The US Commodity Futures Trading Commission has filed and settled charges against Daniel J. Bealko, General Motors’ former global commodity manager for lightweight metals, for knowingly engaging in unauthorised futures and options trading as part of his criminal scheme to defraud the company.
Bealko, formerly of Clarkston, Michigan, is currently in the custody of the Federal Bureau of Prisons.
According to the CFTC order, between 1996 and 2003 Bealko was responsible for devising and implementing GM’s aluminium hedging strategies. Between June 2003 and 7 December 2003, Bealko used the commodity markets subject to the CFTC’s jurisdiction to defraud GM.
Specifically, Bealko, without GM’s knowledge or consent, caused negotiable warrants for GM-owned aluminium to be delivered and put on deposit with a brokerage account held in the name of a third party. The third party then gave Bealko power-of-attorney and full authority to manage and conduct transactions in the account. Bealko used the account to sell New York Mercantile Exchange aluminium futures contracts and options on Nymex aluminium futures contracts to personally profit in the amount of USD6.5m from GM’s sale of surplus aluminium, the order further finds.
Bealko was criminally charged for misconduct and, on 5 November 2009, pled guilty to one count of wire fraud and one count of income tax evasion in connection with his scheme to defraud GM. On 17 March 2010, Bealko was sentenced to 70 months in prison and ordered to make full restitution of the financial loss he caused GM. The total amount of criminal restitution owed by Bealko to GM is equal to his approximate ill-gotten gains of USD6.5m, according to the order.
The CFTC order imposes permanent trading and registration bans on Bealko and requires him to cease and desist from violating the anti-fraud provisions of the Commodity Exchange Act.