The Commodity Futures Trading Commission (CFTC) has filed a complaint in the U.S. District Court for the Eastern District of Michigan against Brian Mitchell of Michigan, Kevin Mack Jr. of Maryland, and their company Young Pros Investment Group LLC (YPIG). The complaint accuses the defendants of fraudulently soliciting and accepting about $1 million from approximately 33 participants in a commodity pool operated by YPIG.
According to the CFTC, from December 2020 through May 2022, Mitchell and Mack misrepresented Mitchell’s trading record, falsely guaranteed profits and protections against loss, and did not disclose the risks associated with futures trading when seeking investments for their commodity pool. The CFTC alleges that most months resulted in losses for pool participants. To hide these losses, the defendants allegedly issued false account statements and used new participant funds to pay earlier investors in a Ponzi-like scheme.
The complaint also states that YPIG was not registered with the CFTC as required by law. Additionally, neither Mitchell nor Mack were registered as associated persons of the pool. The CFTC alleges they failed to operate YPIG as a separate entity and mixed investor funds with their own personal accounts.
Mitchell is further accused of violating a previous CFTC order from 2021 that barred him from trading on any CFTC-registered entity or engaging in activities requiring registration for three years after he was found providing trading advice without proper registration to more than 15 people. "Despite that order, this complaint alleges from September 2021 through at least May 2022, Mitchell solicited funds to trade commodity interests, directed the trading activity, and acted as an associated person of the YPIG pool," according to the press release.
The CFTC is seeking restitution for defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties, permanent bans on trading and registration for those involved, and an injunction against further violations.
The agency acknowledged support from state and federal authorities including the Maryland Office of the Attorney General, Maryland Securities Division, FBI, and U.S. Attorney’s Office for the Eastern District of Michigan.
"The Division of Enforcement staff responsible for this case are Jason Gizzarelli, Karen Kenmotsu, George Malas, Chrystal Gonnella, Traci Rodriguez, and Paul G. Hayeck," according to the release.
The CFTC advises customers to verify if companies are registered using NFA BASIC before investing funds. It also encourages reporting suspicious activities related to commodity trading laws through its hotline or online tip form. Whistleblowers may be eligible for awards between 10% and 30% of sanctions collected if their information leads to successful enforcement actions.
