July 26, 2026  ·  Complaint filed July 7, 2026  ·  United States District Court for the Northern District of Alabama, Southern Division, No. 2:26-cv-01170-SGC

Newman News, By David Brunk

Read the complaint

Barber v. King Alleges $3.6M Off-Exchange Commodity Fraud Scheme

Three investors sued Madding King and his Brookline entities on July 7, 2026, alleging a fraudulent scheme that solicited, pooled, and misappropriated over $3,643,000 in invested principal through unregistered, off-exchange retail commodity and forex transactions. The complaint accuses King of abandoning risk controls, commingling funds, and denying withdrawals while misrepresenting account balances, the segregated nature of investments, and the enforceability of stop-loss protections. The filing cites King’s written admissions, including a December 12, 2024, statement acknowledging a "continual complete disregard" of implemented risk parameters, as evidence of scienter and material misrepresentations under the Commodity Exchange Act (CEA) and federal securities laws.

King’s Admissions Undermine Account Claims and Risk Protections

The complaint alleges that King repeatedly misrepresented the nature of plaintiffs’ accounts and the protections in place. King provided Robert Barber with download instructions for the MetaTrader 5 trading platform, directing him to select "Vortex FX Ltd." as the broker. Barber funded his account with $1,000,000.

In written communications to plaintiffs, King admitted to pausing all trading due to risk-control failures. On October 17, 2024, King acknowledged in writing that trading had been paused. On December 12, 2024, King stated in writing that there had been a "continual complete disregard of everything I have been trying to implement over the past two months," including the manual closure of trades and the overriding of stop-loss protections. On December 16, 2024, King identified four investment vehicles—IDFUND, Solaris VC Fund, XETA Capital Fund, and Vortex FX—with differing management and redemption procedures, confirming the pooling of funds across entities and contradicting earlier representations.

King expressed uncertainty about the resolution of broker settlements, stating in a January 20, 2025, communication that he had "no idea of the end resolution" regarding an ECG broker settlement. The complaint alleges that these admissions establish King’s knowledge of the scheme’s fraudulent nature and his reckless disregard for the truth. The complaint further alleges that King’s SEC Form D filings, which reported aggregate securities offerings totaling $7,805,000, contradict his claims of passive victimhood.

Plaintiffs’ Investments and Transaction Details

The complaint provides a detailed breakdown of plaintiffs’ investments, totaling $3,643,000 in pooled capital. Jose Osorio, a former resident of Jefferson County, Alabama, and a referral source for Barber and Moreira, made multiple investments beginning in September 2022. Osorio wired $50,000 to ID Funds 3 LLC for a Ripple Labs equity investment on September 28, 2022, and an additional ~$50,000 to Brookline Investments, Inc. for the Solaris VC Fund on May 31, 2023. Between October 26 and November 20, 2023, Osorio transferred $993,125.62 in USDC to King’s deposit address, broken down as follows:

• $99,410.46 on October 26, 2023;
• $497,231.38 on October 31, 2023;
• $397,776.15 on November 20, 2023.

Osorio’s total investment amounted to $1,143,000. The third plaintiff, Andre Moreira, a citizen of Brazil, made an initial investment of $100,000, which was sent to King’s personal digital wallet, further evidencing the commingling of funds.

In soliciting Osorio’s investments, King represented that Osorio’s account would be subject to a 20% monthly cap rate. On January 27, 2024, King solicited Osorio to invest in the "Ripple Shares Arbitrage Fund," promising annual returns of 20-30%. King also represented that "appropriate stop-loss protections were in place" to limit downside risk, a statement the complaint quotes verbatim.

Off-Exchange Transactions and Regulatory Violations

The transactions at issue involved leveraged spot gold (XAU/USD) and forex contracts for difference (CFDs) executed through the MetaTrader 5 trading platform via an unregistered offshore entity, VortexFX UK, Ltd., which held offshore registration No. 2023-00517. The complaint alleges that these were retail commodity transactions that did not result in actual delivery of the commodity, in violation of federal law. Defendants were not registered with the Commodity Futures Trading Commission (CFTC) or the National Futures Association (NFA), and the transactions were not executed on a designated contract market, as required by the CEA.

