Alabama company must pay $1.1M for commodity pool fraudPosted On: Apr. 7, 2021 2:40 PM CST
The Commodity Futures Trading Commission said Wednesday a federal district court has entered a default judgment of more than $1.1 million against an Alabama company and its owner for fraud.
The CFTC said last week’s order by the U.S. District Court in Huntsville, Alabama, requires Muscle Shoals, Alabama-based Negus Capital Inc., which is owned by Aaron B. Butler, to pay $294,545 in restitution to defrauded customers and an $883,635 monetary penalty. The order also permanently enjoined NCI from trading in any CFTC-regulated markets, among other provisions.
The CFTC said the order stems from a 2019 enforcement action that charged Mr. Butler and NCI with fraudulent solicitation, misappropriation and registration violations.
The CFTC’s statement said the court had previously issued a permanent injunction against Mr. Butler that required him to pay a combined $755,000 in restitution and civil monetary penalty for violating the Commodity Exchange Act and CFTC regulations.
The order says that between March 2017 and February 2018, through Mr. Butler, the company unlawfully solicited and accepted $294,545 from 70 members of the public to trade binary option contracts on the North American Derivatives Exchange, defrauded those customers and operated as an unregistered commodity pool operator.
Binary options are options where the customer either receives payout or loses their entire investment in the trade.
It said rather than trade customer funds as promised, NCI misappropriated most, if not all the funds for Mr. Butler’s personal benefit, including spending tens of thousands of dollars on jewelry, purchased at Apple stores, and Toys “R” Us gift cards.
Contact information on Mr. Butler was not available.