CFTC brings fraud charges against SEI Equity Investments
David Seibert, doing business as SEI-Equity Investments, fraudulently solicited, accepted and pooled approximately $10 million from at least eight participants.
The United States Commodity Futures Trading Commission (CFTC) has taken action against David Seibert doing business as SEI-Equity Investments, also known as Seibert Equity Investments, and Great America Funding, LLC.
The CFTC complaint, seen by FinanceFeeds, was filed with the United States District Court for the Western District of Texas on September 10, 2020.
The CFTC complaint alleges that between at least March 2016 and April 2019 (“Relevant Period”), David Seibert and his companies fraudulently solicited, accepted and pooled approximately $10 million from at least eight participants. From March 2017 to April 2019, the defendants used the majority of those pooled funds to trade commodity interests, without disclosing that use to the participants, and lost $8,336,148 in participant funds in the trading account. In addition, Seibert misappropriated participant funds for his personal use.
In soliciting participants, the defendant claimed that the funds he was soliciting would be used to provide short-term secured loans in return for the promise of high interest from third-party borrowers who purportedly would use the loaned funds to make repairs to property before permanent financing could be secured. Seibert represented that he would find the lending opportunities, complete due diligence to determine if their borrower was qualified and the offered collateral would fully secure the loan, and handle the closing and servicing of the loans.
In reality, however, Seibert did not use the funds for short term real estate improvement loans as he had represented; rather, he misappropriated his participants’ funds for other purposes. Seibert used some pooled participant funds for his direct personal use and benefit. He also pooled and traded the participant funds in a commodity interest trading account opened under the name David Seibert.
Seibert failed to disclose to his participants that he used and lost $8,336,148 of their funds trading commodity interests in a commodity account during the Relevant Period. He also did not disclose that he used some of their funds for other personal expenses. The CFTC alleges that Seibert has engaged in violations of the Commodity Exchange Act. Specifically, Seibert has engaged, in violations of Section 4o(1)(A) and (B)of the Act, 7 U.S.C. §6o(1)(A) and (B) (2018) (fraud by a commodity pool operator (“CPO”)), and Section 4m(1) of the Act, 7 U.S.C. § 6m(1) (2018) (failure to register as a CPO).
In this case, the regulator seeks to enjoin the defendant’s unlawful acts and practices and to compel his compliance with the Act. The CFTC also seeks civil monetary penalties and remedial ancillary relief, including restitution to defrauded participants, disgorgement, pre- and post-judgment interest.
