FILED NATIONAL FUTURES ASSOCIATION

BEFORETHE

BUSINESS CoNDUCT

COMMITTEE

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NATIONAL FUTURES ASSOCIATION LEGAL DOCKETING

In the Matter of:

PROGRESSIVE INVESTMENT FUNDS (NFA lD #374772), NFA Case No. 08-BCC-019

and

VICTOR EUGENE CILLI (NFA lD #375945), Respondents.

COMPLAINT Having reviewed the investigative report submitted by the Compliance Department of National Futures Association ('NFA'), and having found reason to believe that NFA Requirements are being, have been or are about to be violated and that the matter should be adjudicated, NFA's Business Conduct Commiftee issues this Complaint against Progressive Investment Funds ("Progressive") and Victor Eugene

ciili('ciili). ALLEGATIONS JURISDICTION

1.

At all times relevant to this Complaint, Progressive was an NFA Member commodity pool operator.

2.

At all times relevant to this Complaint, Cilli was the sole owner, a registered associated person, and listed principal of Progressive and an NFA Associate.

BACKGROUND

3.

Progressive operates the Progressive Managed Futures Fund, LP ("the Fund")'

which is a Commodity Futures Trading Commission ('CFTC') Regulation 4.7 commodity pool.

4.

In June, NFA issued a Member Responsibility Action ("MRA") against Progressive

and Cilli for failure to cooperate with NFA in an investigation of a complaint by a Progressive customer who claimed she was unable to redeem her interest in the Fund.

APPLICABLE RULES

5.

NFA Compliance Rule 2-5 provides, in pertinent part, that each Member and

Associate shall cooperate promptly and fully with NFA in any NFA investigation' inquiry, audit, examination or proceeding regarding compliance with NFA requirements or any NFA disciplinary or arbitration proceeding.

couNT

I

VIOLATION OF NFA COMPLIANCE RULE 2-5: FAILURE TO COOPERATE WITH NFA IN THE INVESTIGATION OF A CUSTOMER COMPLAINT.

6.

The allegations contained in paragraphs

1

through 5 are realleged as paragraph

o.

7.

On October 1,2007, Cilli completed Progressive's annual questionnaire in which he represented that the Fund had five participants who had invested in the Fund. However, in May 2008, during a conversation concerning Progressive's 2007 annual report, Cilli represented to NFA that Progressive's annual questionnaire

and had no participants.

-

- contrary to his responses

in

the Fund held only general partner funds

8.

On May 29,2008, NFA received a call from MF Global, Inc. ("MFG"), a futures commission merchant NFA Member, which informed NFA that it had been contacted by Christina Corbisiero ("Corbisiero"), who claimed to be an investor in

the Fund. According to MFG, Corbisiero represented that she had been receiving payments from Progressive on a monthly basis, but that these payments had

stopped. MFG provided NFA with the trading records for the life of the Fund's account at MFG which indicated that approximately $263,000 had been deposated into the account, approximately $200,000 had been lost through trading, and that

approximately $62,500 had been withdrawn, leaving a balance of less than $150 in the account as ofApril 30, 2008. 9.

On May 30, 2008, NFA attempted to call Cilli but he did not answer, whereupon NFA left a voicemail message for Cilli requesting that he contact NFA to discuss

the Fund's activities, and the allegations made by Corbisiero. That same day' NFA also contacted Corbisiero, who told NFA that she had invested $65,000 in

the Fund

-

$1

5,000 in January 2007 and another $50,000 in June 2007. She

also indicated that her son had invested

$1

0,000 in the Fund. Corbisiero told

NFA that, on April 15, 2008, she requested a withdrawal of $3,000 from the Fund, but that she had not yet received the $3,000. 10.

On June 2, 2008, an NFA audit team went to Cilli's business address, which appeared to also be his residence. After knocking on the door a number of times and getting no response, NFA called Cilli's phone number, but there was no

answer. NFA did not leave a message for Cilli, as his voice mailbox was full. A short time later, however, Cilli called NFA.

11.

During this call, Cilli represented to the NFA audit team that the Fund was formed approximately eighteen months earlier. Cilli said that beginning in January 2007, four family members and friends had lent him approximately $300,000 to $400,000 so he could trade and establish a performance record for the Fund. Cilli said that he had given these four individuals promissory notes for the money that they had lent to him. Cilli told NFA that it was a mistake on his part to list these individuals as Fund participants in Progressive's annual questionnaire. Cilli claimed that he had never received any complaints from these four individuals and that if NFA wanted confirmation of this, he could arrange

it.

Cilli also told

NFA that he was in the process of paying back these four individuals the amount of their loans olus interest. 12.

Cilli also told NFA during this call that the Fund had a trading account at MFG and a bank account at Bank of America. In addition, Cilli told NFA that the Fund had a current Offering Memorandum, which he provided to potential investors, but that he had been unable to raise additional capital, as the Fund had failed to build a strong performance record. According to Cilli, he was in the process of deciding

whether or not to close the Fund. tJ.

