Office of Proceedings 

In the Matter of 

U.S. COMMODITY FUTURES TRADING COMMISSION 

Three Lafayette Centre 

1155 21st Street, NW, Washington, DC 20581 

www.cftc.gov 

., 

VERUUS WEALTH MANAGEMENT, LLC 

Registrant. 

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CFTC Docket Number: SD 13-03 

______________________________ ) 

Before: 

Appearances: 

Introduction 

INITIAL DECISION ON DEFAULT 

Philip V. McGuire, 

Commodity Futures Trading Commission 

Susan B. Padove, Esq., Senior Trial Attorney 

Division of Enforcement, Commodity Futures Trading Commission 

525 W. Monroe Street, Chicago, Illinois 60661 

This is a proceeding to revoke the registrations ofVeruus Wealth Management, 

LLC ("Veruus"), pursuant to Sections 8a(4) and 8a(3)(K) ofthe Commodity Exchange 

Act ("Act"), 7 U.S. C. §§ 8a(4) and 8a(3) (2012), and Commission rules 3.6o(g) and 

10.93, 17 C.F.R. §§ 3.6o(g) and 10.93 (2013). Veruus, a Colorado limited liability 

company, has been registered with the Commission, since May 3, 2012, as a commodity 

pool operator ("CPO") and commodity trading advisor ("CTA"). 

By motion dated October 23, 2013, the Commission's Division of Enforcement 

("Division") has moved for entry of a default judgment against registrant Verm1s, based 

on its failure to answer, or otherwise to appear or respond to, the Notice of Intent to 

Revoke the Registrations ofVeruus Wealth Management, LLC, issued by the 
Commission on August 21, 2013 ("Notice"). The Commission's Notice alleges that 

Veruus is subject to statutory disqualification from Commission registration based on 

an Order of Default Judgment against Verm1s, issued on November 28, 2012, by the 

District Court for the City and County of Denver, Colorado ("Default Order"). DRCK 

LLC, David William McCarthy, and Rosemarie L. McCarthy v. Direction Labs, Inc., 

Veruus Wealth Management, LLC, Steve Linnenlcamp, and Chisan Chong ajlcja 

Christian Chong ajlcja Chris Chong, Case No. 2012-CV5305 (Denver Co. D. Ct., 2nd JD) 

("DRCK v. Direction Labs"). The Colorado Court's Default Order in DRCK v. Direction 

Labs: one, made findings of fact and conclusions of law that Veruus was liable on the 

claims of civil theft, conversion, unjust enrichment and breach of contract that were 

filed against it; and two, awarded the private plaintiffs total damages of $1,635,197-46. 

On August 22, 2013, the Commission's Proceedings Clerk, via registered mail, 

served the Commission's Notice on Veruus at its last address listed with the National 

Futures Association ("NFA"): 4600 S. Syracuse Street, Suite 900, Denver, Colorado 

80237. 1 Thus, Veruus was properly served pursuant to CFTC rule 3.50. 2 

1 The Notice and accompanying documents were also served via ce1iified mail to the Denver and Aurora, Colorado 

addresses of Chi san Chong, a listed principal of Veruus. The U.S. Postal Service returned the mailings sent to 

Verm1s' and Chong's Denver addresses, because it was unable to deliver or forward them. Delivery of the Notice 

mailed to Chong's Aurora, Colorado address was also unsuccessful, because no one picked it up. As explained in.fi·a 

in footnote 2, under the Commission's rules, service on Veruus was complete upon mailing to its Denver, Colorado 

business address on file with the NF A. 2 Pursuant to CFTC rule 3.30(a), 17 C.F.R. § 3.30(a) (2013), the address of each registrant as submitted on its 

application for i·egistration or as submitted on the biographical supplement shall be deemed to be the address for 

delivery to the registrant for any communications fi·om the Commission, including any summons, complaint, notice 

and other written documents or correspondence, unless the registrant specifies another address for this purpose. 

CFTC rule 3.30(b ), 17 C.F.R. § 3.30(b) (20 13), provides that each registrant, while registered and for two years after 

the termination of registration, must notify the National Futures Association ("NF A") of any change of add1'ess, and 

that failure to do so may result in an order of default in any Commission or NF A proceedings. Moreover, pursuant 

to CFTC rule 3.50, 17 C.F.R. § 3.50 (20 13), for purposes of an action for the denial, suspension or revocation of 

registration, service upon a registrant will be sufficient if mailed by registered mail or certified mail return receipt 

requested properly addressed to the registrant at the address shown on his application or any amendment thereto, and 

will be complete upon mailing. 

