Investment firm executive jailed for transnational ‘cherry-picking’ scheme

A CHIEF executive officer of an investment firm, who transferred crime proceeds to foreign bank accounts his co-conspirator controlled in Belarus and Dominica, has been sentenced to two years in prison.

In addition, Peter Kambolin, 48, a US-Russian national, has been sentenced to one and a half years of home confinement and ordered to forfeit approximately US$1.6 million for the “cherry-picking” scheme, in which he fraudulently misappropriated profitable trades to himself and saddled his investors with losses.

According to court documents, Kambolin, was the owner and chief executive officer of Systematic Alpha Management LLC (SAM), an investment firm that he marketed as offering algorithmic trading strategies involving futures contracts.

Established in 2007, SAM by 2011 had more than US$720 million in assets under management. Between January 2019 and November 2021, Kambolin, who at the time was a commodity trading adviser and a commodity pool operator, engaged in a cherrypicking scheme in which he fraudulently allocated profits and losses from futures trades in a manner designed to benefit his own accounts unfairly at the expense of his clients.

The court was told that Kambolin also misrepresented to his clients that SAM employed trading strategies focused on cryptocurrency futures contracts and foreign exchange futures contracts, when in reality, approximately half of Kambolin’s trading in each pool involved equity index futures contracts.

In doing so, Kambolin defrauded investors located in the United States and abroad by, among other things, depriving them of profitable trades.

The court heard that he used the proceeds of the scheme to fund personal expenses, including rent for a beachfront apartment, and transferred proceeds to foreign bank accounts his co-conspirator controlled in Belarus and Dominica.

During the relevant period, Kambolin executed trades for pool participants together with trades he executed on behalf of his proprietary accounts, and fraudulently allocated the profits and losses of the trades to benefit his own accounts.

Kambolin pleaded guilty on October 11, 2023, to one count of conspiracy to commit commodities fraud.