WASHINGTON, D.C. — The Commodity Futures Trading Commission today announced the U.S. District Court for the District of Minnesota issued an order of default judgment against Richard “Rick” Miller and his company, Flip 2 Futures Trading Company LLC, both based in Minnesota, and Punch Drunk Marketing LLC, a Wisconsin limited liability company, for their operation of a fraudulent futures trading scheme. 

The order requires Miller and F2F to pay a $900,000 civil monetary penalty and, jointly and severally with PDM, $364,000 in restitution to victims of the scheme. The order also requires PDM to pay a $750,000 civil monetary penalty and imposes permanent trading and registration bans against Miller and F2F and a permanent injunction prohibiting Miller and F2F from further violations of the Commodity Exchange Act and CFTC regulations, as charged. The order resolves the CFTC’s enforcement action against Miller, F2F, and PDM.  [See CFTC Press Release No. 8663-23.]

Case Background

 The order stems from a CFTC complaint filed Feb. 22, 2023, and finds from approximately July 2019 through November 2020, PDM solicited and accepted $400,000 from nine individuals to participate in a commodity pool for the purpose of trading futures contracts. PDM failed to provide pool participants with required disclosure documents and illegally collected their funds in accounts held in PDM’s name before transferring the funds to F2F and Miller for trading. PDM also misappropriated pool participants’ investment funds by failing to transfer all funds provided to PDM by pool participants for the purpose of futures trading to F2F and Miller for trading as provided in PDM’s agreements with pool participants and by failing to return to pool participants funds repaid by F2F. The order also finds PDM acted as a commodity pool operator without being registered with the CFTC as required.

The order further finds Miller made material misrepresentations about his futures trading performance and having other assets under management, to persuade PDM to transfer funds to F2F for the purpose of trading futures contracts. In fact, Miller did not trade as successfully as he claimed and did not have millions under management. Moreover, Miller and F2F misappropriated some of PDM’s funds by failing to transfer all of PDM’s funds to Miller’s trading account and failing to transfer to PDM funds withdrawn from Miller’s trading account. Miller and F2F also illegally collected funds from the pooled investment vehicle in F2F’s or Miller’s bank and trading accounts, failed to provide a required disclosure document to PDM, and failed to maintain required records. The order finds that by soliciting funds from and engaging in discretionary trading on behalf of the pool established by PDM, F2F acted as a commodity trading advisor and Miller acted as an associated person of a CTA without being registered with the CFTC as required.

Division of Enforcement staff responsible for this action are Dmitriy Vilenskiy, Julia Colarusso, Christine Ryall, and Paul G. Hayeck.