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Rockwall father, son charged with fraudulent solicitation of $30 million

By J.J. Smith. The U.S. Commodity Futures Trading Commission (CFTC) has charged a Rockwall father and son and their company with fraudulent solicitation in connection with trading of commodity futures contracts and leveraged foreign currency.

According to a news release from the CFTC, its complaint alleges that, since at least June, 2008, Robert Mihailovich Sr., and his Rockwall-based company, Growth Capital Management, fraudulently solicited and accepted more than$30 million from approximately 93 customers to invest in futures and forex through discretionary accounts traded by the company.

The CFTC’s complaint was filed July 27 in the U.S. District Court for the Northern District of Texas.

The complaint also charges that Robert Mihailovich, Jr, also of Rockwall and the listed principal and registered associated person of Growth Capital Management, made false statements in required regulatory filings with the CFTC by failing to disclose that his father was a controlling principal of the business.

Mihailovich, Sr, is a felon who was on supervised release while he was soliciting for and operating the business.

He served 27 months in prison for the federal felony conviction of mail fraud and was ordered to pay approximately $197,000 in restitution, plus serve a three-year supervised release.

To induce new investors, the father made false representations claiming to be a successful commodity futures trader and touting Growth Capital Management as having a profitable trading record.

According to the complaint, he stated that he had never experienced a losing trade. However, actual trading accounts managed and controlled by him realized net losses.

Attempts to reach the firm or the Mihailovichs were unsuccessful.

In its continuing litigation, the CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans and a permanent injunction prohibiting further violations of the federal commodities laws.

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