Key takeaways:
- After entering a guilty plea to a conspiracy to conduct commodities fraud, the former CEO of a Miami-based financial firm now faces a maximum five-year jail sentence.
- The DOJ claims that Kambolin fraudulently obtained money from domestic and overseas investors by depriving them of profitable transactions.
After entering a guilty plea to a conspiracy to conduct commodities fraud using cryptocurrency futures contracts, the former CEO of a Miami-based financial firm now faces a maximum five-year jail sentence.
The former CEO of Systematic Alpha Management (SAM) LLC, Peter Kambolin, allegedly engaged in a “cherry picking” scheme in which he advertised his company as providing algorithmic trading strategies involving futures contracts, including both cryptocurrency and commodities, in a statement released by the US Department of Justice on October 12.
The truth is that Kambolin traded a majority of equity index futures contracts in each pool, but he lied to investors that his fund was engaged in the trading of cryptocurrencies and foreign exchange futures. As stated by the prosecutors:
“In doing so, Kambolin defrauded investors located in the United States and abroad by, among other things, depriving them of profitable trades,”
A fraudulent stock trading practice known as “cherry picking” occurs when an individual performs deals without designating those trades to a specific trading account until they ascertain whether the trade has gained profit or lost money.
The DOJ claims that Kambolin fraudulently obtained money from investors both domestically and overseas by depriving them of profitable transactions and then using the proceeds to pay for personal needs such as rent for a beachfront flat.
The funds that he made from his scam were moved to overseas bank accounts in Dominica and Belarus that were under the authority of another conspirator. According to Shimon Richmond, assistant inspector general for investigations:
“Yesterday’s plea recognizes the importance of holding the defendant accountable for his actions in misleading and defrauding investors through a cherry-picking scheme, and using proceeds from the scheme to fund his own personal lifestyle,”
Kambolin now faces a five-year prison sentence as a result of his guilty plea. There will be a future date for his sentence hearing that is not yet known.
