The US Commodity Futures Trading Commission (CFTC), based on an order entered on March 21, 2011, by the US District Court for Southern District of New York (SDNY), the court-appointed Receiver, Robb Evans & Associates, LLC, has begun an initial distribution of approximately USD792 million to investors in a commodity pool operated by CFTC defendants Paul Greenwood and Stephen Walsh, who, among other defendants, were charged by the CFTC in 2009 with operating a USD1.3 billion investment Ponzi scam. This constitutes a distribution of nearly 85 per cent of approved claims to investors.
The CFTC complaint, filed on February 25, 2009, in the SDNY, charged Greenwood, of North Salem, N.Y., and Walsh, of Sands Point, N.Y., with operating a Ponzi scheme that misappropriated at least USD553 million from commodity pool participants in connection with entities Greenwood and Walsh owned and controlled, such as Westridge Capital Management, Inc., WG Trading Investors, LP and WGIA, LLC. The Securities and Exchange Commission (SEC) also filed a civil action in a related matter (SEC v. WG Trading Investors, L.P., et al., Civ. No. 09-1750).
The SDNY order approved a pro rata net investment distribution plan recommended by both the CFTC and SEC and proposed by the Receiver. Under the court-approved plan, the Receiver is making an initial distribution of approximately USD792 million dollars to investors, mostly institutions, such as state and county pension funds, private pension funds and university foundations, 30 days from the date of the order. The Receiver’s efforts to recover additional funds to return to investors are ongoing.
Earlier, on July 28, 2010, the SDNY entered an order of permanent injunction against Greenwood holding him liable for futures fraud and misappropriation of pool participant funds. The order also requires Greenwood to pay disgorgement and a civil monetary penalty in an amount to be determined at a later date by the court (see CFTC Press Release 5865-10, July 29, 2010). On July 28, 2010, Greenwood pled guilty to criminal violations in the related criminal action, USA v. Greenwood et al, Case No. 1:09-CR-722 (MGC).
The CFTC’s civil litigation is still ongoing against the other defendants and relief defendants in this matter.
