BROOKLYN (CN) – A commodities trader lured a dozen of his “then-wife’s friends and family” into investing $300,000 each in a Ponzi scheme, the Commodity Futures Trading Commission claims. Jeffrey Shalhoub promised the money would go into a “commodity pool to trade on-exchange commodity futures contracts,” but stuck a lot of it into his own accounts, the CFTC says.
After investors wired money to Shalhoub’s company, The 9 Group, he sent a lot of it along into his own account, Jeff Shalhoub Investments, according to the federal complaint.
Shalhoub promised “pool participants would receive and did receive profit returns ranging from 2.5 to 9 percent per week, i.e., monthly returns ranging from 10 to 36 percent,” the CFTC says. “In fact, the pool’s futures trading resulted in substantial losses and any purported ‘profits’ paid to pool participants by defendants came from existing participants’ original principal and/or from money invested by subsequent pool participants. Thus, defendants operated a Ponzi scheme.
“To conceal and perpetuate the fraud, defendants provided pool participants with false account statements misrepresenting the earnings in their accounts, i.e., that their accounts were increasing by as much as 5.2 percent per week,” the commission says.
Shalhoub misappropriated at least $154,500, which he used to buy “computer equipment, golfing equipment, clothing, car payments on a Land Rover, and to pay a $3,500 tab at a Manhattan restaurant,” according to the complaint.
He also gambled and helped out his family with the ill-gotten gains, the commission says. The CFTC seeks disgorgement, rescission, penalties for fraud and an injunction