A Michigan couple has been ordered to pay $3.1 million in restitution and penalties after defrauding investors in their “private hedge fund.”
Ty and Monette Klotz, who were doing business under Aurifex Investments, were charged with fraud in connection with soliciting funds to be traded in futures, as well as improperly acting as commodity pool operators without registering with the CFTC.
They were believed to be running a Ponzi scheme, which is where unusually high returns are paid to investors through new money coming in by subsequent investors, instead of from any real profits or gains. In fact, $2 million of the money raised from 352 investors were used to pay other investors.
This funneling of cash allowed Ty Klotz to lure new investors by asserting that Aurifex’s returns had been averaging about 20% a month. He also claimed that the fund was insured by Lloyd’s of London.
Investors shelled out a total of $2.2 million, and will receive $1.8 million in restitution.
Julie Scuderi
Contributing Editor for HedgeCo.Net
Email: [email protected]
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