Feds: KY trader didn’t invest most of the $10 million he took from investors
Federal regulators have sued to shut down a Kentucky commodities trader who allegedly misappropriated much of the $10.6 million he solicited from investors.
The complaint argues that William S. Evans III lied to investors about how much money they stood to make with him, about his fee and about the likelihood of losing their money.
Evans transferred $8.4 million of the money he received into other accounts controlled by him and his wife, Frances, and used at least some for personal expenses including their mortgage, according to the complaint by the Commodity Futures Trading Commission.
The commission filed the complaint in U.S. District Court in Lexington on Thursday against the Evanses. It is a civil complaint, not a criminal accusation.
Efforts to reach William Evans on Friday were not successful.
The complaint says the couple live in Harrodsburg and that William Evans, 68, did business under the name Turning Point Investments, with an office listed in Lexington.
Evans told investors he would use their money to trade commodities futures. Since September 2018 he has received $10.6 million from 15 clients, the complaint said.
The complaint cited one woman who liquidated retirement accounts to invest $1 million with Evans earlier this year.
Evans told the woman she would make double-digit profits; that the risk she would lose money was only 5 to 8 percent; and that his fee would be 2 to 3 percent of profits, the commission said.
Evans convinced the woman that his method of trading futures was better than the financial institutions she was using because he had developed software that helped him decide when to buy and sell, according to the complaint.
In fact, Evans didn’t invest the woman’s money in futures, but instead put $450,000 of it into a personal account, the commission alleged.
When the woman’s husband questioned Evans about the investment, Evans said the profit it made in February alone covered the tax liability from liquidating her retirement accounts.
That wasn’t true because there was no trading, according to the complaint.
In addition to misappropriating investors’ money for personal use, Evans used money from some people to pay others in a “Ponzi-like scheme,” the complaint said.
Investors didn’t earn double-digit profits as Evans said they would, and in fact “were not earning any profit at all,” the commission said.
The trading Evans did do through one account lost money, according to the complaint.
Evans also was not registered as a commodity pool operator as required.
The commission wants a judge to freeze Evans’ accounts to keep him from moving money; to stop him from soliciting investments and making trades; and to repay investors.
If the court doesn’t issue an injunction against Evans, he “is likely to continue engaging in the acts and practices alleged in this complaint, and funds he fraudulently obtained are likely to be misappropriated or otherwise dissipated,” the commission said.
This story was originally published May 29, 2020 at 11:29 AM.
