David M. Kogan and First Capital Futures Group Allegedly Defrauded 58 Customers of More Than $3 Million
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today charged David Michael Kogan and his company, First Capital Futures Group a/k/a and d/b/a First Capital Group (First Capital), both of Sherman Oaks, California, with operating a fraudulent commodity scheme involving 58 customers and causing more than $3 million in customer losses.
The complaint was filed on June 26, 2009, under seal in the U.S. District Court for the Western District of Missouri. On June 30, 2009, the Honorable Dean Whipple of the U.S. District Court entered an order freezing the assets of both First Capital and Kogan and all customer accounts they traded. The court also scheduled a preliminary injunction hearing in this matter for July 14, 2009.
Huobi DM Launches Real-Time Settlement for BTC FuturesGo to article >>
The CFTC complaint alleges that the defendants fraudulently solicited members of the public to trade options on commodity futures contracts by misrepresenting and failing to disclose material facts concerning, among other things, (1) the likelihood that a customer would realize large profits from trading options; (2) the risk involved in trading options; (3) the existence of certain options positions in customer accounts; and (4) the dismal performance record of First Capital customers trading options.
According to the complaint, Kogan and other First Capital brokers repeatedly told customers that they would make substantial amounts of money in a very short time by trading options. First Capital routinely failed to disclose adequately the risk of loss inherent in trading options.
The complaint specifically alleges that, despite mounting trading losses, Kogan, as well as other First Capital brokers, told customers that Kogan had “made millionaires out of several customers” and that many First Capital customers were making money. However, First Capital customers instead lost more than $3 million, of which more than $2.2 million was collected as commissions and fees.
The CFTC complaint seeks to enjoin defendants from violating commodity laws and from participating in any activity related to trading in any commodity, demands a return of funds for defrauded customers, repayment of ill-gotten gains, an award of civil monetary penalties, and other relief.
The following CFTC Division of Enforcement staff members are responsible for this case: Jenny Chapin, Jo Mettenburg, Jeff Le Riche, Michael Loconte, Rick Glaser, and Richard Wagner.