2 
Verm1s did not respond to the Commission's Notice. Therefore, on September 

26, 2013; I issued a Default Notice finding that Veruus was in default, and setting 

deadlines for the Division to file a motion for entry of a default judgment and for Venms 

to file any opposition to the Division's motion.3 Subsequently, the Division timely filed a 

motion for entry of a default judgment, and Veruus failed to file a response to the 

Default Notice or to the Division's motion. Accordingly, this matter is ripe for entry of a 

default judgment. 

As a result of its default, Verm1s: one, has waived the opportunity for a hearing 

on the issues; and two, is precluded from introducing evidence of mitigation and 

rehabilitation which is necessary to rebut the presumption of unfitness for registration 

created by the findings of fact, conclusions of law, and sanctions in the Colorado Court's 

Default Order. Thus, the well-plead allegations in the Notice, as augmented by the 

evidence produced by the Division, and as supplemented by the proposed findings and 

conclusions in the Division's motion, are deemed true and conclusive for purposes of 

finding that Veruus is statutorily disqualified from registration under Sections 8a(4) and 

8a(3)(K) of the Act. Accordingly, as set out below, the Division's motion has been 

granted, Veruus has been found to be conclusively unfit for registration and statutorily 

disqualified from registration, and the CPO and CTA registrations ofVeruus have been 

revoked. 

3 The Default Notice was served upon Chong at his Aurora, Colorado address. The U.S. Postal Service sent the 

Office of Proceedings a receipt dated September 28,2013 confirming delivery. In addition, the U.S. Postal Service 

reported that service of the Default Notice in care of Daniel Suh, another listed principal of Veruus and its 

designated contact for compliance and regulation matters and communications fi·om the CFTC, at Suh's Aurora, 

Colorado address was unsuccessful because no one picked it up. This Initial Decision will be served on Verm1s: 

one, at its Denver, Colorado address listed with the,NFA, two, in care of Chong at his Aurora, Colorado address, and 

three, in care of Sub (via UPS, signature waived). 

3 
Findings of Fact 

1. Veruus Wealth Management, LLC, ("Veruus"), a Colorado Limited Liability 

Company, has been registered with the Commission as a CPO and as a CTA since May 3, 

2012, pursuant to Section 4m of the Act, 7 U.S.C. § 6m (2012).4 

2. On August 24, 2012, David W. McCarthy, his wife, and their Colorado limited 

liability company DRCK LLC ("DRCK") (collectively the "private plaintiffs") filed a 

Colorado state court civil injunctive action against Vermis, Direction Labs, Incorporated 

("Direction Labs"), a Colorado corporation that solicited them to invest in a Vermismanaged foreign exchange trading account, and Vermis' and Direction Labs' chief 

executive officers, Chisan Chong and Steve Linnenkamp, respectively. DRCK LLC, 

David William McCarthy, and Rosemarie L. McCarthy v. Direction Labs, Inc., Veruus 

Wealth Management, LLC, Steve Linnenlcamp, and Chisan Chong ajlcja Christian 

. Chong ajlcja Chris Chong, Case No. 2012-CV5305 (Denver Co. D. Ct, 2nd JD) ("DRCK 

v. Direction Labs"). 

The private plaintiffs' alleged: one, that, from January through June 2012, 

Veruus and the other defendants knowingly obtained or exercised control over monies 

that private plaintiffs provided to Veruus to invest in a trading account to be managed 

byVeruus, after Direction Labs and other defendants solicited private plaintiffs by 

falsely promising that an initial $300,000 investment would yield $1,ooo,ooo within 

twelve months, and that, without authorization and with the intent to deprive private 

plaintiffs of the use or benefit ofthose monies, Veruus and the other defendants 

improperly commingled and used the private plaintiffs' funds for operating expenses 

instead of for trading activity, thereby constituting civil theft and conversion; two, that 

4 NF A records, attachment to lung Affidavit and Certification, Exhibit I, Division's motion. 

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private plaintiffs made a $500,000 investment in Direction Labs through a stock 

purchase agreement and advanced an additional $48,ooo for payroll to Direction Labs 

in exchange for additional stock in the company, and Veruus and the other defendants 

breached this agreement by improperly commingling funds; and three, that Veruus and 

the other defendants received a benefit at the private plaintiffs' expense by using private 

plaintiffs' trading funds for purposes other than those stated to the private plaintiffs, 

thereby unjustly enriching themselves at private plaintiffs' expense. 

3. On November 28, 2012, in DRCK v. Direction Labs, the District Court for the 

City and County of Denver, Colorado entered an Order of Default Judgment against 

Veruus and Direction Labs ("Default Order"). The Default Order found that the private 

plaintiffs had filed claims for civil theft, conversion, unjust enrichment and breach of 

contract, that Veruus and Direction Labs had been properly served and had defaulted, 

and that Veruus and Direction Labs were jointly and several liable on those claims. 

