WASHINGTON (Legal Newsline) - Brad Demuzio and his company, Demuzio Capital Management, both of Chubbuck, Idaho, has been sentenced to prison after being charged by the U.S. Commodity Futures Trading Commission with operating a fraudulent $1.8 million commodity pool and foreign currency Ponzi scheme.
On Nov. 1, Judge B. Lynn Winmill of the U.S. District Court for the District of Idaho entered a consent order for permanent injunction against Demuzio and an order of default judgment against his company, DCM.
The consent orders found that the defendants violated the anti-fraud provisions of the Commodity Exchange Act and failed to register with the CFTC as Commodity Pool Operators.
Permanent trading and registration bans were entered against Demuzio and DCM. A total of $805,273 must be paid jointly in restitution. In civil monetary penalties, Demuzio is required to pay $1 million and DCM must pay $2,415,819.
Through DCM, Demuzio allegedly solicited and accepted about $1.8 million from at least 16 investors to trade through a pooled investment vehicle from at least June 18, 2008, through November 2011.
According to the final order, the defendants misappropriated investor funds to pay Demuzio's personal expenses. Emails were also sent that falsely represented to investors that their principal remained and earning profits, the CFTC said. Even though the defendant was not registered as a CPO, he acted as such, according to the final order findings.
Demuzio pleaded guilty to one count of wire fraud in a related criminal proceeding based on substantially the same facts. Demuzio was sentenced to 35 to 46 months in prison on Nov. 5.
Demuzio sentenced for Ponzi scheme
