Federal Court Orders California Forex Firm, Denari Capital, and Its Owners, Travis Capson, and Arnab Sarkar to Pay Over $4 Million for Pool Fraud and Registration Violations
Washington, D.C. (STL.News) The Commodity Futures Trading Commission Monday announced that the U.S. District Court for the Northern District of California entered a consent order for permanent injunction, monetary sanctions, and equitable relief against defendants Travis Capson of Kanab, Utah, Arnab Sarkar of El Cerrito, California, and their California company Denari Capital, LLC (Denari) to resolve a CFTC action filed on November 5, 2019.
The order finds all three defendants liable for engaging in a foreign exchange (forex) pool fraud and failing to register with the CFTC as a commodity pool operator and associated persons as required. The order also finds Capson liable for making misrepresentations regarding Denari’s activities to the National Futures Association (NFA).
The order requires Capson and Sarkar to pay civil monetary penalties of $250,000 and $166,000, respectively. In addition, they and their company, Denari, are required to pay restitution of $3,663,282 to victims of their scheme. The order also imposes a permanent injunction prohibiting the defendants from further violations of the Commodity Exchange Act and CFTC regulations, as charged, permanent registration bans, and five-year trading bans.
Case Background
The order finds that from at least August 2012 to December 2019, the defendants fraudulently solicited participants to invest with Denari, misrepresenting the past profitability of Denari’s forex trading. The order also finds the defendants issued false account statements to participants that misrepresented the profitability of their respective interests in the pool; failed to receive pool funds in the pool’s name; improperly commingled pool funds; and failed to provide required commodity pool disclosures. Further, the order finds the defendants failed to register with the CFTC as required. The order also finds that Capson made false representations to NFA during an examination conducted on July 15, 2019, when he told NFA representatives that Denari had been trading forex with proprietary funds since 2015 and that Denari did not trade forex for third parties until 2019.
The order appoints Kathy Bazoian Phelps as Permanent Receiver for Denari to collect and distribute restitution. Phelps has collected and distributed more than $700,000 of funds and more than $2.5 million of securities to satisfy allowed participant claims. However, the CFTC continues to caution victims that restitution orders may not always result in the recovery of money lost because wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure wrongdoers are held accountable.