CHARLESTON (CN) – A South Carolina man bilked at least 20 people of more than $1 million in a Ponzi scheme, the Commodity Futures Trading Commission claims in Federal Court. The CFTC says Michael Derrick Peninger fraudulently solicited investors, misrepresented his record, and guaranteed profits by claiming his trading system virtually eliminated risk.
The CFTC says Peninger ran the scam as an officer of the Cooper River Group and an agent of CSA Trading Group, both in Mount Pleasant, S.C. He allegedly used investors’ money to pay for personal expenses and to support four other businesses.
Those businesses include Blooming Village Florist, Daniel Island Builders, Palmetto State Commodities, and the American Middle School Athletic Association, according to the complaint.
Peninger used new investors’ money to pay off old ones – a classic Ponzi scheme – the CFTC says.
Peninger once worked as a legitimate broker for Dean Witter Reynolds, Program Traders, and Palmetto State Commodities, the complaint states. It add that he invested only about $10,000 of the money he collected in this scheme, and lost all of it. He has not been registered as a broker with the CFTC since November 2002, about the time he established the Cooper River Group, the complaint states.
The six-count complaint includes two counts of fraud, two counts of failing to register as a commodity pool operator, failing to treat the pool as separate from his other business interests, and violating federal reporting requirements.
Peninger could not be reached for comment. The phones for CSA Trading Group Inc. and Cooper River Group have been disconnected.
In an earlier case, a married couple said they invested nearly $650,000 with Peninger and got about $60,000 back in scheduled payments. But the payments dried up in early 2007, and attorneys representing Peninger told them there was no money left with which to pay them, according to that filing.
The CFTC seeks restitution, fines and an injunction.