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 

GROWTH CAPITAL MANAGEMENT LLC, 

Registrant. 

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CFTC Docket No. SD 12-06 

INITIAL DECISION ON DEFAULT 

Before: Philip V. McGuire, 

Commodity Futures Trading Commission 

Appearances: Alison B. Wilson, Esq., Chief Trial Attorney, and 

Boaz Coreen, Esq., Trial Attorney, 

CFTC Division of Enforcement 

Washington, D.C. 

Background 

By motion filed December 13, 2012, the Commission's Division of Enforcement 

("Division") has moved for entry of a default judgment against Growth Capital Management 

LLC ("GCM"), pursuant to Commission rules 3.60(g) and 10.93, 17 C.F.R. §§ 3.60(g) and 10.93 

(20 12), based on the failure of GCM to answer or otherwise to appear or respond to the Notice of 

Intent to Revoke the Registration of Growth Capital Management LLC ("Notice"), issued by the 

Commission and filed by the Division on August 24, 2012. On August 27, 2012, the 

Commission's Office of Proceedings served the Notice on GCM at its last known address in 

Rockwall, Texas. On October 11, 2012 the Commission's Office ofProceedings re-served the 
Notice on GCM at the Dallas, Texas address that GCM had provided the National Futures 

Association ("NF A") for any communications from the Commission. 1 Thus, GCM was properly 

served pursuant to CFTC rule 3.50.2 GCM defaulted by failing to respond to either Notice, and 

has not responded to the Division's motion. Accordingly, this matter is ripe for entry of a default 

judgment. 

As a result of its default, GCM has waived a hearing on all of the issues and is precluded 

from introducing evidence of mitigation and rehabilitation necessary to overcome the 

presumption of unfitness for registration. 3 In addition, the allegations in the Notice, as 

supplemented by the proposed findings and conclusions in the Division's motion, are deemed 

true and conclusive for purposes of finding that GCM is statutorily disqualified from registration 

under Section 8a(2)(C) of the Commodity Exchange Act ("Act") as amended by the Food, 

Conservation, and Energy Act of 2008, Pub. L. 110-246, Title XII (the CFTC Reauthorization 

Act of 2008, ("CRA")) and by the Dodd-Frank Wall Street Reform and Consumer Protection Act 

of2010, Pub. L. No. 111-203, Title VII (the Wall Street Transparency and Accountability Act of 

2010 C'Dodd-Frank Act")),§§ 701-774 (enacted July 16, 2010), to be codified at 7 U.S.C. 

§ 12a(2)(C). Thus, as set out below, the Division's motion has been granted, GCM has been 

1 See Jung Affidavit and Certification, Exhibit 1, Division's December 131

h motion. 2 Pursuant to CFTC rule 3.30(a), 17 C.F.R. § 3.30(a) (20 12), the address of each registrant as submitted on its 

application for registration or as submitted on the biographical supplement shall be deemed to be the address for 

delivery to the registrant for any communications from 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 12), provides that each registrant, while registered and for two years after 

the termination of registration, must notify the NF A of any change of address, and that failure to do so may result in 

an order of default in any Commission or NFA proceedings. Moreover, pursuant to CFTC rule 3.50, 17 C.F.R. § 

3.50 (2012), 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. 

3 The presumption of unfitness for registration under Section 8a(2) of the Act rests on the common-sense inference 

that once an individual or firm has undertaken serious wrongdoing- as it has been amply demonstrated that GCM 

has done- a substantial risk exists that the individual or firm will undertake similar wrongdoing in the future. See 

In re Akar, Comm. Fut. L. Rep.~ 22, 297 (CFTC February 24, 1986). 

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found to be statutorily disqualified from registration, and GCM's registration as aCTA and CPO 

has been revoked. 

Findings of Fact 

1. Growth Capital Management LLC, is a Texas limited liability company whose listed 

address with the Commission is at 8235 Douglas Ave, Dallas, Texas, and whose last known 

address and principal place of business was 6218 New Forest Drive, Rockwall, Texas. GCM is 

not a financial institution, registered broker dealer (or their associated person), insurance 

company, bank holding company, or investment bank holding company. GCM has been 

registered with the Commission as a commodity trading advisor (''CTA") since September 2008, 

and as a commodity pool operator ("CPO") since October 2008, pursuant to Section 4m of the 

Act, as amended by the Dodd- Frank Act, to be codified at 7 U.S.C. § 6m. 

2. On July 27, 2010, the Commission filed a civil injunctive complaint in the U.S. 

District Court for the Nmihem District of Texas against GCM and other individual defendants 

("complaint").4 The Commission's complaint alleged, inter alia, that from at least June 2008 

through approximately July 2010 GCM had fraudulently solicited over $30 million from 

approximately ninety-three customers to open individual managed accounts and trade onexchange commodity futures and off-exchange foreign currency ("forex") on a managed or 

leveraged basis pursuant to an electronic trading software program and powers of attorney 

granted to GCM and other defendants. The Commission fmiher alleged that GCM and the other 

defendants had made material false statements to prospective customers by: one, falsely 

claiming that Robeti Mihailovich, Sr., a principal of GCM, had expertise and a successful track 

record trading commodity futures and forex; two, misrepresenting and failing to disclose fully 

4 CFTC v. Growth Capital Management LLC, Robert Mihailovich, Sr., and Robert Mihailovich, Jr., Case No.3: I 0-

cv-1473-8 (N.D. TX July 2010) 

