Acting on a case of fraud that has rattled the New Orleans financial community, Acting U.S. Attorney Michael M. Simpson confirmed that a former attorney from the city has been sentenced to nine years in prison for a Commodity Exchange Act violation. The Department of Justice issued a release yesterday, stating that Michael Brian DePetrillo, 43, was sentenced for engaging in fraudulent activities related to foreign currency trading.
Documents from the court have revealed that DePetrillo wasn't registered as a Commodity Pool Operator (CPO) or an Associated Person (AP) with the Commodity Futures Trading Commission as required by law. Repurposing investors' funds for personal use, including rent and private air travel, Acting without proper registration, he embezzled client funds and misled victim investors, according to the report from the U.S. Attorney’s Office.
Using shell companies such as Meteor, LLC and NOLA FX Capital Management, LLC, DePetrillo lured investors with false promises. He claimed their money would be pooled into the NOLA FX FUND for leveraged trading in forex, gold futures options, stocks, and cryptocurrency. Instead, these funds were channeled into his personal expenditures, which included a substantial sum of approximately $300,000 on online gambling and another misappropriated $200,000 which served for private air travel, the DOJ detailed.
To maintain the deception, DePetrillo fabricated account statements indicating successful trades and substantial returns. Around $9.2 million was taken from roughly 55 investors over seven years. While claiming legitimate trading practices, DePetrillo never had intentions of facilitating profits for his clients, his duplicitous actions included using new investor funds to make "returns" to prior investors in a classic Ponzi scheme move, the DOJ reported.
For these violations, United States District Judge Jay C. Zainey sentenced DePetrillo to 108 months imprisonment, followed by a three-year supervised release. He is also ordered to pay restitution totalling $6,748,412.79 and a $100 special assessment fee. The case, which was prosecuted by Assistant United States Attorneys of the Financial Crimes Unit, highlights the repercussions of fraudulent financial activities and underscores the vigilance required by regulatory authorities to protect investor interests. The FBI's assistance in this case was also acknowledged by the U.S. Attorney's Office.