The complaint asserts five federal claims, alleging violations of the CEA and federal securities laws. The federal claims include:

• Count I: Unlawful Off-Exchange Retail Commodity and Retail Forex Transactions (7 U.S.C. §§ 2(c)(2)(C), 2(c)(2)(D), 6(b); Private Right of Action under 7 U.S.C. § 25(a)(1)(D)) – Plaintiff Moreira against all defendants. The complaint alleges that Moreira’s transactions were unlawful retail commodity transactions executed off-exchange and not in compliance with CEA requirements.
• Count II: CEA Anti-Fraud Violations (7 U.S.C. § 6b; Private Right of Action under 7 U.S.C. § 25(a)(1)) – All plaintiffs against all defendants. The complaint alleges that defendants made material misrepresentations and omissions in connection with commodity transactions, including false assurances about segregated accounts, stop-loss protections, and the safety of funds.
• Count III: CEA Anti-Fraud Violations as Commodity Trading Adviser (7 U.S.C. § 6o; Private Right of Action under 7 U.S.C. § 25(a)(1)) – All plaintiffs against all defendants. The complaint alleges that defendants acted as unregistered commodity trading advisers by providing trading advice for compensation and soliciting pooled funds for commodity interests.
• Count IV: Aiding and Abetting Violations of the CEA (7 U.S.C. § 25(a)(1) and § 13c(a)) – All plaintiffs against all defendants. The complaint alleges that defendants knowingly aided and abetted CEA violations, including unregistered transactions, fraud, unregistered introducing-broker activity, and the operation of an unregistered commodity pool. The predicate CEA violations include 7 U.S.C. § 6b, 7 U.S.C. § 6o, 7 U.S.C. § 6(b) and §§ 2(c)(2)(C)-(D), 7 U.S.C. § 6d, and 7 U.S.C. § 6m(1).
• Count V: Federal Securities Fraud (Section 10(b) of the Securities Exchange Act of 1934 (15 U.S.C. § 78j(b)) and Rule 10b-5 (17 C.F.R. § 240.10b-5)) – All plaintiffs against all defendants. The complaint alleges that pooled investment interests constitute "securities" under 15 U.S.C. § 78c(a)(10) and that defendants employed schemes to defraud, made untrue statements, and engaged in fraudulent practices in connection with the purchase or sale of securities.

The complaint alleges that King’s written admissions, including his October 17, 2024, and December 12, 2024, statements, establish scienter, materiality, and loss causation for the federal securities fraud claims.

The state law claims include:

• Count VI: Florida Securities and Investor Protection Act (Fla. Stat. §§ 517.301 and 517.211) – Plaintiffs Osorio and Moreira against all defendants. The complaint alleges that Florida law treats commodity pools as securities and that defendants violated Florida securities laws by making material misrepresentations and omissions in connection with the sale of securities. Osorio’s claims are supported by solicitations directed into Florida, including a January 27, 2024, communication regarding the "Ripple Shares Arbitrage Fund" and post-loss restructuring communications. The complaint seeks recovery of the consideration paid for the securities, plus interest, attorneys’ fees, and costs under Fla. Stat. § 517.211.
• Count VII: Fraudulent Inducement / Intentional Misrepresentation (Ala. Code § 6-5-101) – All plaintiffs against all defendants. The complaint alleges that defendants made material misrepresentations to induce plaintiffs to invest, including false assurances about account segregation, stop-loss protections, and the safety of funds. The complaint quotes King’s representations regarding "account segregation" and "the existence and enforcement of stop-loss and drawdown protections" as examples of these misrepresentations.
• Count VIII: Fraudulent Suppression (Ala. Code § 6-5-102) – All plaintiffs against all defendants. The complaint alleges that defendants had a duty to disclose material facts due to partial disclosures, fiduciary relationships, and unequal access to information, and that they suppressed facts about the unregistered status of the transactions and the abandonment of risk controls.
• Count IX: Breach of Fiduciary Duty – All plaintiffs against all defendants. The complaint alleges that defendants owed plaintiffs fiduciary duties due to King’s control over funds, accounts, and discretionary authority, and that they breached these duties by abandoning risk controls, commingling funds, misrepresenting account balances, and refusing withdrawals.
• Count X: Conversion – All plaintiffs against all defendants. The complaint alleges that defendants converted plaintiffs’ funds by refusing to honor withdrawal requests.
• Count XI: Civil Conspiracy – All plaintiffs against all defendants. The complaint alleges that defendants conspired with non-party Daniel Kingsley and VortexFX UK, Ltd. to solicit unregistered leveraged transactions, operate an unregistered commodity pool, and deny plaintiffs’ withdrawal requests.
• Count XII: Unjust Enrichment / Restitution – All plaintiffs against all defendants. The complaint alleges that defendants were unjustly enriched by retaining plaintiffs’ funds and that restitution is necessary to prevent defendants from profiting from their wrongful conduct.
• Count XIII: Sale of Unregistered Securities (Ala. Code § 8-6-4; Private Right of Action under Ala. Code § 8-6-19) – All plaintiffs against all defendants. The complaint alleges that defendants’ investment vehicles, including the "Ripple Shares Arbitrage Fund," were securities under Ala. Code § 8-6-2(10) and that they were offered and sold in Alabama without registration, exemption, or federal coverage. The complaint alleges that plaintiffs "invested money in a common enterprise with the expectation of profits to be derived solely or substantially from the efforts of King and the other Defendants." The investment vehicles referenced include XETA Capital Fund, Solaris VC Fund, IDFUND/Ripple investment vehicle, and the Brookline Group "Ripple Shares Arbitrage Fund."
• Count XIV: Securities Fraud (Ala. Code § 8-6-17; Private Right of Action under Ala. Code § 8-6-19) – All plaintiffs against all defendants. The complaint alleges that defendants made material misrepresentations and omissions in connection with the sale of securities, including false assurances about "the segregated nature of Plaintiffs’ accounts" and "the existence and enforcement of stop-loss, drawdown, and kill-switch protections."
• Count XV: Control-Person Liability Under the Alabama Securities Act (Ala. Code § 8-6-19(c)) – All plaintiffs against King, Brookline Group, LLC, and Brookline Investments, Inc. The complaint alleges that King directly or indirectly controlled the Brookline entities and is jointly and severally liable as a control person for the securities law violations alleged in Counts XIII and XIV. The complaint quotes the allegation that "King is jointly and severally liable as a control person under Alabama Code § 8-6-19(c)." The complaint further alleges that King used Brookline Group, LLC’s infrastructure to solicit investments, including an email sent to Osorio on January 27, 2024, regarding the "Ripple Shares Arbitrage Fund." Brookline Investments, Inc. processed a wire transfer from Osorio to the Solaris VC Fund on May 31, 2023, via its chief financial officer, Sarah Beth Cain.

