On 5 December 2024, the United States Commodity Futures Trading Commission announced a legal resolution in its enforcement action against Marcus Todd Brisco, a Hawaii-based operator accused of running fraudulent schemes through two commodity pools. The U.S. District Court for the Southern District of Texas issued a consent order imposing permanent injunctive relief, civil monetary penalties, and restitution obligations on Brisco.
Marcus Todd Brisco, operating through Yas Castellum LLC and Yas Castellum Financial LLC, solicited funds from investors under the guise of engaging in leveraged or margined foreign exchange (forex) and gold transactions. These promises proved fraudulent as Brisco failed to direct the funds toward trading activities as pledged. Instead, he misappropriated amounts for personal use and transferred funds to other entities. Between October 2020 and January 2023, his actions caused more than US$1.6 million in losses to pool participants.
The United States Commodity Futures Trading Commission’s investigation revealed a series of fraudulent actions by Brisco, including misrepresentations about trading activity, the provision of falsified account statements, and violations of registration requirements.
Between October 2020 and May 2022, Brisco operated a commodity pool through Yas Castellum LLC, soliciting US$470,700 from at least 43 participants. The funds were not directed toward trading as promised; instead, they were transferred to bank accounts controlled by other entities. Brisco issued false statements about trading profits, further deceiving the investors.
In March 2022, the National Futures Association (NFA) initiated an examination of Yas Castellum LLC, uncovering significant irregularities. Responding to NFA’s concerns, Brisco repaid the first pool’s participants and announced his departure from the financial services industry. However, in June 2022, he formed Yas Castellum Financial LLC to launch a second fraudulent commodity pool. This scheme, which spanned from June 2022 to January 2023, saw Brisco raise over US$1.9 million from 66 participants. Again, the funds were misappropriated, including payments to himself for nonexistent trading profits. During the National Futures Association investigation in March 2022, Brisco claimed to have deposited funds with an offshore trading firm. However, repayments to pool participants reportedly came from a Canadian cryptocurrency business, which had no clear connection to the claimed trading activities, which indicates that cryptocurrency was likely used as a medium for transferring or disguising the misappropriated funds.
By January 2023, Brisco failed to return more than US$1.6 million to investors. In January 2023, the United States Commodity Futures Trading Commission filed a complaint against Brisco and several co-defendants. While prior judgments resolved the cases against the other defendants, the November 2024 consent order brought an end to the CFTC’s action against Brisco.
Brisco’s activities contravened multiple provisions of the United States Commodity Exchange Act and associated regulations, including, Sections 4b(a)(2)(A)-(C) and 4o(1)(A)-(B) of the United States Commodity Exchange Act, 7 U.S.C. §§ 6b(a)(2)(A)-(C) and 6o(1)(A)-(B), which prohibit fraudulent solicitation and misappropriation of funds, Sections 4k(2) and 4m(1) of the United States Commodity Exchange Act, 7 U.S.C. §§ 6k(2) and 6m(1), which require proper registration for commodity pool operators and United states Regulations 4.20(a)(1), (b)-(c), and 5.2(b)(1)-(3) under 17 C.F.R. §§ 4.20(a)(1), (b)-(c), and 5.2(b)(1)-(3), which mandate proper fund management practices, including separate accounting for pool funds.
The U.S. District Court for the Southern District of Texas granted comprehensive relief to address the egregious violations committed by Marcus Todd Brisco and his entities. The reliefs are designed to penalise past misconduct, compensate defrauded investors, and prevent future violations of the United States Commodity Exchange Act and related regulations. The court ordered Brisco to pay a civil monetary penalty of US$350,000 and US$1.65 million in restitution to compensate the 66 defrauded participants who suffered financial losses due to his schemes.
To prevent Brisco from engaging in similar misconduct, the court imposed permanent trading and registration injunction which prohibit him from trading on or subject to the rules of any registered entity, entering into transactions involving commodity interests, or acting in any capacity requiring registration with the United States Commodity Futures Trading Commission. Brisco is permanently enjoined from further violations of the United States Commodity Exchange Act and associated regulations.
The reliefs also include a mechanism for restitution payments through the National Futures Association, which was appointed as the monitor to oversee the collection and equitable distribution of funds to the affected participants. The court retained jurisdiction to enforce compliance with these orders and to hold Brisco accountable and safeguard the integrity of commodity markets. Collectively, these reliefs aim to restore investor trust, reinforce regulatory standards, and deter future violations.
(Source: https://www.cftc.gov/PressRoom/PressReleases/9012-24, https://www.cftc.gov/media/11591/enfbriscoconsentorder112224/download)
