Purvesh Mankad and broker CTAX ordered to pay $2.3m after CFTC lawsuit
The CFTC found that CTAX’s fraud led to more than $1.9 million in losses among pool participants.
The U.S. District Court for the District of Arizona has ordered Purvesh Mankad and his affiliated entities CTAX Series, LLC, a CFTC-registered commodity pool operator, and CTAX Partners, LLC, a CFTC-registered introducing broker, to pay $1,631,072.29 in restitution to victims and to pay a $727,588.91 civil monetary penalty following CFTC charges of fraudulent solicitation, misappropriation of pool participant funds, and false statements to the NFA regarding the fraud.
According to the CFTC complaint filed on October 8, 2021, which the court agreed, from July 25, 2014 to March 22, 2019, Mankad and CTAX Series:
(1) represented to pool participants that only experienced commodity trading advisors (CTAs) would trade funds in the CTAX pool, when in reality Mankad, who was not a CTA and had limited, unsuccessful experience trading futures, engaged in much and eventually all trading in the CTAX pool;
(2) misrepresented and omitted material facts regarding brokerage commissions that would be charged to the CTAX pool, when in fact Mankad and CTAX Partners misappropriated pool funds by extracting excessive commissions triggered by Mankad’s own unauthorized trading;
(3) beginning in July 2018, recklessly traded the CTAX pool’s assets in a manner that resulted in a loss of approximately 89 percent of the CTAX pool’s assets, resulting in significant losses to pool participants;
(4) concealed those losses from pool participants by intentionally delaying the provision of monthly account statements to pool participants;
(5) submitted false emails to the NFA, in connection with an NFA audit of CTAX Series and CTAX Partners, to make it appear that the defendants provided timely account statements to all pool participants. As a result of this conduct, pool participants lost more than $1.9 million.
Paul Ohanian, an SEC-registered investment advisor and his advisory firm Scottsdale Wealth Planning, Inc., were also charged for intentionally or recklessly omitting material facts from communications with their clients who were pool participants contributing funds to the CTAX pool and for failing to register with the CFTC as CTAs.
Paul Ohanian and Scottsdale Wealth were ordered to pay $338,000 in restitution and a $169,000 civil monetary penalty, among other things.
CFTC enforcement actions that follow through with significant help from whistleblowers ensure they are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.