The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against NOLA FX Capital, Meteor LLC, and Michael DePetrillo.
The CFTC complaint was submitted on October 25, 2024 at the Louisiana Eastern District Court.
From at least July 2017 and continuing through the present (the “Relevant Period”), Meteor, LLC, by and through Michael B. DePetrillo, NOLA FX Capital Management, LLC, by and through DePetrillo, and DePetrillo, individually, operated a fraudulent scheme in which Defendants solicited and accepted at least $7.6 million from at least 40 individuals.
Defendants represented to these individuals that their funds would be pooled and invested in NOLA FX Fund, LLC (“the Fund”) which would be used to trade retail forex.
At various times during the Relevant Period, DePetrillo further represented to certain of these individuals that either Meteor or NOLA FX Capital was the manager of the Fund. In at least one representation, however, DePetrillo identified “NOLA FX Capital,” not the Fund, as the pooled investment vehicle.
Instead of trading as promised, the defendants misappropriated pool funds. Defendants used these misappropriated pool funds to: (1) make payments to existing pool participants, in a manner akin to a Ponzi scheme; (2) pay DePetrillo’s personal expenses; and/or (3) conduct personal trading in DePetrillo’s personal trading accounts.
To conceal Defendants’ misappropriation, the defendants created and issued fictitious account statements in the name of the Fund and/or NOLA FX Capital. The fictitious account statements purported to show that (1) Defendants had traded forex using pool participant funds and (2) the Fund and/or NOLA FX Capital had achieved significant trading returns for pool participants, because of Defendants’ profitable forex trading.
In fact, defendants never deposited pool participant funds into a trading account belonging to the Fund or NOLA FX Capital, and Defendants never achieved the trading returns represented on the false account statements.
At least one of the pool participants was not an eligible contract participant (“ECPs”) pursuant to Section 1a(18)(A)(xi) of the Commodity Exchange Act (“Act”), 7 U.S.C. § 1a(18)(A)(xi).
Defendants also did not set up the forex pool in the manner required by the Regulations, did not receive pool participant funds in the name of the forex pool, and commingled pool participant funds with their own funds.
The CFTC alleges that the defendants have engaged in, are engaging in, or are about to engage in acts and practices in violation of Sections 2(c)(2)(C)(iii)(I)(cc), 4b(a)(2)(A)-(C), 4k(2), 4m(1), and 4o(1)(A)-(B) of the Act, 7 U.S.C. §§ 2(c)(2)(C)(iii)(I)(cc), 6b(a)(2)(A)-(C), 6k(2), 6m(1), and 6o(1)(A)–(B), and Commission Regulations (“Regulations”) 4.20(a)(1), (b)–(c), 5.2(b)(1)–(3), and 5.3(a)(2), 17 C.F.R. §§ 4.20(a)(1), (b)–(c), 5.2(b)(1)–(3), and 5.3(a)(2) (2024).
In connection with its solicitations on behalf of the Fund, and the operation of the pool, Meteor and/or NOLA FX Capital were required but failed to register with the Commission as a Commodity Pool Operator (“CPO”), and DePetrillo was required to register as an Associated Person (“AP”) of a CPO. From March 2019 to the present, NOLA FX Capital and DePetrillo similarly failed to register as a CPO and an AP of a CPO.
At all times during the Relevant Period, DePetrillo held and exercised direct and indirect control over Meteor and NOLA FX Capital, and either did not act in good faith, or knowingly induced Meteor’s and NOLA FX Capital’s violations, and is therefore liable pursuant to Section 13(b) of the Act, 7 U.S.C. § 13c(b), for Meteor’s and NOLA FX Capital’s actions in violation of the Act and Regulations.
At all times during the Relevant Period, DePetrillo’s acts on behalf of Meteor and/or NOLA FX Capital were committed within the scope of his employment, agency, or office with Meteor and/or NOLA FX Capital. Therefore, pursuant to Section 2(a)(1)(B) of the Act, 7 U.S.C. § 2(a)(1)(B), and Regulation 1.2, 17 C.F.R. § 1.2 (2024), Meteor and NOLA FX Capital are liable as principals for DePetrillo’s actions in violation of the Act and Regulations.
The Commission seeks civil monetary penalties, restitution, and remedial ancillary relief, including, but not limited to, trading and registration bans, disgorgement, rescission, pre- and post- judgment interest, and such other and further relief as the Court may deem necessary or appropriate.
