Commodity Trading Cases: Galileo Trading Fined Over $1.6M, Trader Ordered to Pay More than $141K for Aiding and Abetting Fraud, and Criminal Defendant Must Pay Over $4.7M in Restitution

Galileo Trading to Pay Penalties and Restitution to Settle Commodity Futures Fraud Charges
The U.S. Commodity Futures Trading Commission is filing fraud charges against Nathan Schleifer and his Galileo Trading LLC. Schleifer and his firm are accused of fraudulently soliciting customers to get them to trade commodity futures and for making a number of false statements and material representations to the National Futures Association about their trading practices.

The SEC said that from at least ’99 – ’14, Schleifer and his firm fraudulently obtained at least $2.8M from a number of people for supposed trading in a pooled investment in commodity futures. The Commission claims that Galileo and Schleifer misrepresented to pool participants that they’d had previous success trading in futures. They also purportedly claimed that they were making a lot of money for these pool participants when in reality there were substantial losses.

Schleifer is accused of falsely claiming that he was a skilled money manager. He guaranteed investors minimum returns and told them their money was safe. When at least one individual tried to take money out, Schleifer said he lost the funds during a flash crash in May. Later, he admitted that he lost all of the investor’s money years ago.

CFTC Permanently Bans Trader from Registering with the CFTC
The CFTC has settled charges against Brian Hinman for aiding and abetting a commodity pool fraud involving a number of Texas-based entities owned by Kevin G. White and for the fraudulent solicitation of participants to get involved in Revelation Forex Fund, a foreign currency exchange pool. It was in 2013 that the CFTC filed a federal court action against White and his KGW Capital Management, LLC and RFF GP, LLC. They were ordered to pay $3,365,888 in restitution and a civil penalty of over $4.1M. White is now serving prison time for mail fraud.

Hinman is accused of aiding and abetting White from 7/11 to 8/11 and then again in 8/12. Now, he must pay disgorgement of over $1,138 and a $140K penalty. He also is permanently barred from registering with the regulator and taking part in commodity-tied activities.

Man Must Pay Over $4.7M, Serves 10 Years in Prison for Commodity Pool Fraud
John David Stroud and his TS Capital Partners, LLC, Stroud Capital Management, LLC, and TS Capital Management, LLC must pay over $4.7M in restitution and penalties for stealing more than $2.3M from pool participants and losing over $1.1M in trading. Stroud, who pleaded guilty to securities fraud in a parallel criminal case, will serve 10 years behind bars.

According to the CFTC, Stroud and his companies accepted nearly $5M from individuals for two commodity pools. He falsely represented to actual and potential participants that his trading record was a successful one. The regulator’s order said that when pool participants, who included his own employees, asked him about certain misrepresentations, he gave some of them bank statements with inflated figures.

Our securities fraud law firm represents investors throughout the US. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.

The CFTC order in the Galileo Trading case (PDF)

The CFTC Order in the Brian Hinman case (PDF)

The CFTC order in the John David Stroud et al. case (PDF)