August 5, 2011
CFTC Charges Tampa Resident Anthony J. Klatch II and Four Other Defendants with Fraudulently Soliciting over $11.3 Million
Defendants allegedly misappropriated more than $2.1 million in commodity pool scheme; federal court freezes defendants’ assets
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) obtained an emergency federal court order freezing the assets of defendants Anthony J. Klatch II of Tampa, Fla., and American Private Equity, LLC (APE LLC) of Los Angeles, Calif., as well as three Commodity Pool Operators (CPOs) controlled by Klatch, ARM Capital Management, LLC, (ARMCM) and TASK Capital Management, LLC (TASKCM), both of New York, N.Y., and Vigilant Capital Management, LLC (VCM) of Center Valley, Pa. The order also prohibits the destruction of books and records, grants the CFTC immediate access to such documents, and appoints a temporary receiver.
The order stems from a CFTC enforcement action originally filed under seal on July 27, 2011,in the U.S. District Court for the Southern District of New York, charging the defendants with fraudulently soliciting, collectively, at least 62 individuals to invest at least $11.3 million in three commodity pools that Klatch controlled. The pools are ARM Capital Partners, LP (ARM Pool), TASK Capital Partners, LP (TASK Pool), and Vigilant Capital Partners, LP (Vigilant Pool). The defendants are also charged with collectively misappropriating over $2.1 million from the pools.
Klatch and APE LLC, through its now-deceased principal, non-party, Timothy M. Sullivan of Los Angeles, Calif., allegedly told prospective pool participants that Klatch had an excellent track record trading for the pools and a prior hedge fund that he managed. Klatch and APE LLC also allegedly gave pool participants investor presentations claiming that the pools had risk management policies to prevent losses of more than a pre-determined percentage of participants’ investments. Klatch and APE LLC also allegedly told pool participants of one pool that it had successfully traded since 1997, when Klatch would have been in middle school.
Instead, Klatch’s trading allegedly resulted in massive losses of over $8.6 million for the pools. Moreover, defendants allegedly took over $2.5 million from the pools in management fees and expenses -- far more than the fees disclosed to pool participants in their subscription agreements. According to the complaint, defendants also misappropriated over $2.1 million from the pools.
Defendants ordered to appear at court hearing
U.S. District Court Judge George B. Daniels ordered defendants to appear in court on August 4, 2011 for a preliminary injunction hearing. The hearing was subsequently rescheduled for August 17, 2011.
In its continuing litigation, the CFTC seeks a return of ill-gotten gains, restitution to defrauded customers, civil monetary penalties and permanent injunctions against further violations of the federal commodities laws and further trading.
The CFTC appreciates the cooperation in this matter of the U.S. Attorney’s Office for the Southern District of Alabama, which filed an indictment of Klatch on July 27, 2011, the U.S. Marshals Service, and the Federal Bureau of Investigation (FBI).
The CFTC Division of Enforcement staff responsible for this action are Andrew Ridenour, Brian Walsh, Jessica Harris, Erica Bodin, Kenneth McCracken, Rick Glaser and Richard Wagner.
Last Updated: August 5, 2011