The Colorado Court's Default Order also found that the private plaintiffs suffered 

$339,517.79 in damages under the civil theft claim, comprised ofthe $300,000 

. investment and $39,517.79 in reported profits in the trading account. Further, the 

Court ordered that the private plaintiffs were entitled to treble the damages of 

$339,517.79 pursuant to C.R.S.A. § 18-4-405 (2012), which allows treble damages as a 

punitive remedy for stealing an owner's property. The Default Order therefore awarded 

total damages of $1,589,557.56, which includes the $339,517.79 trading account loss, 

trebled, plus $548,ooo recompense for private plaintiffs' stock purchase. The Colorado 

Court entered a final judgment amount of $1,635,197-46, after adding fees, costs and 

pre-judgment interest. 

5 
Discussion and Conclusions of Law 

In 1982, Congress created a two-tiered system of statutmy disqualification, 

Futures Trading Act of 1982, Pub. L. No. 97-444, 96 Stat. 2294 (1983). The most 

egregious bases for disqualification are set out in Section 8a(2) of the Act. Additional 

bases for disqualification are set out in Section 8a(3) of the Act. Although less egregious 

than a Section 8a(2) disqualification, a Section 8a(3) disqualification is sufficiently 

serious to operate as a presumption that a person or firm is unfit to do business in a 

relevant registered capacity. The presumption of unfitness under Section 8a(3) can be 

rebutted by a showing of the preponderance of the evidence that full, conditioned or 

restricted registration would not pose a risk to the public, including, for example, 

mitigating circumstances, rehabilitation, or close supervision by another registrant. By 

defaulting, Veruus has precluded itself from presenting such rebuttal evidence, and has 

waived the opportunity for a hearing. See Commission rules 3.6o(b)(1), 3.6o(b)(2)(i), 

3.6o(b)(2)(ii)(A)-(C), and 3.6o(e)(ii), 17 C.F.R. §§ 3.6o(b)(1), 3.6o(b)(2)(i), 

3.6o(b)(2)(ii)(A)-(C), and 3.6o(e)(ii) (2013). See generally H.R. report No. 97-565, 

Part I at 49-50, and 96 (May 17, 1982); Sen. Rep. No. 384, 97th Cong, 2d Sess. 35-37 

(1982); and Parts I and III of the preamble to the CFTC final rules implementing 

registration provisions of the Act, as amended by the Futures Trading Act of 1982, 49 

Fed. Reg. 8208 (March 5, 1984), reported in Comm. Fut. L. Rep.~ 22,019, at 28,568-

28,569, 28,572-28,573, and 28,578-28,579; and In re Walter, Comm. Fut. L. Rep. ~ 

24,215, at 35,009-35,011 (CFTC 1988). 

Section 8a(4) of the Act, 7 U.S.C. § 12a(4) (2012), in relevant part, authorizes the 

Commission to revoke the registration of any person if cause exists under Section 8a(3) 

of the Act which would warrant a refusal of registration of that person, after the 

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opportunity for a hearing. Section 8a(3)(K) of the Act, 7 U.S.C. § 12a(3)(K) (2012), in 

relevant part, authorizes the Commission to revoke the registration of any person who 

has been found by a court of competent jurisdiction to have violated any state or any 

rule, regulation or order thereunder which involves, among other things, theft or 

fraudulent conversion of funds. 

Here, on November 28, 2012, in DRCK v. Direction Labs, the District Court for 

the City and County of Denver, Colorado, a court of competent jurisdiction, entered an 

Order of Default Judgment against Veruus. The Colorado Court's Default Order made 

findings of fact and conclusions of law that Veruus was liable on the claims of civil theft, 

conversion, unjust enrichment and breach of contract that had been filed against it, and 

awarded the private plaintiffs $1,635,197-46 in damages. The Colorado Court's Default 

Order in DRCK v. Direction Labs therefore constitutes a valid basis for revoking 

Veruus' CPO and CTA registrations pursuant to Sections 8a(4) and 8a(3)(K) of the Act. 

ORDER 

Veruus Wealth Management, LLC is statutorily disqualified from registration 

under Sections 8a(4) and 8a(3)(K) of the Commodity Exchange Act. Accordingly: one, 

the Division's motion for entry of a default judgment is hereby granted; two, Veruus 

Wealth Management, LLC is found conclusively unfit for registration; and three, the 

commodity pool operator and commodity trading advisor registrations ofVeruus 

Wealth Management, LLC are hereby revoked. 

Dated Ja~ua 7, 2014. . 

.1/M(/~ Philip . McGuire, 

Judgment Officer 

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