Fri, 04/05/2012 - 12:45
The US Commodity Futures Trading Commission (CFTC) has filed a federal court action in Utah charging Bentley Equities, LLC (Bentley), a Delaware corporation, and its principals, Christopher D Hales and Eric A Richardson, with fraud and misappropriation in connection with commodity futures trading.
Richardson resides in Cedar Hills, Utah, and Hales is currently an inmate at the Florence, Colorado, Federal Correction Complex. None of the defendants has ever been registered with the CFTC.
The CFTC’s complaint, filed May 2, 2012, in the US District Court for the District of Utah, alleges that from at least April 2009 through August 2010, the defendants fraudulently solicited and accepted more than USD1.1 million from approximately 38 pool participants and clients to trade commodity futures in a commodity pool account and in individual managed accounts.
The CFTC seeks an emergency restraining order freezing the defendants’ assets and prohibiting the destruction or alteration of the defendants’ books and records.
Specifically, according to the CFTC’s complaint, Bentley, Hales, and Richardson misrepresented to customers that their trading was profitable, and that they actively managed more than USD1 million in commodity futures accounts. In reality, the complaint charges, the defendants were not successful commodity futures traders and never managed more than USD480,000 in commodity futures trading accounts at one time. In fact, the defendants lost approximately USD1,296,600 of the Bentley participants’ and managed clients’ funds trading commodity futures contracts, according to the complaint.
The complaint further charges that the defendants misappropriated at least USD628,000 of customer funds for personal use, including food, clothing, auto expenses, and utility and credit card payments. The defendants also allegedly used misappropriated funds to make payments to existing participants and clients, as is typical of a Ponzi scheme.
To conceal their trading losses and misappropriation, defendants allegedly issued false account statements to participants and clients by altering trading statements that they received from the futures commission merchant carrying the Bentley pool account. These doctored statements falsely showed inflated account balances and profitable commodity futures trading returns, when, in fact, the defendants’ futures trading for their participants and clients “consistently lost money,” according to the complaint.
In its continuing litigation, the CFTC seeks civil monetary penalties, restitution, disgorgement of ill-gotten gains, trading and registration bans, and preliminary and permanent injunctions against further violations of the federal commodities laws, as charged.
In November 2011, Hales was sentenced to more than seven years imprisonment and ordered to pay USD12,719,236 in criminal restitution in connection with a judgment entered against him in a related criminal matter for the conduct alleged in the CFTC’s case, as well as mortgage fraud. United States v. Christopher D. Hales, No. 2:10-CR-183-TS-SA-1 (D. Utah, 2 Sept. 2010).
The CFTC appreciates the assistance of the US Attorney’s Office for the District of Utah, the US Department of Housing and Urban Development — Office of Inspector General, the US Postal Inspection Service, and the Federal Bureau of Investigation.
CFTC Division of Enforcement staff members responsible for this case are Brigitte Weyls, Joseph Patrick, Susan Gradman, Robert Howell, Scott Williamson, Rosemary Hollinger, and Richard Wagner.
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