CEO Of Miami Investment Management Companies Pleads Guilty To Defrauding Investors Of Over $7.5 Million
Fabio Bretas de Freitas lied to regulators in an effort to cover up his use of client funds for personal expenses
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that FABIO BRETAS DE FREITAS pled guilty today before U.S. District Judge Laura T. Swain to defrauding a group of investors (the “Victims”) by soliciting funds for investment in the commodity futures markets, but instead using the funds for personal and other expenses. BRETAS lulled his Victims and furthered the scheme by distributing fictitious financial statements to the Victims, purporting to show their investments’ position and growth under his management. When his companies were audited by regulators, the Commodities Futures Trading Commission (“CFTC”) and the National Futures Association (“NFA”), BRETAS lied to the regulators in order to cover up his crimes, going so far as to steal the identity of one Victim and to impersonate that Victim in email communications with the NFA.
Manhattan U.S. Attorney Geoffrey Berman said: “Fabio Bretas De Freitas solicited investor funds from several companies he operated by touting his prolific ability to profit from his futures market trading strategies. In reality, Bretas’ core strategy was swindling investors, using the funds to line his own pockets while doing minimal trading for his investors. Bretas now faces serious time in prison, and this case is a prime example of the inevitability of getting caught when defrauding investors.”
According to the allegations in the criminal complaint, the indictment, and other documents filed in federal court, as well as statements made in public court proceedings:
BRETAS operated a group of investment companies, including Phynance Capital Management LLC (“Phy Cap”), Phy Global Partners Fund LLC (“PGP”), Absolute Experience LLC (“Absolute”), and Global Partners Investors LLC (“GPI”), that he used to solicit investments from. Phy Cap was a commodity pool operator and commodity trading advisor, registered with the NFA, as required by CFTC. In his companies’ marketing materials, BRETAS represented that he used “statistical analysis and mathematical modeling of historical data to develop quantitative systematic methodologies applied to managed futures strategies.” In fact, while BRETAS solicited more than $7.5 million from individual investors, he conducted only a minimal level of trading; his predominant use of his companies was the theft of investor money, using it to cover his personal expenses and transferring investor funds abroad. In order to continue the scheme, and solicit additional investments, BRETAS prepared false monthly statements, purporting to demonstrate the investments’ growth, and distributed them to the Victims. When his regulators, the CFTC and NFA, initiated an audit in 2017, BRETAS lied about his affiliation with Absolute, falsely claimed that the funds that the Victims invested in PGP were mere loans to his company, lied about the use of those funds and the solicitation of investments, and ultimately created a fraudulent email account for the purpose of impersonating one victim in communications with the NFA.
BRETAS, 53, of Miami, Florida, pled guilty to one count of conspiracy to commit wire fraud and commodities fraud. That offense carries a maximum prison term of 25 years. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. BRETAS is scheduled to be sentenced by Judge Swain on December 17, 2019.
Mr. Berman praised the outstanding investigative work of the FBI’s New York Money Laundering Investigation Squad, and thanked the attorneys and investigators at the CFTC whose expertise and diligence were integral to the development of this investigation and today’s successful guilty plea.
This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant United States Attorney Benet J. Kearney is in charge of the prosecution.