Trade Futures 4 Less: A Ponzi Scheme?

Trade Futures 4 Less
  • Honesty
    (1)
  • Safety Of Funds
    (1)
  • Quality of Customer Support
    (4)
  • Broker Experience
    (1)
  • Platform Availability
    (4)
2.2

Summary

Mr. Pratik Patel of discount futures brokerage TradeFutures4Less.com, and various other trading related websites is under investigation by the National Futures Association. The allegations are very serious and are described as a “Ponzi-scheme like situation.”

The NFA investigation team has discovered that Mr. Patel has accepted client funds and deposited funds into his personal checking account. Also discovered several instances where “photoshopped” brokerage account statements were sent to futures account holders.

Investigators have been stymied by an uncooperative Mr. Patel that is claiming that client records were lost in a house fire. How convenient.

Investors should proceed with caution and review prior account statements for signs of fraud.

Pros: Extremely cheap futures brokerage.
Cons: Allegations of fraud by the National Futures Association.

Thanks for reading today’s update on futures brokerage: TradeFutures4Less.com

Trade Futures 4 Less is a popular discount futures brokerage owned and operated by Pratik Patel, operating out of Houston Texas. The brokerage is what is termed as an IB or Introducing Broker. What exactly does this mean? Essentially, the company serves two primary functions. The first function is marketing and acquisition of new customer accounts and deposits. The second function is customer service and support. After an account is opened and funded, the customer is then supported by the Introducing Broker in various capacities.

Some examples of those capacities include helping customers navigate the usage of a trading platform, providing general commodities and futures trading advice, helping clients enter and exit trades, and sending clients daily account statements that show trading profits and losses. Some well known Introducing Brokers include NinjaTrader, and Optimus Futures.

In 2015, TradingSchools.Org published a web page that contained a master file of nearly every Introducing Brokerage in existence. We attempted to curate a list of every futures broker advertising on the internet and build a spreadsheet that contained what each broker was charging in commissions. The idea was to help customers find the absolutely cheapest available futures trading commissions. The central argument was that service and safety of funds were secondary to commission pricing. That the futures brokerage industry had become essentially a commodity and that 99% of traders need only worry about the commissions paid and platform fees. I was wrong. Big time.

TradingSchools.Org attempted to clean up the original article by placing greater importance on the safety of funds, and customer support. In one article published October 2015, TradingSchools.Org interviewed Matt Zimberg of Optimus Futures and he gave me a real education and a stinging scolding on how I was making a huge mistake by placing too much emphasis on commissions, and nearly zero exposure to customer safety and customer support. Matt has been around FOREVER and has an excellent reputation. Most everything I know of Matt Zimberg was told to me by actual customers of his brokerage. You can read about Matt Zimberg and Optimus Futures here.

This is not a plug for Optimus Futures, but I would like take a moment to write about the latest scandalous behaviour that was recently discovered by the NFA or National Futures Association. In my mind’s eye, I can see Matt Zimberg wagging his finger at me, saying “I told you so! You didn’t listen to me. Customers that seek the ultimate lowest commissions always end up paying the highest commissions!” Enough with that, let’s talk about the latest fraud uncovered by the NFA.

TradeFutures4Less and those other websites

Pratik Patel is a one man futures trading brokerage. He does everything himself. From his apartment in Houston Texas. He owns and operates many different websites. A list below is the most recent list of futures trading brokerage websites that he promotes.

If took a look at the list of websites, there are quite a few. The main overarching theme is “cheap” trading commissions. But as Matt Zimberg told me, “a broker that is willing to work for nothing is probably going to leave you with nothing.” And, when a broker is willing to offer a service that earns him nearly nothing in commissions, then the broker is likely looking to capitalize on something on the side.

It appears that Pratik Patel had something on the side. On February 21, 2017, the National Futures Association filed a devastating complaint against Pratik Patel. Since February 21,  2017, TradingSchools.Org has received over a dozen requests to write about Pratik Patel and his various brokerage websites. It is important to note that these requests did not come from retail customers, these requests came from registered Series 3 brokers that compete with Pratik Patel for brokerage business. Apparently, there are a lot of brokers pissed off that Pratik has been winning far too many clients by undercutting trading commissions by a “nickel and diming” the competition. All of the complaining brokerages and registered individuals wish to remain anonymous. Their opinions should be considered biased.

Apparently, there are a lot of brokers pissed off that Pratik has been winning far too many clients by undercutting trading commissions by “nickel and diming” the competition. All of the complaining brokerages and registered individuals wish to remain anonymous. Their opinions should be considered biased.

National Futures Association Allegations

The National Futures Association is the regulatory body for futures brokerages. When they issue a press release with highly detailed allegations of fraud, its very serious business. Let’s review some of the allegations, it is important to note that at this time, these are allegations.

As per the NFA, on January 2017, the NFA received a customer complaint that (Customer A) had invested $17,000 with a ‘futures investment fund’ operated by Pratik Patel. During the course of several months, she was sent monthly account statements that showed steady increases in her futures trading account balance. The most recent account statement showed an account balance of approximately $40,000. At that time, she decided to cash out and close her trading account. Mr. Pratel responded that her money would be wired to her shortly. It never arrived. At some point, Mr. Patel stopped responding to her repeated e-mails and phone calls.

