Californian court orders restitution and penalties in Piranha case
The US Commodity Futures Trading Commission has announced that a federal court in California has entered a consent order of permanent injunction against Montana-based Robert Beasley and Longboat Global Funds Management.
The order, entered by Phyllis Hamilton of the US District Court for the Northern District of California, arises out of a complaint filed by the CFTC in May 2005, charging that the defendants committed fraud by misrepresenting the condition and status of certain investments held by Piranha Capital, a commodity pool that the defendants operated, and failed to disclose Beasley's personal financial interest in those investments.
The complaint alleged that, among other things, the defendants directed and approved loans from the commodity pool totalling approximately USD4m to entities controlled by Beasley without fully disclosing his relationship and control of those entities.
The defendants are also alleged to have misrepresented the security of the loans, while Beasley allegedly disregarded his duties by failing to collect interest or principal due and by using the value of the unpaid interest payments to calculate his fees.
The order imposes restitution totalling USD13.8m, of which Beasley is responsible for USD4.5m. The order also requires Beasley to pay a USD500,000 civil monetary penalty and Longboat to pay a USD1m penalty.
The order also permanently bars the defendants from engaging in any commodity-related activity and appoints Robb, Evans and Associates as the permanent receiver for Longboat with respect to matters involving Piranha.
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