Fraudulent Scheme Involving Cherry-Picking
A former CEO of an investment firm has confessed to participating in a fraudulent scheme known as cherry-picking. Peter Kambolin, the founder and former CEO of Systematic Alpha Management LLC (SAM), engaged in this practice between 2019 and 2021, according to the US Department of Justice.
In this scheme, Kambolin manipulated trades to benefit his personal accounts while causing losses for investors. He also deceived clients about the focus of SAM’s trading strategies, misleading them into believing that they primarily involved crypto futures contracts and foreign exchange futures contracts.
However, about half of Kambolin’s transactions actually involved equity index futures contracts, which he concealed from clients.
Kambolin’s Profits and Losses
The Commodities Futures Trading Commission (CFTC) had previously filed a complaint against SAM and Kambolin, making similar allegations. The complaint stated that Kambolin and his investment firm unfairly allocated profitable trades to their own accounts while leaving pool participants with unprofitable trades.
According to the CFTC, Kambolin and SAM made over $1.5 million in trading profits through this fraudulent scheme, while clients suffered losses exceeding $1.5 million.
Kambolin used the proceeds from the cherry-picking scheme to fund his lavish lifestyle, including renting a beachfront apartment and transferring funds to bank accounts controlled by his co-conspirator in Belarus and the Dominican Republic.
Plea and Potential Consequences
Kambolin has pleaded guilty to conspiracy to commit commodities fraud. While he could face up to five years in prison, a sentencing date has not yet been determined.
Nicole Argentieri, the Acting Assistant Attorney General, criticized Kambolin’s actions for breaching client trust and undermining investor confidence in the commodities market.
Hot Take: Former CEO Admits to Cherry-Picking Scheme in Crypto Trading
A former CEO of an investment firm has confessed to engaging in a fraudulent cherry-picking scheme involving crypto futures contracts and foreign exchange contracts. Peter Kambolin, the founder and ex-CEO of Systematic Alpha Management LLC (SAM), manipulated trades to benefit himself while causing losses for investors. Kambolin misled clients about SAM’s trading strategies and concealed the fact that half of his transactions involved equity index futures contracts. The Commodities Futures Trading Commission (CFTC) filed a complaint against Kambolin and SAM, accusing them of defrauding pool participants and making significant profits while clients suffered losses. Kambolin used the proceeds from the scheme to fund his lavish lifestyle. He has pleaded guilty to conspiracy to commit commodities fraud and could face up to five years in prison.
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