The US Commodity Futures Trading Commission on Tuesday announced a final judgement order issued by the US District Court for the Middle District of Florida to settle fraud charges against two commodities pool operators who were charged with operating a fraudulent scheme that took more than $500,000 from investors to trade futures contracts.
Trading of the pool funds by defendants Anthony J. Klatch, Lindsey Heim, and their company Assurance Capital Management (ACM), was never profitable or legal, according to the CFTC complaint.
The order requires defendants to pay $459,613 in restitution and a $1,509,552 civil monetary penalty. The order also requires Klatch to pay an additional $96,873 in restitution and a $335,456 civil monetary penalty for his involvement in two additional fraudulent schemes.
Upon his release from prison in 2014 through to at least December 2015, Klatch used his company ACM, acting together with Lindsey Heim, to defraud 11 investors through 3 separate fraudulent schemes that collectively caused investors losses of more than $556,000.
The scheme wasn’t Klatch’s first fraudulent fund. Indeed, from 2007-2011, Klatch orchestrated a massive Ponzi scheme that duped eight investors out of $2.3 million in the TASK hedge fund. In addition to his involvement in the TASK scheme, Klatch was also involved in similar fraudulent investment schemes involving American Private Equities, LLC, ARM Capital Management, LLC, and Vigilant Capital Management, LLC.
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A recidivist offender
The Tampa man’s legal problems go beyond that. In 2012, the US District Court for Alabama sentenced Klatch to 60 months in prison on charges of securities fraud and conspiracy to defraud investors in connection with a Ponzi scheme that saw Klatch soliciting $13 million from 62 people from 2007 through 2009.
Even before he was released, Klatch began planning new investment frauds, which he implemented shortly after his release. During the relevant period, Klatch and Lindsey Heim established a commodity pool operated by ACM which traded commodity futures contracts and options on futures among other instruments, the complaint said.
Klatch fraudulently marketed ACM by using the pseudonym ‘Larry J. Heim’ in phone calls, email correspondence, and social media interactions with pool participants in order to hide his true identity and past wrongdoing.
In their solicitations of pool participants, defendants marketed ACM as an established “investment vehicle” and claimed that it had over $18 million under management. Klatch further claimed that ACM had been in operation since July 2013.
To cover up their fraud, the defendants allegedly provided fabricated account statements which claimed to pool participants that ACM generated investment returns of 17.7% in 2013, 64.3% in 2014, and 19.9% in 2015. In reality, the majority of ACM’s trading activity took place during a 3-month period in 2015 and their overall trading showed consistent losses, despite the rosy picture they painted.