New Jersey Sting Operation Exposes $3.7 Million Nationwide Investment Fraud

Phillip Galles faces charges of wire and commodities fraud, accused of duping investors out of over $3.7 million through a deceptive hedge fund operation.

In a significant crackdown on financial fraud, U.S. Attorney Philip R. Sellinger announced today the indictment of 57-year-old Chicago resident Phillip Galles. Charged with wire fraud and commodities fraud, Galles is accused of orchestrating a fraudulent scheme that siphoned more than $3.7 million from unsuspecting investors. Masquerading as a successful hedge fund manager, Galles allegedly lured victims into investing in commodity futures with his Chicago-based company, Tyche Asset Management, only to misappropriate their funds for personal use.

Galles, previously a commodities trader, reportedly enticed investors by boasting about Tyche's non-existent success and purported proprietary trading strategies, claiming to achieve extraordinary annual returns exceeding 100 percent. Contrary to these representations, investigations reveal that Tyche barely engaged in any legitimate investment activities. Instead, Galles operated Tyche akin to a Ponzi scheme, recycling investor money to fabricate returns and cover personal expenses, including his stint as a dog walker.

The indictment highlights Galles' encounter with an undercover agent in New Jersey, where he further embellished Tyche's achievements and his own credentials, falsely claiming astronomical annual returns of 336 percent and backing from high-profile investors. These deceptive practices led to the defrauding of over a dozen victims across multiple states.

Galles now faces up to 20 years in prison for each count and could be fined up to $250,000 or twice the gross gain or loss from his offenses, demonstrating the serious consequences of financial fraud. This case underscores the U.S. Attorney's Office's commitment to protecting investors and upholding market integrity by rigorously pursuing those who engage in deceitful and exploitative practices.

The charges are part of a collaborative investigation effort led by special agents from the U.S. Attorney’s Office in Newark and postal inspectors in Newark, with contributions from the Commodity Futures Trading Commission and the National Futures Association. Assistant U.S. Attorney Carolyn Silane of the Economic Crimes Unit in Newark represents the government in this case.

While the charges against Galles are severe, it is important to remember that they are merely accusations at this stage, and he is presumed innocent until proven guilty in a court of law. This case serves as a stark reminder of the perils of investment fraud and the importance of due diligence when entrusting one's finances to investment managers.