Feb. 24—Marcus Todd Brisco and his companies, Yas Castellum LLC of Denver and Yas Castellum Financial LLC of Wailuku, Maui, are named in the enforcement action filed Jan. 31 in U.S. District Court for the Southern District of Texas by the Commodity Futures Trading Commission.

A 25-year-old Wailuku man is accused of defrauding investors of more than $2 million through his role in a $146 million Ponzi scheme that took money from investors who thought they were buying futures in foreign currency or gold exchange rates, according to a federal civil enforcement action alleging fraud and misappropriation.

Marcus Todd Brisco and his companies, Yas Castellum LLC of Denver and Yas Castellum Financial LLC of Wailuku, Maui, are named in the enforcement action filed Jan. 31 in U.S. District Court for the Southern District of Texas by the Commodity Futures Trading Commission.

Brisco allegedly worked with Tin Quoc Tran of Katy, Texas, and Brisco's brother-in-law, Michael Shannon Sims, to run three interconnected schemes that took $146 million from customers purportedly to trade foreign currency exchange positions and gold-U.S. dollar pair transactions, known as XAUUSD.

Federal court documents allege that Brisco told investors through email, newsletter and recorded pitches that his companies were providing pooled funds to a private broker "trading financial instruments on margin " with a "high degree of leverage " and claimed returns on investment of more than 10 % a month with one of his strategies. He also promised referral fees of $500 to $1, 000 to people who could bring new investors.

Brisco paid himself fees for successful trades that allegedly did not exist, according to the complaint. He did not return Honolulu Star-Advertiser messages seeking comment.

Most of the money came to the alleged scheme starting in April 2020, with Tran allegedly accepting more than $144 million from 913 pool participants.

Instead of sending the pool funds to a trading firm, Tran misappropriated some of the money to pay invoices, a loan and people not involved with the commodity pool and to subsidize his unrelated businesses, said the Commodity Futures Trading Commission complaint.

Leveraged foreign currency exchanges allow investors to borrow money from a broker to trade bigger positions in a particular currency. That leverage can create large returns from favorable changes to a currency's exchange rate but can also lead to losses if the rate moves against the bet placed by the investor.

The same concept applies to gold value positions taken by investors using borrowed money. The Commodity Futures Trading Commission regulates the U.S. derivatives market.

Brisco attend the University of Hawaii at Manoa from 2018 until he graduated in spring 2019 with a Bachelor of Arts in chemistry, according to university records. Since 2018 he has also owned and operated Rolly Receipts LLC, a Wailuku-based company that markets eco-friendly food packaging and an ATM machine service featuring receipts printed on smokable paper that can be used to role cannabis cigarettes, according to the company's website.

The federal commission alleges in its complaint that Brisco and his two companies knowingly made "fraudulent and material misrepresentations and omissions " about their historical trading profits, where they would maintain customer funds, how they would trade with those funds and who would do the trading.

In fact, Brisco, Tran and the two companies "did not send any funds to a firm that trades forex or XAUUSD. Instead, nearly all of the funds were directed to commodity pools controlled and operated by Tran, " the complaint states. Additionally, those involved misappropriated a portion of the funds for other purposes and concealed their scheme, providing pool participants with false account statements and wire transactions "to disguise deposits as payments for 'services.'"

To hide Tran's actions from regulators, Francisco Story and Ted Safranko, in their roles as directors and officers of SAEG Capital General Management LP, allegedly "submitted falsified bank statements to the National Futures Association " for one of Tran's pools of money, according to the complaint.

Between October 2020 and May 2022, Brisco and Yas Castellum LLC "fraudulently solicited " money from investors who thought they were buying into a commodity pool with a 10.95 % return on investment per month average in the previous 12 months as of February 2022, the complaint said.

Brisco allegedly took 43 pool participants for $470, 780 and did not direct any of the money toward bets on the movement of foreign currency or commodity exchange rates.

Instead, the commission alleges, Brisco transferred most of the money to Tran's investment pools and a small portion to the "purported trading firm " that was handling the fake trades.

"Brisco did so at the direction and with the assistance of Mike Sims, his brother-in-law and the purported CEO of the firm that was supposed to trade on behalf Yas Castellum LLC pool participants, " the complaint said. "Sims was aware that these Pool Participant funds were supposed to be used to trade forex or XAUUSD. Sims instructed Brisco to disguise the transfers as payments for 'services' so the scheme would not be discovered."

Yas Castellum LLC sent fake weekly account statements to investors that were allegedly created by Brisco and "showed their purported trading profits."

From Dec. 4, 2020, until just recently, Yas Castellum LLC was registered with the Commodity Futures Trading Commission as a commodity pool operator, and from March 29 to Aug. 18, it was registered as a foreign exchange firm with the National Futures Association, the self-regulatory organization of the U.S. derivatives industry.

In March the NFA identified "serious concerns " about Yas Castellum LLC's "lack of oversight and control of investor funds, " according to the commission's complaint.

Brisco allegedly told the NFA that his company was ceasing operations, but instead he started Yas Castellum Financial LLC to pool more money from investors using the same "brokers, platform, and trading strategies " as Brisco's first company, the complaint said.

The new company was not registered with the federal commission. Brisco allegedly received funds from 57 people totaling $1.58 million. Most of the money was sent to Tran's third pool of money.

Tran also allegedly used investments from pool participants to pay off other investors.