Tate Street’s Leonard J. Cipolla ordered to repay $5m to scammed investors
In a separate, parallel criminal action, Mr. Cipolla pleaded guilty to mail fraud and acting as an unregistered commodity pool operator in connection with the scheme for which he was sentenced to 121 months in federal prison and ordered to pay restitution to victims.
The U.S. District Court for the Eastern District of Virginia has ordered Leonard J. Cipolla to pay restitution of $5,102,283.51 and imposed permanent trading and registration bans for its unlawful operation of Tate Street.
Judge John A. Gibney, Jr. entered a Consent Order for Permanent Injunction, Restitution, and Ancillary Equitable Relief against the defendant for having fraudulently solicited individuals to place funds in a commodity pool to trade futures and options while misappropriating more than $5 million of the money he was given to trade.
The order resolves a CFTC action against Mr. Cipolla filed in the Eastern District of Virginia on September 19, 2019, but litigation against Cipolla’s company, Tate Street Trading, Inc., continues.
According to the order, and admitted by Cipolla, from June 2009 through April 2019, the defendant fraudulently accepted and received approximately $7,096,303 from pool participants in connection with futures and options pooled trading with its firm Tate Street.
He also misappropriated more than $2.5 million for business expenses or personal use and made more than $3 million in Ponzi-like payments to pool participants.
From the more than $7 million received from pool participants, he transferred approximately $1,462,834 into Tate Street’s trading accounts.
His actual trading between June 2009 and April 2019 was profitable in only two years and resulted in cumulative net losses of approximately $1,462,305, but the statements he provided to pool participants did not accurately reflect their trading results.
In a separate, parallel criminal action, Mr. Cipolla pleaded guilty to mail fraud and acting as an unregistered commodity pool operator in connection with the scheme for which he was sentenced to 121 months in federal prison and ordered to pay restitution to victims.
The CFTC reminds customers and other individuals they can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement.
Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the Commodity Exchange Act.
All too frequently, the DoJ finds a number of trading firm operators guilty of Ponzi schemes as well as other financial crimes.
In April, a court in New Mexico ordered Douglas Lien to pay more than $10.3 million in monetary sanctions and relief for a futures trading fraud that lasted nearly 20 years.
In a classic Ponzi scheme, Mr. Lien misappropriated client money intended for futures trading and issued false account statements to conceal his fraud. He solicited more than $14.2 million from 45 individuals to manage their trading in commodity futures, specifically U.S. Treasury Bond futures.
He used client money to pay for the false trading profits he declared and kept more than $3.5 million for so-called “management fees”.
