The US Commodity Futures Trading Commission has obtained an order freezing USD7.6m in assets held by Janet Schaberg, the ex-wife of Stephen Walsh of Sands Point, New York.
The US Commodity Futures Trading Commission has obtained an order freezing USD7.6m in assets held by Janet Schaberg, the ex-wife of Stephen Walsh of Sands Point, New York.
The order, entered by the US District Court for the Southern District of New York on 4 August 2009, stems from CFTC charges filed on 25 February 2009 against Walsh and Paul Greenwood of North Salem, New York, and entities they owned and controlled.
The CFTC complaint charged Walsh and Greenwood with fraud and misappropriating at least USD553m from commodity pool participants in connection with entities they owned or controlled. The CFTC also alleged that Walsh and Greenwood fraudulently solicited approximately USD1.3bn from individuals and entities through Westridge Capital Management and other entities.
On the same day the complaint was filed, the federal district court entered an asset freeze order, which froze the defendants’ assets and preserved records.
The 4 August order modifies the scope of the asset freeze imposed at the outset of the litigation and rules that USD7.6m in assets held by Walsh’s ex-wife, Janet Schaberg, remain subject to the earlier court-ordered asset freeze. The court found that Walsh, during the period of the alleged fraud, regularly transferred funds from WG Trading Investors, an entity he controlled, to Schaberg. The court concluded that the CFTC is likely to prevail on the merits of its claim that the funds transferred to Schaberg constitute fraudulent proceeds. The court also found that Schaberg likely did not have a legitimate claim to the assets; thus, the court enlarged the scope of its preliminary injunction to include USD7.6m in assets controlled by Schaberg.
The office of the US Attorney for the Southern District of New York filed a criminal complaint against Walsh and Greenwood, and the Securities and Exchange Commission filed a civil action against Walsh, Greenwood and others. Recently, Walsh and Greenwood were indicted in the Southern District of New York. Deborah Duffy, WG Trading’s compliance officer, pled guilty to criminal information in the same matter.
