On Thursday, the Commodity Futures Trading Commission (CFTC) announced in a press release that the Central District of California entered a default order for a permanent injunction, monetary sanctions and equitable relief against Daniel Adam Hewko and Main & Prospect Capital, LLC.
According to the press release, the CFTC filed a lawsuit against the defendants on November 13, 2019, alleging fraud, misappropriation of investor funds and failing to register with the CFTC. The order states that in August 2014, the defendants began seeking investments into a pooled investment vehicle operated by MPC and marketed to prospective investors as the Global Opportunity Fund. Further, the CFTC states that Main & Prospect Capital transferred more than $1.1 million collected from the investors into a futures trading account.
The CFTC states that from the fourth quarter of 2015 through third quarter of 2018, the defendants provided false account statements to investors indicating growth while the fund was actually suffering losses. Additionally, the order found that the defendants did not use investor funds as they represented and instead misappropriated their funds for their own benefit.
Further, the CFTC states that Hewko stated to investors that he was the owner of Main & Prospect Capital and that he opened and controlled the futures trading account in the company’s name. However, the CFTC purports that neither Hewko nor Main & Prospect Capital ever registered with the CFTC as an associated person of a commodity pool operator or a commodity pool operator.
The court order requires the defendant to pay $1,906,395 in restitution to victims of the fraudulent scheme and $5.7 million civil monetary penalty. Additionally, the order permanitaly prohibits the defendant from further violations of CFTC regulations and the Commodity Exchange act and imposes a permanent registration and trading ban against them.
