Former Fund Manager Sentenced In Manhattan Federal Court To 30 Months In Prison In Connection With Multimillion-Dollar Commodities Fraud Scheme
Preet Bharara, the United States Attorney for the Southern District of New York, announced that THOMAS HAMPTON, formerly the Managing Director of Hampton Capital Markets, LLC (“Hampton Capital” or the “Fund”), was sentenced today in Manhattan federal court to 30 months in prison in connection with an investment scheme in which HAMPTON concealed millions of dollars in losses he incurred trading various securities, including S&P 500 futures contracts tied to the S&P 500 stock index. HAMPTON pled guilty in April 2013 to one count of commodities fraud before U.S. Magistrate Judge James C. Francis. He was sentenced today by U.S. District Judge Robert W. Sweet.
Manhattan U.S. Attorney Preet Bharara said: “Lying to investors is never acceptable and, as Thomas Hampton now knows after being convicted and sentenced for doing so, it is a federal crime that carries stiff penalties.”
According to the charging instruments in this case and statements made in open court and at the plea proceeding:
From September 2010 through September 2011, HAMPTON was the Managing Director of Hampton Capital, an Arizona limited liability company that had more than $4 million in assets under management. Hampton Capital engaged in the business of buying and selling exchange traded funds (“ETFs”). An ETF is an investment fund that holds assets such as stocks, commodities or bonds, and typically tracks – or attempts to replicate the performance of – an underlying benchmark or index, such as the S&P 500 equities market index. Hampton Capital purported to utilize specially designed computer software to trade ETFs based on pricing inefficiencies. In his role as Managing Director, HAMPTON bought and sold various securities, including S&P 500 E-mini futures contracts, on behalf of the Fund.
When the Fund began to suffer substantial losses as a result of HAMPTON’s trading, he concealed those losses from investors by, among other things, falsely representing that the investments continued to earn profits. For example, HAMPTON provided monthly statements to investors as early as April 2011 that falsely reflected a positive return for the Fund instead of disclosing the actual losses suffered. Based on his misrepresentations and omissions, Hampton Capital investors did not seek to redeem or withdraw their investments. In fact, some investors provided additional investment capital. As a result of the scheme, more than 50 investors lost in total almost $5 million.
* * *
In addition to his prison term, HAMPTON, 45, of St. Louis, Missouri, was sentenced to three years of supervised release. He was also ordered to pay restitution in the amount of $4,879,627.98, and to forfeit this amount.
Mr. Bharara praised the investigative work of the FBI. He also thanked the U.S. Commodity Futures Trading Commission for their assistance.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jillian B. Berman and Emil J. Bove, III, are in charge of the prosecution.