CFTC Charges Two Men, their Unregistered Commodity Pool with Futures Fraud, Registration Violations

WASHINGTON — The Commodity Futures Trading Commission has filed a complaint in the U.S. District Court for the Eastern District of Michigan against Brian Mitchell of Michigan, Kevin Mack Jr. of Maryland, and their Michigan company, Young Pros Investment Group LLC. The complaint alleges the defendants fraudulently solicited and accepted approximately $1 million from roughly 33 participants of a commodity pool operated by YPIG. It also alleges Mitchell violated a prior CFTC administrative order. In the complaint, the CFTC seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations, as charged. According to the complaint, from about December 2020 through May 2022, Mitchell and Mack, individually, and as controlling persons of YPIG, fraudulently solicited and received funds from pool participants to trade commodity futures in a pool operated by YPIG. Their solicitation included misrepresentations about Mitchell’s trading success, false guarantees of profit and protections against loss, and failure to disclose the risks involved in futures trading. The complaint alleges the defendants incurred losses in most months they traded on behalf of the pool. To conceal their losses, they allegedly issued false account statements and used funds from new participants to make Ponzi-type payments to earlier participants. The defendants also failed to register the pool with the CFTC, failed to register Mitchell and Mack as associated persons of the pool, failed to operate the pool as a separate entity, and commingled pool participants’ funds with their own, all in violation of CFTC regulations. Mitchell is also accused of violating a CFTC order issued against him in 2021 for failing to register as a commodity trading advisor while providing commodity trading advice to more than 15 people. [See CFTC press release No. 8427-21]. As part of that order, he was prohibited from directly or indirectly trading on any CFTC-registered entity and engaging in any activities requiring CFTC registration for three years. Despite that order, this complaint alleges from September 2021 through at least May 2022, Mitchell solicited funds to trade commodity interests, directed the trading activity, and acted as an associated person of the YPIG pool. The CFTC appreciates the assistance of the Maryland Office of the Attorney General, Maryland Securities Division, the FBI, and the U.S. Attorney’s Office for the Eastern District of Michigan.