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Former CBOE member charged with Ponzi-like scheme

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Staff writer | Thursday June 30, 2016 1:16PM ET
CFTC
Futures Trading   Wilkinson allegedly misappropriated at least $5.2 million

CFTC charged former CBOE member Alvin Guy Wilkinson and his Connecticut-based entities with fraud, misappropriation, failing to register with the CFTC, and making misrepresentations to the NFA.


The U.S. Commodity Futures Trading Commission (CFTC) filed a civil enforcement Complaint in the U.S. District Court for the Northern District of Illinois, charging Alvin Guy Wilkinson, of San Juan, Puerto Rico, and his limited partnerships Chicago Index Partners (CIP) and Wilkinson Financial Opportunity Fund (WFOF), both of Sharon, Connecticut, with fraud and acting as Commodity Pool Operators or Associated Persons without being registered with the CFTC, as required.

The CFTC Complaint also charges Wilkinson with providing false statements and documentation to the National Futures Association (NFA) during an NFA investigation. Wilkinson is a former member of the Chicago Board Options Exchange (CBOE), who served in leadership capacities on CBOE committees and on the CBOE’s board of directors, the Complaint states.

The Complaint, filed on June 28, 2016, alleges that, from July 1999 to the present, Wilkinson fraudulently solicited and accepted at least $6.9 million from at least 30 individuals for purchase of interests in WFOF and CIP, claiming that he would trade a portfolio of financial instruments on their behalf, including futures contracts, using a market volatility strategy.

However, instead of trading participants’ monies as he represented he would, Wilkinson allegedly misappropriated at least $5.2 million, and he returned at least $1.7 million to participants of WFOF and CIP as return of capital and purported profits in the manner of a Ponzi scheme.

According to the Complaint, Wilkinson also directed his accountant to issue false Schedule K-1 Forms that misrepresented the profitability and value of participants’ interests in WFOF and CIP.

As part of his scheme, Wilkinson allegedly lied to participants about the likelihood of profit and risk of loss, and, when participants demanded to withdraw from WFOF and CIP, Wilkinson ignored their demands, engaged in delay tactics, and lied about conditions that purportedly prevented him from making disbursements.

As also alleged, Wilkinson omitted to tell investors that their partnership interests had little or no value, and that he had misappropriated their investments.

Furthermore, when NFA was investigating Wilkinson in May 2016, he produced to NFA financial information for WFOF and CIP reflecting that nearly all of the funds’ assets were ultimately tied to a “Note Receivable” purportedly worth more than $12 million, although no such note exists, according to the Complaint.

Accordingly, by this conduct, Wilkinson provided false, fictitious, and fraudulent statements to the NFA, the Complaint alleges.

In its continuing litigation against the Defendants, the CFTC seeks full restitution to defrauded participants, disgorgement of any ill-gotten gains, a civil monetary penalty, permanent registration and trading bans, and a permanent injunction against violations of federal commodities laws, as charged.

 

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