(Bloomberg) – A former Chicago commodity trader has been arrested and charged with fraud for lying to customers about everything from a nonexistent collection of 122 luxury cars to fake returns that exceeded 200%.
Phillip Galles, 57, has been charged with a criminal case Complaint According to a statement from New Jersey Attorney Philip Sellinger, the court was unsealed Thursday with a single wire fraud case alleging that more than $2 million was stolen from victims whose money he mistakenly invested in commodity futures.
Prosecutors say Galles has made almost no investments of any kind. Instead, he ran his company using a Ponzi scheme, using the money to pay off early investors and cover his own expenses, the government said.
According to Sellinger’s office, Galles appeared in court in Chicago and remains in custody. Galles’ lawyer could not be located for comment.
Picassos and Chagalls
The Commodity Futures Trading Commission also sued Galles in federal court in Chicago on Thursday. According to the regulator, he told potential clients that his company, Tyche Asset Management, is heavily staffed by former employees of Goldman Sachs Group Inc. and is “$275 million in the US and $1.7 billion overseas managed”.
Galles allegedly claimed that a “known owner of a professional sports team,” who is not named in the court filings, and a Kuwaiti sovereign wealth fund are interested in investing in Tyche. According to the government, the annual return has been as high as 363.29%.
According to prosecutors, Galles made many of his claims to two undercover law enforcement officers posing as potential investors.
To back up his claims of wealth and success, Galles also made high-sounding claims about his lifestyle, according to the CFTC. He reportedly told potential investors that his car collection included several Lamborghinis and Ferraris and that he had luxurious homes in Chicago, Miami and London decorated with paintings by Picasso and Chagall.
Rented luxury cars
Galles also said Tyche has multiple offices and once claimed the company had more than 100 employees, according to the CFTC. He allegedly told people he was the valedictorian of a “renowned US university.”
On the same day that an alleged victim, a Texas mortgage specialist, wired him $100,000 for an investment, Galles wired $19,300 for a personal credit card bill, $14,800 to a jewelry store, $10,000 to one According to prosecutors, he received a luxury car rental and $3,200 to his girlfriend.
When a victim tried to repay $190,000 of her investment, Galles told her “among other things, he switched banks, Tyche was a victim of fraud, banks and wire transfers weren’t working properly, and he was ill.” the government.
The cases are US v. Galles, 23-mj-08076, U.S. District Court, District of New Jersey; Commodity Futures Trading Commission v. Galles, 23-cv-02970, United States District Court, Northern District of Illinois (Chicago).
