CFTC files fraud action against Lake Dow Capital and its hedge fund

November 8, 2005
Hedgeweek

A US Federal Court has frozen the assets of the Aurora Investment Fund and its operators Lake Dow Capital, LLC and Ty Edwards. The US Commodity Futures Trading Commission announced that the United States District Court for the Northern District of Georgia entered a restraining order freezing the assets of Lake Dow Capital, LLC and Ty Edwards in a CFTC action alleging fraud committed by those parties. The order also froze the assets of hedge fund Aurora Investment Fund.

Specifically, the CFTC’s complaint alleges that Lake Dow, a registered commodity pool operator and commodity trading advisor, and Edwards, a principal and registered associated person of Lake Dow, falsely represented to actual and prospective participants in the Aurora Fund commodity pool, a hedge fund operated by Lake Dow and Edwards, that Aurora Fund had consistently generated annual profits without a single losing month.

The complaint further alleges that Lake Dow and Edwards misrepresented to actual and prospective participants that they managed between USD 60 and USD 100 million, when funds in the Aurora Fund did not exceed USD 20 million. According to the complaint, Edwards also attributed to the Aurora Fund performance results that were not based upon any actual financial documents, actual performance, or any analysis thereof.

The complaint also alleges that Edwards failed to disclose to participants in the commodity pool the fact that he is a named defendant in a pending Commission civil injunctive action alleging fraud, CFTC v. Risk Capital Trading Group, Deron Baugh, Tyrone Edwards, et. al, Case No. 103 CV-2633 (N.D. GA 2003), and that he withheld material information from the National Futures Association (NFA) by willfully concealing the identity of certain participants in the pool.

The CFTC’s ongoing action seeks orders of preliminary and permanent injunction against the defendants, an accounting for all funds, disgorgement of benefits, repayment to injured participants, monetary penalties and other relief. The National Futures Association assisted the CFTC in its investigation of this matter.

Labels: CFTC