CEO Of Miami Investment Management Companies Pleads Guilty To Defrauding Investors Of Over $7.5 Mill

[nitpicker]

https://www.justice.gov/usao-sdny/pr/ceo-miami-investment-management-companies-pleads-guilty-defrauding-investors-over-75

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Thursday, August 8, 2019

CEO Of Miami Investment Management Companies Pleads Guilty To Defrauding Investors Of Over $7.5 Million

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that FABIO BRETAS DE FREITAS pled guilty today before U.S. District Judge Laura T. Swain to defrauding a group of investors (the “Victims”) by soliciting funds for investment in the commodity futures markets, but instead using the funds for personal and other expenses. BRETAS lulled his Victims and furthered the scheme by distributing fictitious financial statements to the Victims, purporting to show their investments’ position and growth under his management. When his companies were audited by regulators, the Commodities Futures Trading Commission (“CFTC”) and the National Futures Association (“NFA”), BRETAS lied to the regulators in order to cover up his crimes, going so far as to steal the identity of one Victim and to impersonate that Victim in email communications with the NFA.
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BRETAS operated a group of investment companies, including Phynance Capital Management LLC (“Phy Cap”), Phy Global Partners Fund LLC (“PGP”), Absolute Experience LLC (“Absolute”), and Global Partners Investors LLC (“GPI”), that he used to solicit investments from. Phy Cap was a commodity pool operator and commodity trading advisor, registered with the NFA, as required by CFTC. In his companies’ marketing materials, BRETAS represented that he used “statistical analysis and mathematical modeling of historical data to develop quantitative systematic methodologies applied to managed futures strategies.” In fact, while BRETAS solicited more than $7.5 million from individual investors, he conducted only a minimal level of trading; his predominant use of his companies was the theft of investor money, using it to cover his personal expenses and transferring investor funds abroad. In order to continue the scheme, and solicit additional investments, BRETAS prepared false monthly statements, purporting to demonstrate the investments’ growth, and distributed them to the Victims. When his regulators, the CFTC and NFA, initiated an audit in 2017, BRETAS lied about his affiliation with Absolute, falsely claimed that the funds that the Victims invested in PGP were mere loans to his company, lied about the use of those funds and the solicitation of investments, and ultimately created a fraudulent email account for the purpose of impersonating one victim in communications with the NFA.
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