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the risk of loss in trading commodity futures and forex; three, falsely claiming that GCM and 

Robert Mihailovich, Sr. never had a losing trade, when in fact GCM, through Robert Mihailovich 

Sr., had lost approximately $2.2 million dollars trading in forex and S&P e-mini futures while 

accumulating $388,000 in performance and management fees between the months of June 2008 

and November 2009; four, falsely claiming that only a cetiain percentage of a customer's 

account would be at risk at any one time; five, misrepresenting that the trading being performed 

by the electronic trading system would be transparent to the customers at all times; and six, 

misrepresenting and failing to disclose Robert Mihailovich, Sr.'s prior criminal conviction for 

mail fraud and his related prison time. According to the complaint, the fraudulent acts of GCM 

and its agents and principals were in violation of Sections 4b(a)(l)(A) and (C), and 4b(a)(2)(A) 

and (C), of the Act, as amended by the CRA, to be codified at 7 U.S.C. §§ 6b(a)(l) (A) and (C) 

and 6b(a)(2)(A) and(C); and Section 4o(1) ofthe Act, 7 U.S.C. § 6o(1) (2006). 

3. The Commission also alleged that GCM, through Robeti Mihailovich, Jr., in required 

filings with the Commission, through the NF A, had failed to disclose that Robeti Mihailovich, 

Sr., an umegistered individual, was a principal of GCM, and thereby GCM, aided and abetted by 

Robeti Mihailovich, Jr., had filed false reports to the Commission in violation of Sections 6( c) 

and 9(a)(3) of the Act, 7 U.S.C. §§ 9(c) and 13(a)(3) (2006), and Commission rule 3.10(a)(2), 17 

C.F.R. § 3.10(a)(2) (2010). 

4. Finally, the Commission alleged that in soliciting prospective GCM managed account 

customers for commodity futures trading, or supervising the solicitation activities of others, 

Robeli Mihailovich, Sr. was required to be registered as an associated person of GCM, but that 

GCM permitted Robert Mihailovich, Sr. to engage in activities which required him to be so 

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registered while GCM knew or should have known that Robert Mihailovich, Sr. was not so 

registered, and thus GCM had violated Section 4k(3) of the Act, 7 U.S.C. § 6k(3) (2006). 

5. On June 26, 2011, pursuant to a previous order holding GCM in default judgment, the 

Honorable Jane J. Boyle of the U.S. District Court for the Northern District of Texas, Dallas 

Division ("Court") entered a permanent injunction against GCM. The permanent injunction 

enjoined GCM from further violations of Sections 4b(a)(l)(A) and (C), and 4b(a)(2)(A) and (C) 

ofthe Act, as amended by the CRA, to be codified at 7 U.S.C. §§ 6b(a)(l)(A) and (C), and 

6b(a)(2)(A) and (C); and Sections 4o(1), 4k(3), and 4m(1) of the Act, 7 U.S.C. §§ 6(o)(l), 6k(3), 

and 6m(l) (2006). The Court also permanently enjoined GCM from: trading on or subject to the 

rules of a registered entity; entering into any transactions involving commodity futures, options 

on commodity futures, commodity options and/or forex contracts for which it has a direct or 

indirect interest; soliciting, receiving or accepting customer funds in connection with the 

purchase or sale of futures contracts or options on future contracts; engaging, controlling, or 

directing the trading of commodity futures or options on futures for or on behalf of any other 

person or entity; applying for or claiming exemption from registration with the Commission in 

any capacity; and from engaging in any activity requiring such registration or exemption from 

registration, except as provided for in Commission rule 4.14(a)(9), 17 C.F.R. § 4.14(a)(9) 

(2011). Finally, the Court also ordered GCM to pay $3,475,112 in restitution, to disgorge 

$398,006 in ill-gotten gains, and to pay a $5,440,000 civil monetary penalty. 

Conclusions of Law 

Section 8a(2)(C) of the Act, as amended by the CRA and the Dodd-Frank Act, to be 

codified at 7 U.S.C. § 12a(2)(C), in relevant part, authorizes the Commission to revoke the 

registration of any person "if such person is pem1anently or temporarily enjoined by order, 

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judgment, or decree of any court of competent jurisdiction ... including an order entered 

pursuant to an agreement of settlement to which the Commission ... is a party, from ... (i) acting 

as a futures commission merchant, introducing broker, floor broker, floor trader, commodity 

trading advisor, commodity pool operator, [or] associated person of any registrant under this Act 

... or (ii) engaging in or continuing any activity when such activity involves ... fraud .... " Cause 

exists for statutory disqualification of GCM pursuant to Section 8a(2)(C) of the Act, because the 

United States District Court for the Northern District of Texas (the "Court") is a court of 

competent jurisdiction, and by order dated June 26, 2012, the Court entered an Order of 

Permanent Injunction and other relief against GCM ("Order".) Among other things, this Order 

permanently enjoined GCM from registering with the Commission or acting as a principal or 

agent of a registrant, and from committing any further fraud in violation of the Commodity 

Exchange Act. The Order therefore demonstrates that GCM is unfit to act as a Commission 

registrant, and constitutes a valid basis for revoking GCM's registration pursuant to Section 

8a(2)(C) of the Act. 

ORDER 

Growth Capital Management LLC is statutorily disqualified from registration under 

Section 8a(2)(C) of the Act, and is unfit for registration. Accordingly, the Division's motion for 

entry of a default judgment is hereby granted, and the registration of Growth Capital 

Management LLC is hereby revoked. 

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