The US Commodity Futures Trading Commission has obtained more than USD4.6m in disgorgement and civil monetary penalties in a court order settling CFTC charges filed on 11 March 2009 against Virginia-based defendants.
The defendants are John M. Donnelly, Tower Analysis , Nasco Tang and Nadia Capital, all of Charlottesville, Virginia. The relief defendants are Blue Logic Operating Partners, Nadia Capital Operating Partners and Deborah B. Donnelly.
The consent order and judgment, entered on 24 March 2010, by the Honourable Glen E. Conrad of the US District Court for the Western District of Virginia, requires defendants and relief defendants, with the exception of Deborah Donnelly, to disgorge, jointly and severally, USD3,768,792 of ill-gotten gains.
The order also requires John and Deborah Donnelly to sell real property in Charlottesville and to disgorge the net proceeds of the sale. The disgorgement amount will be reduced by the amount of restitution that John Donnelly pays in a related criminal proceeding.
The order further requires defendants to pay, jointly and severally, a civil monetary penalty of USD888,323.29.
Previously, on 1 July 2009, the court entered a consent order of permanent injunction, which prohibits the defendants from further violations of federal commodities laws and required the defendants to pay equitable relief in amounts to be determined in a subsequent judgment order.
The CFTC charged the defendants with operating a USD10m Ponzi scheme, misappropriating at least USD1m of investor funds and committing other types of fraud in soliciting individuals to invest in US treasury note futures and S&P 500 futures.
The CFTC complaint also alleged that John Donnelly may have unlawfully received another USD1.7m from pool funds.
According to the complaint, John Donnelly concealed the fraud by paying off certain investors with other investor funds and by issuing false account statements to the investors, lulling them into believing that their principal was earning steep profits.