NFA advised Cilli that there were certain records that NFA would need to review to complete its audit, and later that day, sent Cilli an e-mail which identified the records that NFA wanted to review, including a list of the individuals who loaned money to establish the Fund; loan agreements and promissory notes for these individuals; schedules of loan payments: statements or other correspondence with these individuals regarding the status of their loans; financial information for

the Fund, including a cash receipts and disbursements journal, monthly balance

sheets, bank statements, and broker statements; and financial information for Progressive, including a cash receipts and disbursements journal and bank

statements. After NFA sent this e-mail to Cilli, Cilli called NFA and requested more time to gather the requested records, and a postponement of NFAs audit. 14.

NFA advised Cilli that, at a minimum, he and Progressive would have to produce

to NFA by the following day (i.e., June 3, 2008) the following records: the names and contact information for the four individuals who loaned money to Cilli; copies of the promissory notes given to these individuals; and bank statements for the Fund. 1E

On the morning of June 3, 2008, NFA again e-mailed Cilli the list of documents

that he was required to produce that day. In this e-mail, NFA also advised Cilli that if he failed to produce the requested records, NFA would consider issuing an MRA against Progressive. 16.

Later, on June 3, 2008, NFA received a telephone call from Cilli' who representeo

that he had spoken with Corbisiero and had straightened out everything with her' Subsequently, NFA spoke with Corbisiero, who changed her original story and now claimed that she had "loaned" $65,000 to Cilli to do with as he pleased. After speaking with Corbisiero, NFA e-mailed Cilli and advised him that' notwithstanding Corbisiero's most recent representations, he was still required to produce the requested records to NFA by 5:00 p.m. on June 3, 2008. 17.

However, Cilli and Progressive failed to produce the requested records and, as a consequence, on June 6, 2008, NFA's Executive Committee issued an MRA against Progressive and Cilli based on their failure to cooperate with NFA' Among other things, the MRA prohibited Progressive and Cilli from soliciting or

I

accepting any new investments in the Fund, placing trades on behalf of the Fund, or disbursing or transfening any funds without prior approval from NFA.

18.

To date, NFA has received none ofthe requested records from Progressive or

ciili.

19.

By reason of the foregoing acts and omissions, Progressive and Cilli are charged

with violations of NFA Compliance Rule 2-5.

PROCEDURAL REQUIREMENTS ANSWER You must lile a written Answer to the Complaint with NFA within thirty days of the date of the complaint. The Answer shall respond to each allegation in the Complaint by admitting, denying or averring that you lack sufficient knowledge or information to admit or deny the allegation. An averment of insufficient knowledge or information may only be made after a diligent effort has been made to ascertain the relevant facts and shall be deemed to be a denial of the pertinent allegation.

The place for filing an Answer shall be: National Futures Association 200 West Madison Street Suite 1600 Chicago, lllinois 60606-3447 Attn : Legal Department-Docketing E-Mail: [email protected] Facsim ile: 31 2-7 81 -1 67 2 Failure to file an Answer as provided above shall be deemed an admission of the facts and legal conclusions contained in the Complaint. Failure to respond to any

allegation shall be deemed an admission of that allegation. Failure to file an Answer as provided above shall be deemed a waiver of hearing.

POTENTIAL PENALTIES, DISQUALIFICATION AND INELIGIBILITY At the conclusion of the proceedings conducted as a result of or in connection with the issuance of this Complaint, NFA may impose one or more of the following penalties:

(a) (b) (c) (d) (e)

expulsion or suspension for a specified period from NFA membership; bar or suspension for a specified period from association with an NFA Member;

censure or reprimand; a monetary fine not to exceed $250,000 for each violation found; and order to cease and desist or any other fitting penalty or remedial action not inconsistent with these penalties.

The allegations in this Complaint may constitute a statutory disqualification from registration under Section 8a(3XM) of the Commodity Exchange Act. Respondents in this matter who apply for registration in any new capacity, including as an associated person with a new sponsor, may be denied registration based on the pendency of this proceeding. Pursuant to the provisions of CFTC Regulation 1.63 penalties imposed in connection with this Complaint may temporarily or permanently render Respondents who are individuals ineligible to serve on disciplinary committees, arbitration panels and governing boards of a self-regulatory organization, as that term is defined in CFTC Regulation 1.63.

Da".d, g- l8-0 3 /jac(Complaints\Progressive-Cilli)

AFFIDAVIT OF SERVICE l, Nancy Miskovich-Paschen, on oath state that on August 18, 2008,

I

served copies of the attached Complaint, by sending such copies in the United States mail, first-class delivery, and by overnight mail, in envelopes addressed as follows:

Progressive Investment Funds 403 S. Maple Avenue Glenrock, NJ 07452 Attn: Victor Cilli, President

Subscribed and sworn to before me on this 18th day of August 2008.

OFFICIALSEAL .4,. Vandermyib Nor.rthbll, ht d llhdr

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Victor Eugene Cilli 170 Prospect Avenue

PH2 Hackensack, NJ 07601