Based upon this information, the NFA then searched for any records of a registered ‘futures trading fund’ by Mr. Patel. Nothing could be found. On January 26, 2017, the NFA, fearing fraud, commenced an aggressive examination of Mr. Patel. The NFA subsequently discovered that Patel had solicited and accepted funds from at least four other customers for the ‘futures investment fund’.

The examination team with the NFA then requested a full list of ‘futures investment fund’ participants. Patel claimed that he could not provide a complete list of participants because the records had been kept at his parents’ house. And his parents’ house had burned down in a fire. And all the records had been burned in the fire. The NFA exam team then requested all emails relating to customers of the ‘futures investment fund’. Patel then claimed that all emails were permanently erased and he could not recover any emails older than 30-days.

Of the customers that the NFA was able to actually interview (Customer B), a customer was told that his funds were kept in a segregated trading account and that his monthly average monthly return would range from 10%-40%. Monthly account statements were mailed to customer (Customer B).

However, upon further examination, the NFA discovered that the account statements were actually phony and appeared to have been created through “photoshopping” older account statements and inserting phony information onto what appeared to be a real statement.

In total, the NFA investigation team discovered Customer A, B, C, and D had all been sent phony brokerage statements that were created by “photoshopping.” In one particular instance, the fake account statement showed a list of supposed trades that were net losers. But Patel sloppily changed only the balance amount to show only profitable trades. A clear sign of fraud, and sloppy fraud at that.

The big question is how many people have been burned through this fraudulent activity? This is a question that the NFA would like to answer, but cannot because apparently the records were kept in a house that supposedly burned down. And the emails were all deleted.

Mr. Patel is attempting to defend himself by stating that the fraud occurred prior to his registration with the NFA. And since the fraud occurred prior to official registration, then the NFA’s  enforcement action is not valid. However, the NFA discovered that even after his NFA registration, he continued to send false statements to investors. Furthermore, the NFA is alleging that the activity appears to be a Ponzi-like scheme.

The NFA is also alleging that “Patel provided false and misleading information to NFA investigators throughout the course of the NFA’s examination, and it was not until the NFA confronted him with numerous falsehoods that he finally confessed to the fraud.”

What happens to Pratik Patel now? Are client funds safe?

The big question that readers want to know, “are my funds safe?” Truthfully, we don’t know. Some investors thought that they were opening actual brokerage accounts. Some sent funds directly to the personal checking account of Patel. Anyone that personally sent funds directly to Patel, and not a segregated trading account, those funds are probably lost. However, if you sent your funds directly to the segregated account held at Dorman Trading, then your funds are probably safe. But in truth, we dont even know if that is valid. There is also the possibility that Patel sent “photoshopped” account statements using Dorman Trading letterhead.

If you are concerned that you might a party to the fraud, or suspicious that your Dorman Trading account statements are not authentic, then you should contact the person in charge of supervising Patel, his name is Bob Siler at Dorman Trading, and he can be reached directly at 800-552-7007.

TradingSchools.Org reached out directly to Bob Siler at Dorman Trading, the FCM or Futures Commodity Merchant in charge of supervising Mr. Patel. He responded that “this has been keeping me up at night, and I am genuinely worried.” He also explained that Dorman Trading is ending their relationship with Mr. Patel on March 31, 2017. Why not sooner? Bob Siler explained that all of Mr. Patels accounts are being transferred to another Introducing Broker named Stage5 Trading. Apparently, Stage5 Trading purchased the “book of customers” from Mr. Patel. The only question…if there are additional missing funds, is Stage5 Trading and Dorman Trading going to reimburse those customers for any faked or fraudulent trading accounts?

Additionally, with the seriousness of these allegations, were any clients trading with simulated accounts and not actual ‘live’ trading accounts? This is the main question that various brokers have requested that TradingSchools.Org write about. At this point, we just don’t know how deep the rabbit hole goes. If you have ever had a futures trading account with Mr. Patel, you should probably take another look at prior brokerage statements, looking for signs of fraud.

Speaking with Mr. Patel

TradingSchools.Org made several attempts to reach Mr. Patel by telephone. We were finally able to reach him and discuss these allegations. He responded that none of the allegations are true and he has hired an attorney to fight the charges levied by the NFA.

Additionally, he mentioned that one of the accounts was from a jealous ex-girlfriend from 10 or 15 years ago. That she was looking to ‘shake him down’ because he had recently purchased a new Corvette.

Mr. Patel categorically denies all allegations against him. Perhaps there is “more smoke than fire”. Time will tell.

Wrapping things up

Thanks for reading today’s update. It has been a couple of years since the last big scandal regarding a futures broker. Most recently was Peregrine Financial, another introducing broker that stole client funds and the owner of that company was sentenced to 50 years in prison.

In my opinion, the moral of the story is that choosing a broker is about not having your money stolen. Don’t look for the lowest commissions, this is secondary. The most important thing is to make sure your money is safe. And if you have to spend an additional .25 cents for that safety…its money well spent. Brokers that rely upon gimmick pricing, or an “all you can eat buffet” approach to trading probably are not making their money from trading commissions, but from some sort of side activity or gimmick. Buyer beware.

I can’t get that stupid quote from Matt Zimberg out of my head, “customers that seek the ultimate lowest commissions always end up paying the highest commissions.” Maybe he is right.

Thanks again for reading. And don’t forget to leave a comment below. Also for those interested in the ‘nitty-gritty’ of the NFA complaint, I have included this below.

Pratik Patel complaint

19 Comments

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