Innovative Capital Management LLC. Case 12/19/2008
According to the U.S. Commodity Futures Trading Commission (”CFTC”), the CFTC filed on December 19, 2008 and settled charges of fraud, filing false documents, and misappropriation of customer funds against a registered commodity pool operator, Innovative Capital Management, LLC (Innovative), and its principal and sole owner, Yehuda Belsky (Belsky), both of Brooklyn, New York. The CFTC order requires Belsky and Innovative to pay, jointly and severally, a total of $1,250,000 in restitution to five pool participants and a $100,000 civil monetary penalty. The order also imposes permanent trading bans on Belsky and Innovative and permanently prohibits them from applying for registration with the CFTC.
The CFTC order, issued on December 19, 2008, finds that from approximately September 2006 through February 2008, Belsky and Innovative fraudulently obtained funds totaling $1,250,000 from five commodity pool participants. Instead of using the solicited funds to purchase commodity futures and/or options contracts—as represented in solicitation materials—Belsky and Innovative misappropriated at least $385,000 of those funds, created false commodity pool account statements misstating the net asset value and monthly rates of return of the pool and then delivered these fraudulent statements to pool participants.
The order also finds that, during a routine audit by the National Futures Association (NFA), Belsky and Innovative provided NFA with (1) fraudulent account statements purportedly prepared by the futures commission merchant where the pool’s account was maintained and (2) fraudulent bank statements that falsely inflated the amount of pool funds on deposit at that bank.