds that from July 2014 through March 2017 (relevant period), Landgarten operated the Tradeanedge Members Fund (TMF) commodity pool, consisting of three pool participants who invested $150,000 total. Landgarten incurred purported pool expenses and subsequently withdrew money from the TMF account to reimburse himself for such expenses.

Rather than disclose he was incurring purported expenses and using pool participants’ funds to reimburse himself for these expenses, Landgarten instead misrepresented to the pool participants – on statements he prepared and provided – that their investments were worth an amount that included the funds he had already spent.

The order also finds that, on numerous occasions, Landgarten withdrew more money from TMF, in the form of cash withdrawals and electronic transfers to himself, than he had incurred in claimed expenses, and thus commingled pool funds with his own funds. At times during the relevant period, the amount Landgarten withdrew in excess of claimed expenses and commingled with non-pool funds exceeded $10,000.

The CFTC cautions that orders requiring payment of funds to victims may not result in the recovery of any money lost because wrongdoers may not have sufficient funds or assets.