March 22, 2011

CFTC Sanctions Hernando Chovil of McLean, Virginia, for Fraud in Connection with Operating a Commodity Pool

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today filed and simultaneously settled charges that Hernando Chovil of McLean, Va., committed fraud in connection with operating a commodity pool. Chovil has never been registered with the CFTC.

The CFTC order, entered on March 22, 2011, finds that in or about August and September 2008, Chovil fraudulently solicited at least seven individuals he knew as acquaintances and from business dealings to trade commodity futures and options through a commodity pool. The order finds that Chovil failed to establish and operate the pool as a separate legal entity as required by CFTC regulations, commingled pool participants’ funds with his personal funds and sustained consistent trading losses, eventually losing all of the pool participants’ funds. To conceal his trading losses, the order finds that Chovil told one participant that the account had made a small profit and told another participant that there was “no problem” with the account, that he was “doing okay” and that “we’re going to make money.”

Eventually, Chovil’s participants asked for their principal back, and Chovil admitted that he had lost their money. Chovil paid back some, but not all, of the pool participants’ funds, the order also finds.

The CFTC order requires Chovil to pay a $10,000 civil monetary penalty and restitution to defrauded pool participants totaling $7,345. The order also permanently bars Chovil from engaging in any commodity-related trading activities, including trading and registering with the CFTC, and requires him to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations.

CFTC Division of Enforcement staff members responsible for this case are Alan Edelman, James H. Holl, III, Gretchen L. Lowe and Vincent A. McGonagle.

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Last Updated: March 22, 2011