More than a year after the United States Commodity Futures Trading Commission (CFTC) charged Craig L. Clavin and his company Lighthouse Futures, Ltd with fraudulent solicitation of commodity pool participants, misappropriation of pool funds, commingling pool funds with other funds, and failing to register with the CFTC, the case is getting settled.
On October 9, 2021, the CFTC filed a settlement agreement in the New York Eastern District Court. The document, seen by FX News Group, indicates that Clavin and his company agree to pay a fine and restitution in order to settle the charges.
The defendants agree to pay restitution of $345,000. They also agree to pay a civil monetary penalty of $25,000.
The defendants are also permanently restrained, enjoined and prohibited, while acting as a commodity pool operator, from commingling the property of any pool that it operates or that it intends to operate with the property of any other person in violation of Regulation 4.20(c), 17 C.F.R. § 4.20(c) (2020).
Clavin is also permanently restrained, enjoined and prohibited from being associated with a commodity pool operator as a partner, officer, employee, consultant, or agent, in any capacity that involves the solicitation of funds, securities or property for the participation in a commodity pool or the supervision of any person or persons so engaged without being registered with the CFTC as an associated person of such commodity pool operator, in violation of Section 4k(2) of the Act, 7 U.S.C. § 6k(2) (2018), and Regulation 3.12(a), 17 C.F.R. § 3.12(a) (2020).
Lighthouse is also permanently restrained, enjoined and prohibited from making use of the mails or any means or instrumentality of interstate commerce, unless registered under the Act, in connection with its business as a commodity pool operator.
Let’s recall that, according to the complaint, from at least 2015 until 2019, the defendants fraudulently solicited and misappropriated at least $345,000 from U.S. residents for pooled investments in commodity futures contracts. The defendants, however, failed to trade the vast majority of pool participants’ funds as promised, misappropriated most of their money, and concealed their fraud by sending false performance reports and account statements to pool participants.
As alleged in the complaint, in order to entice prospective pool participants, the defendants falsely represented that they were running a successful commodity pool, that the pool would participate in the commodities markets, that the pool was exempt from registration with the CFTC, and that upon request pool participants could withdraw the funds they had deposited and their purported profits at the end of any given year.
As further alleged, the defendants used pool funds to pay Clavin’s personal expenses, including items such as travel, meals, the purchase of patio furniture, and debit card purchases. The remaining funds were used to pay purported profits to some pool participants in the manner of a Ponzi scheme.
The complaint also alleges that in soliciting and receiving funds for a pooled investment vehicle for the purpose of trading commodity futures contracts, Lighthouse illegally operated as an unregistered commodity pool operator and Clavin acted as an unregistered associated person of Lighthouse, which Lighthouse unlawfully allowed Clavin to do.