The complaint also asserts additional theories of liability, including piercing the corporate veil (alter ego liability) and CEA claims under 7 U.S.C. §§ 2(c)(2)(C), 2(c)(2)(D), 6(b), 6b, 6c(b), 6d, 6m, 6o, 13c(a), and 25(a). The complaint alleges that King used the Brookline entities as his alter ego, without corporate formalities or role separation, to perpetrate the fraudulent scheme.

The filing seeks compensatory damages, disgorgement, pre- and post-judgment interest at the legal rate of six percent (6%) per annum from the date of payment, punitive damages, attorneys’ fees, and costs. Osorio and Moreira seek recovery of the consideration paid for the securities, plus interest, attorneys’ fees, and costs under Florida law. The complaint also seeks punitive damages under Ala. Code § 6-11-20 for defendants’ gross, reckless, or intentional misconduct.

Alter Ego and Veil-Piercing Theories

The complaint alleges that King used the Brookline entities’ infrastructure for investor communications and to process transactions, blurring the lines between the entities and King’s personal operations. On January 27, 2024, King used a Brookline Group, LLC email address to solicit Osorio to invest in the "Ripple Shares Arbitrage Fund." On May 31, 2023, Brookline Investments, Inc. processed a wire transfer from Osorio to the Solaris VC Fund via its chief financial officer, Sarah Beth Cain. The complaint alleges that King controlled all aspects of the scheme, including solicitation, onboarding, funding, communications, risk parameters, and post-loss explanations.

The complaint further alleges that King’s securities filings contradict his claims of passive victimhood. On July 23, 2025, King filed a Form D with the Securities and Exchange Commission (SEC) reporting total sales of $3,385,000, and on September 26, 2025, he filed an amended Form D reporting total sales of $4,420,000. The aggregate securities offerings reported in King’s SEC Form D filings totaled $7,805,000, a figure the complaint alleges contradicts his claims of being a passive victim.

The complaint alleges that King used multiple entities interchangeably without corporate formalities or role separation, including IDFUND, Solaris VC Fund, XETA Capital Fund, and Vortex FX. The complaint alleges that King’s conduct demonstrates that the Brookline entities lacked independence from him and were operated as his alter ego for fraudulent purposes.

Withdrawal Denials and Ongoing Harm

The complaint alleges that defendants denied plaintiffs’ withdrawal requests and conditioned redemptions on group recoupment or outright refused to honor them. On December 15, 2024, Osorio submitted a withdrawal demand for $2,000,000 from Vortex FX. In May 2026, an offshore broker rejected three of Osorio’s withdrawal requests within 13 minutes, further evidencing defendants’ refusal to honor redemption demands. The complaint alleges that defendants’ conduct was ongoing through May 2026, including the refusal to honor withdrawal demands and the continued misrepresentation of account statuses.

The allegations remain unproven, and no defendant has yet responded to the complaint.

The allegations described here are taken from the filing and remain unproven; no responsive pleading is reflected in the source document.

David Brunk is a civil litigation attorney. He can be reached at david@newmanbrunk.com.