The Commodity Futures Trading Commission has secured a significant enforcement victory against a Wisconsin man who operated a fraudulent commodity trading scheme for nearly eight years. The U.S. District Court for the Eastern District of Wisconsin entered a consent order against Robert Narvett, requiring him to pay more than $185,000 in restitution to defrauded victims and imposing a permanent ban on trading and registering with the CFTC.
The order, announced Wednesday, resolves a CFTC enforcement action filed in March 2021 that charged Narvett with fraud, misappropriation, and engaging in prohibited activities as a commodity trading advisor. The consent order also prohibits Narvett from further violating provisions of the Commodity Exchange Act.
According to the court's findings, Narvett operated his fraudulent scheme from at least December 2013 through March 2021. During this period, he persuaded clients to allow him to manage their commodity futures trading accounts, only to abandon them after losing money trading their accounts and misappropriating their investment funds.
To attract client investments, Narvett employed a pattern of deceptive practices that included making numerous false and misleading statements about his trading successes and methods. The court found that he deliberately concealed critical information from potential clients that would have exposed the fraudulent nature of his operations.
Most significantly, Narvett failed to disclose that he was not registered with the CFTC as a commodity trading advisor, a registration required by the Commodity Exchange Act for individuals providing such services. This omission violated federal law and deprived clients of important regulatory protections.
The court also found that Narvett concealed from clients that a Wisconsin federal court had previously entered a judgment against him in a Securities and Exchange Commission case involving a separate fraudulent investment scheme. This prior enforcement action should have served as a red flag to potential investors about Narvett's history of financial misconduct.
The case demonstrates the interconnected nature of financial fraud enforcement, as Narvett faced both civil and criminal consequences for his actions. In a related criminal case, the U.S. Attorney's Office for the Eastern District of Wisconsin charged him with wire fraud, bank fraud, money laundering, and aggravated identity theft.
The criminal proceedings moved swiftly, with Narvett pleading guilty in May 2022 to one count of wire fraud and one count of money laundering. The federal court sentenced him to 15 years in prison and ordered him to pay $1.68 million in restitution, demonstrating the serious nature of his financial crimes.
The CFTC's enforcement action highlights the agency's commitment to protecting investors in commodity futures markets from unregistered and fraudulent operators. The permanent trading ban ensures that Narvett cannot return to the industry to victimize additional investors, while the restitution order provides some measure of recovery for those who lost money in his scheme.
This case also illustrates the importance of due diligence for investors considering commodity trading arrangements. Potential clients should verify that trading advisors are properly registered with the CFTC and investigate any prior enforcement actions or criminal charges. The CFTC maintains public databases that allow investors to check the registration status and disciplinary history of commodity trading advisors.
The enforcement action benefited from coordination between multiple federal agencies. The CFTC acknowledged the assistance of the U.S. Attorney's Office for the Eastern District of Wisconsin and the FBI, demonstrating how civil and criminal authorities work together to address complex financial fraud schemes.
The CFTC's Division of Enforcement staff responsible for this action included Dmitriy Vilenskiy, Julia C. Colarusso, and Paul G. Hayeck, along with former staff members Luke Marsh and A. Daniel Ullman II. Their work spans nearly four years from the initial enforcement action filing to the final consent order.
For victims of Narvett's scheme, the restitution order represents an important step toward recovery, though the amount may not fully compensate all losses incurred during the eight-year fraud. The case serves as a reminder that while enforcement actions can result in penalties and restitution, prevention through proper due diligence remains the best protection for investors.
The consent order format allowed for resolution without a trial, but the court's findings establish the facts of Narvett's misconduct for the public record. This enforcement action adds to the CFTC's ongoing efforts to maintain market integrity and protect participants in commodity futures markets from fraudulent schemes and unregistered operators who violate federal commodities law.