October 29, 2013
Washington, DC –The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court Order awarding restitution for defrauded commodity customers and a civil monetary penalty against Defendant Jeffrey Gustaveson of Morgan Hill, California, in connection with a commodity pool investment scheme. The Order requires Gustaveson to pay a civil monetary penalty of $1,230,000 and $410,000 in restitution. The Order also imposes permanent trading and registration bans against Gustaveson and prohibits him from violating the Commodity Exchange Act, as charged.
The Order resolves the CFTC’s Complaint, filed on August 29, 2012, charging Gustaveson with fraud, misappropriation, and issuing false account statements in a multi-million dollar commodity pool scheme (see CFTC Press Release 6341-12).
Magistrate Judge Howard Lloyd of the U.S. District Court for the Northern District of California issued a Report and Recommendation for default judgment and permanent injunction on August 19, 2013, and District Judge Lucy Koh entered an Order adopting Judge Lloyd’s Report and Recommendation on October 23, 2013.
The Order finds that Gustaveson received $2,495,000 from customers to trade commodity futures in a pool. But, rather than trade the pool participants’ funds as promised, Gustaveson used only approximately $400,000 of the funds to trade commodity futures, and he kept at least $400,000 the remaining funds to pay his personal expenses, the Order finds. To conceal his misappropriation, Gustaveson distributed false trading account statements to the pool participants that misrepresented the value of the pool, reported false profits, and failed to disclose his misappropriation of pool participants’ funds. When his fraud was exposed, Gustaveson returned a significant portion of the pool participants’ funds, leaving $410,000 of the customers’ funds unpaid, the Order finds. As to the amount still owed, Gustaveson admitted that he spent the money on personal expenses, past-due taxes, and repaying a previous investor, according to the Order.
CFTC Division of Enforcement staff members responsible for this case are Lindsey Evans, Mary Beth Spear, Diane Romaniuk, Ava M. Gould, Scott R. Williamson, Rosemary Hollinger, and Richard B. Wagner.
Last Updated: October 29, 2013