CFTC Charges Company’s President and His Father With $2.3m Fraud
14 November 2019: The US Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against Main & Prospect Capital LLC and two associated men, Daniel Adam Hewko and his father Daniel Hewko, after they were alleged to have carried out fraudulent activities.
The complaint alleges that the two defendants engaged in a scheme in which they duped investors into believing that they would trade various financial instruments, but instead misappropriated fund assets for their own benefit. Moreover, Daniel Adam Hewko allegedly created false account statements that showed that the funds had been profitable, when they had not – or had not been invested. When investors eventually attempted to withdraw their funds, Daniel Hewko informed them that they were unable to withdraw money because fund assets were a “trade” or because there was an ongoing CFTC investigation.
The fraudulent scheme appears to have been ongoing since August 2014, and has seen the company and two defendants glean illicit profits of around $2.3m. The CFTC has said that Main & Prospect Capital made further errors insofar as it violated Commission regulations by failing to operate its commodity pool as a separate legal entity, and failed to register with the CFTC as a commodity pool operator.
CFTC is seeking full restitution for the defrauded investors, disgorgement of illicit profits, civil monetary penalties, permanent registration and training bans and a permanent injunction against further violations of the Commodity Exchange Act.
This case shows, once again, that sometimes even the people at the top can’t be trusted: Daniel Adam Hewko was the firm’s president.