Federal authorities have charged a commodity trading pool operator with mail fraud and with failing to register as an operator in a scheme that took in at least $7 million in investor funds.
Leonard J. Cipolla, 71, of Richmond, owned and operated Tate Street Trading Inc. and Tate Street Capital Inc.
According to charges filed in federal court, "Cipolla fraudulently obtained millions of dollars from more than 30 investors."
"Ultimately, Cipolla lost nearly all the money he used to trade commodity futures contracts and commodity options," the government alleges.
A plea agreement hearing has been set in the case for Thursday. His lawyer, John B. Russell Jr., declined Monday to comment on the charges.
In papers filed in U.S. District Court in Richmond, the government gave notice to Cipolla that if convicted, he stands to forfeit at least $7 million he allegedly gained through mail fraud.
Authorities said investors place their money in commodity trading pools to trade futures as a group, enabling them to make investments they might not do alone and to minimize risk.
A pool operator solicits the funds from others to make trades on futures contracts. Pool operators are required to be registered with the Commodity Futures Trading Commission.
Charges filed last week against Cipolla allege that from 2009 until this March, he used the U.S. mail to facilitate the scheme and that he was not registered as a commodity pool operator as required.
The U.S. attorney's office alleges that Cipolla fraudulently told prospective investors their money would be used to trade in commodity futures contracts and options; that he was an experienced trader with a profitable history; and that Tate Street was qualified to manage tax-deferred retirement accounts.
Authorities also allege that he used money from the principal they invested with him or that their money would be used for his own personal expenses and to pay back earlier investors.
The charges allege that Cipolla transferred only a portion of the money he collected from investors to pool for commodity futures trades.
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