July 11, 2017
Federal Court in Florida Orders Anthony J. Klatch II, Lindsey Heim, and their Company Assurance Capital Management, LLC to Pay More than $2.4 Million in Restitution and Civil Monetary Penalties for Commodity Pool Fraud and Misappropriation
The Court Also Ordered Klatch to Affirmatively Disclose His Violations of the Commodity Exchange Act and CFTC Regulations in Connection with All Future Speeches or Writings Related to Commodity Interests
In Related Criminal Actions, Klatch and Heim Pleaded Guilty in the U.S. District Court for the Middle District of Florida
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced that Judge Susan C. Bucklew of the U.S. District Court for the Middle District of Florida entered an Order of Final Judgment by Default against Defendants Anthony J. Klatch II, Lindsey Heim, and their company Assurance Capital Management, LLC (ACM) for defrauding pool participants in a commodity pool they operated, misappropriating pool participants’ funds, and other violations of the Commodity Exchange Act and CFTC Regulations.
The Order requires that Klatch, Lindsey Heim, and ACM jointly pay $459,613 in restitution and a $1,509,552 civil monetary penalty. The Order also requires that Klatch pay an additional $96,873 in restitution and a $335,456 civil monetary penalty for two additional fraudulent schemes he carried out.
The Order stems from a CFTC Complaint filed on January 26, 2017 (see CFTC Complaint and Press Release 7524-17, CFTC Charges Florida Residents Anthony J. Klatch II and Lindsey Heim, Along with Their Company Assurance Capital Management, LLC, with Fraud and Misappropriation).
The Order also imposes permanent trading and registration bans against Lindsey Heim and ACM. Klatch is already subject to a permanent trading and registration ban and an approximately $12.9 million restitution judgment entered by the U.S. District Court for the Southern District of New York (SDNY) following a 2011 CFTC action filed against him in connection with a Ponzi scheme he orchestrated between 2007 and 2011 (see CFTC Complaint and Press Release 6088-11, CFTC Charges Tampa Resident Anthony J. Klatch II and Four Other Defendants with Fraudulently Soliciting over $11.3 Million). The Order expands upon the SDNY’s injunctive relief by, among other things, banning Klatch from trading in commodity interests, as that term is defined in CFTC Regulation 1.3 (yy). The Court’s Order also requires that Klatch make the following disclosure in connection with any speech or writing concerning commodity interests:
I have violated the Commodity Exchange Act and CFTC Regulations. After being sued by the CFTC in federal courts in New York and Florida, I have been collectively ordered to pay $13,476,225 in restitution to victims of my illegal conduct. I have also been ordered to pay $1,845,008 in civil monetary penalties for my illegal conduct. In addition, I have been permanently enjoined from, among other things: 1) entering into any transactions involving commodity interests; 2) controlling or directing the trading for or on behalf of any other person or entity in any account involving commodity interests; or 3) soliciting, receiving, or accepting any funds from any person for the purpose of purchasing or selling any commodity interests. Case numbers for the CFTC actions against me are: U.S. District Court for the Southern District of New York, 11-cv-5191, and U.S. District Court for the Middle District of Florida, 17-cv-213.
Klatch, in connection with his prior Ponzi scheme, pleaded guilty and was sentenced to 60 months in prison on charges of securities fraud, wire fraud, money laundering, and conspiracy to defraud the United States.
The Court’s Findings
The Order finds that Klatch, upon his release from prison in 2014 for his prior Ponzi scheme, implemented a new series of investment schemes between April 2014 and December 2015. The first of these schemes began in June 2015 when Klatch and Lindsey Heim established ACM for the purpose of fraudulently soliciting investors in a commodity pool. The Order finds that Klatch fraudulently marketed ACM to at least some prospective and actual pool participants by using the pseudonym “Larry J. Heim” to hide his true identity and past wrongdoing. To some ACM investors, Klatch provided his real identity, but misrepresented or failed to disclose the nature and extent of the permanent injunction entered against him in the CFTC’s prior civil action. Defendants also made material misrepresentations to investors, including providing false account statements showing successful trading by ACM. In total, investors in ACM’s pool contributed $92,000, which was all lost through trading futures and options or misappropriated for personal use by Klatch and Lindsey Heim.
Additionally, in connection with an effort to solicit one prospective ACM investor, Klatch – misrepresenting himself as Larry J. Heim – offered to demonstrate successful trading in the prospective investor’s trading account as a means of attempting to convince him to make a $100,000 investment in ACM. Klatch’s trading in the prospective investor’s account caused $367,613 in losses over the course of three days.
The Order also finds that, in another scheme separate from ACM and Lindsey Heim, Klatch convinced an individual to provide $50,000 to an entity under Klatch’s control for the purpose of trading futures and options. In soliciting this individual, Klatch misrepresented or failed to disclose the nature and extent of the injunction entered against him in the CFTC’s prior civil action. All $50,000 was lost either through trading futures and options or through misappropriating the funds for personal use.
The Order further finds that, in yet another scheme, Klatch made fraudulent representations and omissions in order to gain control over and direct trading in various individual trading accounts. For at least one of these individuals, Klatch’s caused trading losses of $41,709 and caused this individual to pay Klatch over $5,164 in fees related to commodity trading advice.
Related Criminal Action
On April 19, 2017, Klatch pleaded guilty to one count of wire fraud in a related criminal action and is awaiting sentencing. On March 22, 2017, Lindsey Heim pleaded guilty to one count of obstruction of justice in a related criminal action and was sentenced to one year and one day in prison on June 21, 2017.
The CFTC cautions that orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
The CFTC thanks and acknowledges the assistance of the U.S. Attorney’s Office for the Middle District of Florida, the Federal Bureau of Investigation, and the Securities Commission of the Bahamas.
CFTC Division of Enforcement staff members responsible for this action are Rebecca Jelinek, Nicholas Sloey, Elsie Robinson, Peter Riggs, and Charles Marvine.
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CFTC’s Commodity Pool Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Commodity Pool Fraud Advisory, which warns customers about a type of fraud that involves individuals and firms, often unregistered, offering investments in commodity pools.
Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.
Last Updated: July 11, 2017