CFTC goes after fraudulent scheme Turning Point Investments

Maria Nikolova

William S. Evans III, doing business as Turning Point Investments, has been fraudulently soliciting and accepting funds to trade commodity interests.

The United States Commodity Futures Trading Commission (CFTC) has launched an action against William S. Evans III, doing business as Turning Point Investments. The regulator filed a complaint with the Kentucky Eastern District Court on May 28, 2020.

The complaint alleges that, since at least September 2018, Evans, individually and doing business as Turning Point Investments, has been fraudulently soliciting and accepting funds from the public to trade commodity interests and has been misappropriating the funds.

Turning Point Investments is a business name that Evans has used at least since 2018, including in bank account opening documents. However, it does not appear that Evans formally incorporated Turning Point Investments or formed it as a limited liability company. Turning Point Investments has never been registered with the CFTC in any capacity.

According to the CFTC, to date Evans has accepted at least $10 million.

He allegedly solicited participants and prospective participants with numerous misrepresentations, including: that their funds would be used to trade commodity futures, when in fact the funds were misappropriated and used to pay participants in a Ponzi-like scheme or for Evans and his wife, Frances Evans; his fee structure; and the likelihood of profits and the risk of loss.

The CFTC says that by engaging in this conduct, Evans has violated the Commodity Exchange Act , 7 U.S.C. §§ 1-26 (2018). Specifically, Evans has engaged in violations of Section 4b(a)(1)(A) and (C) of the Act, 7 U.S.C. § 6b(a)(1)(A), (C) (2018), which makes it unlawful to cheat or defraud or attempt to cheat or defraud another person or to willfully deceive or attempt to deceive another person in connection with commodity futures and Section 4o(1)(A) and (B), 7 U.S.C. § 6o(1)(A),(B) (2018), which makes it unlawful for any commodity pool operator (CPO) to employ any device, scheme, or artifice to defraud any client or participant or prospective client or participant or to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or participant or prospective client or participant.

Also, by engaging in a business that is of the nature of a commodity pool and soliciting and accepting funds for the purpose of trading in commodity interests, Evans acted as a CPO without being registered with the CFTC, thereby escaping regulatory scrutiny into his activities and violating Section 4m(1) of the Act, 7 U.S.C. § 6m(1) (2018).

The CFTC seeks to enjoin Evans’ unlawful acts and practices and to compel his compliance with the Act. The regulator also seeks civil monetary penalties and remedial ancillary relief, including restitution to defrauded participants, disgorgement, pre- and post-judgment interest.

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