Galles, Tyche Charged by CFTC
Posted on 05/12/2023
The Commodities Futures Trading Commission (CFTC) has charged Phillip Galles, of Chicago’s Tyche Asset Management, with running a Ponzi scheme and comingling funds: “Phillip Galles is stealing funds from victims he solicits to participate in what he describes as a “managed futures fund.” Galles has deceived, and is continuing to deceive, participants into depositing funds with the Tyche entity defendants he owns and controls.”
According to the complaint, Tyche has “fraudulently” taken in US$ 6 million from 50 individuals, the Kuwait Investment Authority, and the owner of a professional sports team since 2019. Customer funds were mingled with bank and investment funds allegedly. Tyche is accused of making “misrepresentations of material fact.” The result is that Tyche “committed fraud in violation of Sections 4b(a)(2)(A)-(C), 4o(1)(A)-(B), and 6(c)(1) of the Act, 7 U.S.C. §§ 6b(a)(2)(A)-(C), 6o(1)(A)-(B), 9(1), and Regulation 180.1(a)(1)-(3), 17 C.F.R. § 180.1(a)(1)-(3) (2022), and is thought to be in violation of other laws as well.
Other details add color to the case: “Galles also bolstered his pitch to prospective participants by cultivating an image of personal wealth and sophistication. For example, in public posts to his “phillip_g724” and “tradeitup” Instagram accounts, Galles: a. boasted about his luxury car collection that supposedly included multiple Lamborghinis and Ferraris; b. bragged about his luxury homes in Miami, Chicago and Palm Beach; c. described his high-end watch collection alongside photos of Rolex and Longines watches; d. claimed to be hanging art by Picasso and Chagall in one of his homes; and e. touted the opening of offices in Chicago, Miami and London. Galles’ claims about his personal and business success are lies. In fact, since he first opened a bank account in the name of a Tyche entity in 2019, Galles has used almost none of the funds he received from participants to place any trades. Instead, Galles has used the money he received into Tyche bank accounts from the participants he solicited (or hired others to solicit for Tyche) to fund his lavish lifestyle and to further promote his fabricated image.”
U.S. Attorney Sellinger credited agents of the U.S. Attorney’s Office, under the direction of Special Agent Thomas Mahoney and inspectors of the U.S. Postal Inspection Service, under Postal Inspector Christopher A. Nielsen. The government is represented by Assistant U.S. Attorney Carolyn Silane of the Economic Crimes Unit in Newark.
In the Department of Justice announcement, they partially wrote, “Galles met in New Jersey with an undercover agent purporting to be an investment manager looking to make a large investment. Galles falsely claimed that Tyche had annual returns of 336 percent, raised over $2 billion within 60 days of starting the fund, and had prominent investors, including a Kuwaiti sovereign fund and a well-known owner of a professional sports team. Galles also falsely claimed that he graduated from a prominent university in the Midwest.
Galles defrauded more than a dozen victims out of more than $2 million.”
