A Classic Commodity Ponzi Scheme Raising Novel Issues For Pools And Carbon Credits

The Federal U.S. District Court for the Northern District of Illinois entered an Order granting summary judgement for the U.S. Commodity Futures Trading Commission on July 1, 2024 and ordered $83 million in restitution and $36 million in disgorgement against Sam Ikkurty and his affiliated companies. This would have been a garden variety "classic Ponzi scheme" case but for two novel issues.

First, the court agreed with the CFTC's interpretation that for an investment vehicle to qualify as a "commodity pool" it need not actually "trade" any "commodity interests," i.e., derivatives – such as commodity swaps, futures or options. Instead, merely the "solicitation of funds" from participants to invest in a vehicle for purposes of trading in derivatives (e.g., in the future) – would be enough to qualify this vehicle as a "commodity pool." Thus, the court agreed with the CFTC that Ikkurty's investment vehicles were "commodity pools" even though they had no positions in