Federal Court Orders Over $2 Million in Penalties and Restitution in CFTC Futures Fraud Case

The U.S. District Court for the District of Minnesota has entered an order of default judgment against Minnesota resident Richard “Rick” Miller, his Minnesota-based firm Flip 2 Futures Trading Company LLC (F2F), and Wisconsin-based Punch Drunk Marketing LLC (PDM). The order resolves an enforcement action brought by the Commodity Futures Trading Commission (CFTC) over a fraudulent futures trading scheme. Under the court's order, Miller and F2F are required to pay a $900,000 civil monetary penalty and, jointly and severally with PDM, $364,000 in restitution to victimized investors. Additionally, PDM was ordered to pay a $750,000 civil monetary penalty. The judgment also imposes permanent registration and trading bans against Miller and F2F, alongside a permanent injunction prohibiting both from committing further violations of the Commodity Exchange Act and CFTC regulations. The judgment follows a CFTC complaint filed on February 22, 2023. According to the court's findings, between July 2019 and November 2020, PDM solicited and accepted $400,000 from nine individuals to participate in a commodity pool to trade futures contracts. PDM collected investor funds into its own accounts rather than maintaining proper accounts, failed to supply required disclosure documents, and operated as an unregistered commodity pool operator (CPO). PDM also misappropriated investor capital by failing to forward all funds to F2F and Miller as agreed, and by withholding funds repaid by F2F. The court further determined that Miller made material misrepresentations regarding his past trading performance and assets under management to convince PDM to transfer capital to F2F. Contrary to his claims, Miller was not trading successfully and did not manage millions of dollars in assets. Miller and F2F misappropriated portions of the funds, failed to maintain required records, neglected to provide mandatory disclosures, and illegally collected pooled funds into their own bank and trading accounts. By soliciting funds and executing discretionary trading on behalf of the commodity pool, F2F acted as an unregistered commodity trading advisor (CTA), while Miller acted as an unregistered associated person of a CTA. The CFTC's Division of Enforcement team handling the matter includes Dmitriy Vilenskiy, Julia Colarusso, Christine Ryall, and Paul G. Hayeck.