October 26, 2012
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an order filing and settling charges against Joshua T.J. Russo of Chicago, Ill., for fraudulently soliciting at least one customer to participate in a fictitious commodity futures and options pool, engaging in unauthorized trading, and issuing false account statements.
The CFTC order requires Russo to pay restitution of $960,000, a $645,000 civil monetary penalty, and disgorgement of $215,000. The order permanently prohibits Russo from engaging in any commodity-related activity, including trading, and from registering or seeking exemption from registration with the CFTC. The order also permanently prohibits Russo from further violations of the Commodity Exchange Act and CFTC regulations, as charged.
The CFTC order finds that, from around March 2007 through April 2011, Russo, as a registered Associated Person of an independent Introducing Broker (IB), fraudulently solicited at least one of the IB’s customers by telling the customer that he would be a general partner in a fictitious pool called Peak Performance Fund, LP (PPF). According to the order, Russo issued false statements to the PPF customer in the form of purported PPF audited financial statements and in the form of weekly spreadsheets that Russo represented were summaries of the customer’s account values. In fact, however, the statements grossly overinflated the value of the customer’s accounts, the order finds.
In addition, the order finds that Russo provided at least five other customers with similar spreadsheets that grossly inflated the value of the customers’ accounts. Russo also engaged in a significant amount of unauthorized trading in these customers’ accounts, and in the accounts of three other customers, the order finds. Russo engaged in speculative trading for at least one customer, contrary to the hedging strategy that Russo represented he would utilize, according to the order.
According to the order, Russo’s eight customers deposited at least $3 million into trading accounts to trade commodity futures and options in managed and self-directed accounts. Russo, through his false statements to the eight customers, concealed his unauthorized trading and overall trading losses of approximately $1.7 million, the order finds.
On October 25, 2012, Russo was charged with a single count of commodities fraud in a related criminal action (USA v. Russo, 1: 12-cr-00836). His arraignment is currently scheduled for November 1, 2012.
The CFTC appreciates the assistance of the U.S. Attorney’s Office for the Northern District of Illinois and the National Futures Association.
CFTC Division of Enforcement staff members responsible for this case are Katherine S. Driscoll, Michael Solinsky, Michelle Bougas, Kassra Goudarzi, Melanie Bates, Gretchen L. Lowe, and Vincent A. McGonagle.
Last Updated: October 26, 2012