August 4, 2016

Federal Court Orders Georgia Resident Hendrik A. Van Beuningen and His Company, DeBrink Trading Fund I, LLC, to Pay $910,000 in Sanctions to Settle CFTC Charges of Fraud, Misappropriation, and Registration Violations in Connection with Their Commodity Pool

Defendants Fraudulently Solicited at Least $505,000 from Pool Participants and Fabricated Account Statements to Conceal Their Fraud

Washington, DC -- The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court Consent Order imposing a permanent injunction against Defendants Hendrik A. Van Beuningen and his company, DeBrink Trading Fund I, LLC, and requiring them to pay a $430,000 civil monetary penalty and restitution of $480,000 to defrauded pool participants.

The Court’s Order against the Defendants finds that they violated anti-fraud provisions of the Commodity Exchange Act (CEA), misappropriated pool participants’ funds, and committed registration violations.  The Consent Order also imposes permanent trading and registration bans on the Defendants and prohibits them from further violations of the CEA and CFTC Regulations, as charged.

The Order, entered on August 1, 2016, by U.S. District Court Judge Timothy C. Batten, Sr. of the U.S. District Court for the Northern District of Georgia, arises from a CFTC enforcement action filed against the Defendants under seal on March 28, 2016 (see CFTC Complaint, Asset Freeze Order, and Press Release 7350-16).

The Order finds that, between February 2014 and January 2016, the Defendants solicited and received at least $505,000 from at least five pool participants for the purported purpose of trading foreign currency, “bond,” oil, and gold futures contracts. Defendants failed to operate the pool as a legal entity separate from that of DeBrink, and participants’ funds were received in a DeBrink bank account, rather than in an account in the name of the pool. The Order further finds that the Defendants comingled pool funds with non-pool funds.

Misappropriation of Pool Participants’ Funds and Trading Losses

According to the Order, the Defendants either misappropriated or lost the pool funds, yet continued to represent that the pool’s trading was profitable. Of the $365,000 received from pool participants between February 2014 and May 2015, the Defendants transferred only $228,405 to a Futures Commission Merchant (FCM) account. The Order further finds that, as of September 30, 2015, the Defendants had lost nearly all of the funds transferred to the FCM through unprofitable trading, with only $7,632 of the original $228,405 remaining. Defendants received an additional $40,000 from a pool participant in November 2015 and $100,000 from another pool participant in January 2016; these funds were misappropriated and never transferred to a pool FCM trading account, the Order finds.

False Trading Results and Returns

However, in October 2015, the Defendants’ website falsely claimed the pool had a 19.41% return for 2014 and a 31.77% cumulative return through September 2015. In reality, the Defendants had experienced cumulative trading losses since the pool’s inception and provided false information about the pool’s trading results knowingly or with reckless disregard for the truth, according to the Order. Furthermore, as recently as March 2016, the Defendants falsely provided participants with online account statements that claimed the five pool participants were experiencing an average 37.47% return on their $505,000 combined investment, while fabricating FCM account statements to cover up their trading losses, per the Order.

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 the National Futures Association, the U.S. Attorney’s Office for the Northern District of Georgia, and the Brookhaven Police Department for their assistance.

CFTC Division of Enforcement staff members responsible for this case are Jenny Chapin, Lauren Fulks, Mary Lutz, Joyce Brandt, Jeff Le Riche, and Charles D. Marvine, as well as Jeremy Christianson and Sarah Wood from the CFTC’s Office of Data and Technology.  

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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. 

Media Contact
Dennis Holden
202-418-5088
 

Last Updated: August 4, 2016