The US Commodity Futures Trading Commission has obtained a federal court order in California freezing the assets and prohibiting the destruction of documents of Orange County-based commodi
The US Commodity Futures Trading Commission has obtained a federal court order in California freezing the assets and prohibiting the destruction of documents of Orange County-based commodity trader Paul Abad and his company, Thirteen Thirty-Two.
The asset freeze order, entered on December 1, by the US District Court for the Central District of California, stems from a CFTC complaint charging Abad and Thirteen Thirty-Two with misappropriating customer funds and concealing trading losses in connection with operating a fraudulent commodity pool.
The complaint alleges that, from around February 2001 until earlier this year, the defendants solicited at least USD400,000 from the public to trade commodity futures contracts through a commodity pool operated by Thirteen Thirty-Two and through individual managed accounts, which Abad managed.
The complaint says the defendants sustained some USD122,000 in trading losses, returned some funds to pool participants, and misappropriated around USD230,000. Throughout the period, it alleges that the defendants routinely sent false statements to pool participants and clients, reflecting profitable returns from supposed trading on their behalf.
This year, when as pool participants and clients demanded that Abad return their funds, he purportedly blamed Thirteen Thirty-Two’s introducing broker for causing delays and created fictitious emails from an employee of the broker indicating a trading account balance of more than USD180,000 in an account in Thirteen Thirty-Two’s name.
In reality, it is alleged, that particular account had a balance of USD110, and Thirteen Thirty-Two’s only other account with the introducing broker had a zero balance.
The complaint also charges the defendants with failing to register as a commodity pool operator and an associated person, among other violations of the Commodity Exchange Act.
In its litigation against Abad and Thirteen Thirty-Two, the CFTC is seeking permanent injunctive relief, the return of funds to defrauded customers, the repayment of ill-gotten gains and civil monetary penalties for each violation of the act.
Separately, the judge entered an order to show cause why a preliminary injunction should not be entered against the defendants. A hearing date on the order is scheduled for December 10.
