The allegations read: Commodity futures trading commission (commission), alleges that from at least january 1, 2017 to the present (the relevant period), dwight a. Foster, and k.e.l. Enterprises, inc. (kel), (collectively, defendants), engaged in a fraudulent scheme through which they solicited not less than $13.2 million from at least 45 members of the public to participate in a commodity pool operated by foster and kel, for the purpose of trading in commodity interests, including foreign currency (forex) pairs on a leveraged, margined or financed basis with participants who are not eligible contract participants (ecps) and forex futures contracts. Instead of trading pool participants' funds as promised, defendants misappropriated all of the pool participants' funds by depositing them directly into defendants' corporate bank accounts, rather than depositing the funds into an account carried in the name of the pool at a futures commission merchant (fcm) and/or a retail foreign exchange dealer (rfed). Defendants misappropriated, and continue to misappropriate, participants' funds to pay fosters' personal expenses, including, but not limited to: car payments, insurance, credit cards payments, and other expenses. Defendants used not less than $10.1 million of later-in-time participants' funds to pay earlier in-time participants purported profits and/or redemptions in the nature of a ponzi scheme. Defendants took steps to conceal their fraud by, among other things, sending pool participants false account statements which purported to show that defendants' pool consistently traded at a profit each month. While operating a business that was of the nature of a commodity pool, defendants used the internet, interstate wires, and other means or instrumentalities of interstate commerce, directly or indirectly, to employ a device, scheme, or artifice to defraud existing and prospective participants, and to engage in transactions, practices, or a course of business that operated as a fraud or deceit upon existing and prospective participants. Foster, individually and as the agent of kel, made, and continues to make, fraudulent omissions of material facts in solicitations to actual and prospective pool participants and in monthly account statements to actual participants, including but not limited to failing to disclose that: defendants never traded pool participant funds as promised; defendants did not open forex trading accounts in the name of the pool with any lawfully operating commodity exchange, or with any registered fcm or rfed; defendants misappropriated, and are continuing to misappropriate, participants' funds; the monthly statements defendants sent to participants showing purported monthly profits were false, created by foster, and not reflective of actual trading; and foster was unlawfully acting, and continues to unlawfully act, as an unregistered associated person (ap) of a cpo. Foster acted at all times, and continues to act, as an ap of a cpo without being registered with the commission. By this conduct, defendants have engaged, are engaging and/or are about to engage in acts and practices in violation of sections 2(c)(2)(c)(iii)(i)(cc), 4k(2), 4m(1), and 4o(1)(a)-(b) of the commodity exchange act, and commission regulations 4.20(a)(1), (b), and (c), 4.21-4.23, and 5.3(a)(2)(i) and (ii). The acts and omissions described herein have all been done by foster within the scope of his employment or office at kel during the relevant period. Foster was, and is, a controlling person of kel and did not act in good faith or knowingly induced kel's violations of the act and regulations described herein during the relevant period. Therefore, foster is liable for kel's violations of the act and regulations, pursuant to section 13(b) of the act. Unless restrained and enjoined by this court, defendants will likely continue to engage in acts and practices alleged in this complaint and similar acts and practices.
