The U.S. Commodity Futures Trading Commission has filed an enforcement action against a Nova Scotia couple claiming that they operated a Ponzi scheme that victimized hundreds of U.S. investors.

The CFTC enforcement action, filed in the U.S. District Court, Southern District of Florida, alleges that from October 2004 through September 2005, a citizen of Nova Scotia fraudulently solicited, accepted, and pooled approximately US$650,000 from at least 900 investors in the U.S. and throughout the world to participate in a commodity pool which purported to trade in a commodity futures, options, precious metals, and foreign currency-based investment program.

However, the CFTC alleges that Robin States (doing business as Infinity Online Investors Group) never engaged in any trading, but rather, ran a “Ponzi scheme,” paying “profits” to existing pool participants with money obtained from newly-solicited participants. At the same time, it claims that States and his common-law wife, Bernadette Bowden, misappropriated more than C$600,000 of the pool’s assets for personal expenses.

The enforcement action charges them with fraudulent solicitation and misappropriation of commodity pool participant funds and with false statements. The complaint also alleges that States operated as a commodity pool operator without being registered and failed to provide pool participants with required disclosures, documents, and account statements in accordance with CFTC regulations. States’s brother, Paul States, is also named in the CFTC complaint as a relief defendant based on his alleged receipt of approximately $230,000 (Canadian) of pool participant funds.

None of these allegations have been proven.

The CFTC acknowledged the assistance of the Nova Scotia Securities Commission, the BC Securities Commission, Quebec’s Autorité des Marchés Financiers, the Ontario Securities Commission, the Alberta Securities Commission, the RCMP, and the French AMF in the investigation.