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Regulation and Compliance > Federal Regulation

CFTC Sues Centurion Capital Management Over Alleged Commodity Pool Fraud

By Melanie Waddell

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What You Need to Know

  • Centurion and Svejda allegedly misappropriated about 80% of pool participant funds.
  • Neither Centurion nor Svejda was registered with the CFTC.
  • Offerings were related to exchange-traded commodity futures contracts.

The Commodity Futures Trading Commission recently levied an action against Centurion Capital Management Inc. and its principal, Terry Michael Svejda, over fraudulent offerings related to exchange-traded commodity futures contracts.

Beginning in about 2012 and continuing to the present, Svejda told pool participants that he would use pool funds to trade exchange-traded commodity futures contracts, according to the complaint, filed in U.S. District Court for the District of Nebraska.

He solicited and received at least $790,050 from at least 27 individuals, many of whom were farmers.

Instead, the order states, Centurion and Svejda misappropriated approximately 80% of pool participant funds.

The misappropriated funds were used to trade futures in Svejda’s personal trading account, to pay personal expenses of Svejda and corporate expenses of Centurion, the order states.

During and before the relevant period, Svejda operated a commodity advisory subscription service, the order states. As part of this service, Svejda distributed newsletters to subscribers that provided advice on agricultural commodities.

In connection with its solicitations, and its operation of the pool, Centurion was required to register with the CFTC as a commodity pool operator, and Svejda was required to register as an associated person of Centurion.

Throughout the relevant period, however, Centurion and Svejda failed to so, the order states.

The CFTC brings the action to enjoin defendants’ “unlawful acts and practices, to compel their compliance with the Act and Regulations, and to enjoin them from engaging in any commodity-related activities,” the order states.

In addition, the CFTC seeks civil monetary penalties, restitution and remedial ancillary relief, including but not limited to trading and registration bans, disgorgement of benefits derived from defendants’ illegal activities, fees and costs, prejudgment and post-judgment interest.

Melanie Waddell

@Think_MelanieW

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