CFTC orders California commodity trading adviser to pay more than $4 million for fraud, registration violations

The Commodity Futures Trading Commission today issued an order to present and concurrently settle charges against Sharif Deona McDowell, of Loma Linda, California, for fraud in connection with options on commodity futures contracts by a commodity trading advisor (CTA) and failure to register as a CTA. The order requires McDowell to pay $2,376,509.96 in restitution and a civil money penalty of $2,376,509.96. The CFTC also ordered McDowell to cease and desist further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged, and imposed permanent registration and trading bans.

Background of the case

The order finds that from October 2018 to approximately March 2022, McDowell, doing business through a company she founded known as Presidential Investments LLC, engaged in a fraudulent scheme through which she solicited and accepted more than $2 million in al least 29 persons or entities for the purported purpose of trading commodity futures contracts and options on commodity futures contracts on his behalf and then embezzled the funds for his personal use.

By claiming to engage in discretionary trading of futures and options contracts on behalf of its clients, McDowell acted as a CTA, without being registered or exempt from registration with the CFTC as required by the CEA. In addition, in communications by phone, text message, and email with potential and existing customers, McDowell knowingly made material misrepresentations and omitted material facts about his use of customer funds and profits allegedly earned by his customers. Among other misrepresentations, McDowell told clients that she used the funds they transferred to Presidential Investments to trade options and futures contracts on her behalf. Contrary to these statements, McDowell did not conduct any transactions on behalf of her clients and, instead, she misappropriated client funds for her direct personal benefit. To conceal and perpetuate her fraudulent scheme, McDowell issued fabricated trading confirmations and updates to clients that falsely reflected profitable returns from her alleged trading activity.

Parallel Criminal Action

On November 30, 2022, McDowell pleaded guilty in a related criminal case in the US District Court for the Central District of California. She is scheduled to be sentenced on June 30, 2023. [See United States v. McDowell, 5:22-cr-00274-AB]

The CFTC advises that orders that require the payment of funds to victims may not result in the recovery of lost money because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously to protect customers and to ensure that violators are held accountable.

The CFTC gratefully acknowledges the assistance of the US Attorney’s Office for the Central District of California, the US Department of Justice Criminal Division, the FBI Riverside Field Office, and the Securities and Exchange Commission. of British Columbia for their assistance in this matter.

The Enforcement Division staff members responsible for this case are Michael Amakor, Julia Colarusso, Christine Ryall, and Paul Hayeck.