The US financial regulator, the Commodity Futures Trading Commission (CFTC), has officially taken action against one David Seibert, who does business as Seibert Equity Investments (also known as SEI-Equity Investments), and Great America Funding, LLC.
The Act Itself
Within the complaint, the CFTC alleges that David Seibert, alongside his companies, had fraudulently solicited, pooled, and accepted an approximate of $10 million from a minimum of eight participants. He did so, according to the CFTC, between the time period of March of 2016 and April of 2019, referred to as the Relevant Period.
During March of 2019 and April of 2019, the defendant had made use of a large portion of these pooled funds in order to trade in commodity interest but failed to disclose using it as such to the pool participants. As a result of this trading, $8,336,148 of the participant fands were lost.
Alongside this, Eibert did what was typical of a fraudulent financial scheme, misappropriating a portion of the participant funds for his own personal use.
Failure Of Disclosing Facts
Seibert claimed, when soliciting funds from participants, that these funds that he was soliciting will be used in order to provide short-term secured loans with promises of high interest. He claimed that these loaned funds would be used in order to make repairs to various properties before permanent financing can be secured.
Seibert had presented himself as the one finding these lending opportunities, claiming to complete all the due diligence to determine if the borrower was qualified or not. Alongside this, he claimed that the offered collateral for these loans would fully secure the funds, and offered to handle the servicing and closing of these loans.
The reality was far from this case, however. Instead of using the funds for short-term real estate improvement loans, as he had promised, he misappropriated the funds for other purposes, instead. Some of the pooled participant funds were ultimately used directly by Seibert for personal benefit.
Alongside this, he pooled, then traded, the remainder of the participant funds in a commodity interest trading account opened under his name.
The Charges In Question
Sibert had failed to disclose to his participants that he had done this and further retained from disclosing losses of $8,336,148 he had done while trading on commodity interests within the Relevant Period.
As such, the CFTC charges him with violation of the Commodity Exchange Act, Section 4o(1)(A) and (B). Alongside this, he violated Section 4m(1) of the act.
The CFTC is demanding remedial ancillary relief, civil monetary penalties, disgorgement, restitution, as well as pre- and post-judgement interest.