CEO Pleads Guilty to Transnational Scheme Involving Foreign Exchange and Cryptocurrency Futures Contracts

 

First Criminal Charge Against a Commodities Trading Advisor and Commodities Pool Operator for Engaging in a “Cherry-Picking” Scheme Involving Cryptocurrency Futures Contracts

A former chief executive officer of an investment firm pleaded guilty to a “cherry-picking” scheme, in which he fraudulently misappropriated profitable trades to himself, and saddled his investors with losses.

According to court documents, Peter Kambolin, 48, a U.S.-Russian national of Sunny Isles Beach, Florida, was the owner and chief executive officer of Systematic Alpha Management LLC (SAM), an investment firm that Kambolin marketed as offering algorithmic trading strategies involving futures contracts. Between January 2019 and November 2021, Kambolin, who at the time was a commodity trading advisor and a commodity pool operator, engaged in a cherry-picking scheme in which he fraudulently allocated profits and losses from futures trades in a manner designed to benefit his own accounts unfairly at the expense of his clients. Kambolin also misrepresented to his clients that SAM employed trading strategies focused on cryptocurrency futures contracts and foreign exchange futures contracts, when in reality, approximately half of Kambolin’s trading in each pool involved equity index futures contracts. In doing so, Kambolin defrauded investors located in the United States and abroad by, among other things, depriving them of profitable trades. Kambolin used the proceeds of the scheme to fund personal expenses, including rent for a beachfront apartment, and transferred proceeds to foreign bank accounts his co-coconspirator controlled in Belarus and Dominica.

“The defendant breached client trust for personal profit,” said Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division. “This conduct undermines investor confidence in the commodities markets. This plea demonstrates that the Justice Department will not allow financial advisors to place their self-interest ahead of clients, including by cherry-picking trades. It also underscores the Justice Department’s commitment to using data analytics to prosecute wrongdoing in the financial markets.”

During the relevant period, Kambolin executed trades for pool participants together with trades he executed on behalf of his proprietary accounts, and fraudulently allocated the profits and losses of the trades to benefit his own accounts.

“Yesterday’s plea recognizes the importance of holding the defendant accountable for his actions in misleading and defrauding investors through a cherry-picking scheme, and using proceeds from the scheme to fund his own personal lifestyle,” said Assistant Inspector General for Investigations Shimon R. Richmond of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG). “The FDIC-OIG remains committed to working with our law enforcement partners to protect investors and the nation’s banking system from individuals who commit such egregious financial crimes.”

Kambolin pleaded guilty to conspiracy to commit commodities fraud. He faces a maximum penalty of five years in prison. A sentencing date has not yet been set. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FDIC-OIG is investigating the case. The Commodity Futures Trading Commission previously charged Kambolin and SAM by complaint.