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(Bloomberg) — A former Chicago commodities trader was arrested and charged with fraud for lying to clients about everything from a non-existent collection of 122 luxury cars to phony returns that exceeded 200%. 

Phillip Galles, 57, was charged in a criminal complaint unsealed Thursday with a single count of wire fraud for allegedly stealing more than $2 million from victims whose money he falsely claimed he was investing in commodity futures, according to a statement by New Jersey US Attorney Philip Sellinger. 

Prosecutors say Galles made almost no investments of any kind. Instead, he was running his firm as a Ponzi scheme, using the money to pay off early investors and for his own personal expenses, according to the government.

Galles appeared in court in Chicago and remains in custody, according to Sellinger’s office. A lawyer for Galles could not be located for comment.

Picassos and Chagalls

The Commodity Futures Trading Commission also sued Galles on Thursday in Chicago federal court. According to the regulator, he told prospective clients that his firm, Tyche Asset Management, was heavily staffed with former Goldman Sachs Group Inc. employees, and had “in the US $275 million under management, and $1.7 billion offshore.”

Galles allegedly claimed a “well-known owner of a professional sports team,” who is not identified in court papers, and a Kuwaiti sovereign-wealth fund were interested in investing with Tyche. He said annual returns were as high as 363.29%, according to the government. 

According to prosecutors, Galles made many of his claims to two undercover law enforcement agents posing as potential investors.

To buttress his claims of wealth and success, Galles also made grandiose claims about his lifestyle, according to the CFTC. He allegedly told potential investors that his car collection included multiple 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 had multiple offices and at one time claimed it had more than 100 employees, according to the CFTC. He allegedly told people he had been valedictorian of a “prestigious US university.”

The same day that one alleged victim, a Texas mortgage professional, wired him $100,000 to invest, Galles transferred $19,300 for a personal credit card bill, $14,800 to a jewelry store, $10,000 to an earlier investor, $9,000 to a mattress store, $6,000 to a luxury car rental company and $3,200 to his girlfriend, according to prosecutors.

When one victim tried to redeem $190,000 of her investment, Galles told her “among other things, that he had switched banks, Tyche had been the victim of fraud, banks and wire payments were not working properly, and he was ill,” according to the government.

The cases are US v. Galles, 23-mj-08076, US District Court, District of New Jersey; Commodity Futures Trading Commission v. Galles, 23-cv-02970, US District Court, Northern District of Illinois (Chicago).

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