The US Commodity Futures Trading Commission (CFTC) has filed an enforcement action in the US District Court for the Central District of California, charging Michael J Leighton of Torrance, California, with solicitation fraud and issuing false statements in connection with the operation of a commodity trading pool.
According to the CFTC complaint, filed on 8 May, 2012, Leighton defrauded and deceived at least 42 pool participants who invested at least USD1.6 million in a commodity pool he operated from at least July 2008 and continuing through the present.
The complaint alleges that Leighton told prospective pool participants that he was a successful trader and that his pool was profitable. The complaint further alleges that Leighton deposited at least USD1.6 million into commodity pool trading accounts and most, if not all, of these funds belonged to pool participants. The complaint also alleges that Leighton lost over $1.3 million trading these accounts. However, according to the complaint, Leighton did not disclose these trading losses and, instead, issued false statements to the pool participants regarding the profitability and value of their shares of the pool.
Leighton also allegedly failed to satisfy participant requests to withdraw funds and lied about the reasons he did not pay them. For example, Leighton is alleged to have misrepresented to pool participants that a regulatory audit prevented him from making any distributions or payments to pool participants or returning participant funds upon request, when, in fact, no such audit had occurred.
In its continuing litigation, the CFTC seeks a civil monetary penalty, 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.
On 9 May 2012, in conjunction with the filing of the CFTC’s complaint, the US Attorney’s Office charged Leighton with one count of commodities fraud. United States v Leighton, Case No. 2:12-cr-00439. Leighton has agreed to appear in federal court for an arraignment in the related criminal matter on 4 June, 2012. The CFTC appreciates the efforts of the US Attorney’s Office for the Central District of California and the Los Angeles, California office of the Federal Bureau of Investigation.