Texas court orders broker to pay $9.3 million
FORT WORTH, Texas (Legal Newsline) - The U.S. Commodity Futures Trading Commission announced Monday it has obtained a permanent injunction against Robert Mihailovich, Sr. and Growth Capital Management.
The order from the U.S. District Court for the Northern District of Texas requires the defendants to make restitution to defrauded customers, disgorge ill-gotten gains and pay a civil monetary penalty totaling over $9.3 million. The defendants were accused of fraudulently soliciting more than $30 million from customers to trade commodity futures contracts and foreign currency (forex).
The order also imposes permanent trading and registration bans against the defendants. The court's order is dated June 26.
Mihailovich was convicted and incarcerated on federal wire fraud charges, served 27 months, and then allegedly took more than $30 million from approximately 93 customers to open managed trading accounts while on a three-year supervised release.
The federal court's order finds that during discovery Mihailovich engaged in a pattern of willfulness and bad faith. He also failed to attend a number of court-ordered hearings, repeatedly failed to abide by court orders, failed to communicate with the CFTC, failed to appear or respond to his scheduled deposition, and failed to respond to written discovery requests, according to the order.
Mihailovich and GCM jointly and severally must pay $3,475,112 in restitution, disgorge $389,006 in ill-gotten gains and pay a civil monetary penalty of $5,440,000.
The order also permanently prohibits the defendants from violating the Commodity Exchange Act and CFTC regulations, as charged, and from engaging in certain commodity-related activities, including personal trading and applying for registration or claiming exemption from registration with the CFTC.