November 30, 2015
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Charles P. Kocoras of the U.S. District Court for the Northern District of Illinois entered an Order for permanent injunction against Eric A. Bloom, formerly of Northbrook, Illinois, to resolve charges against him alleging violations of Section 4d(b) of the Commodity Exchange Act (CEA) in the handling of $562 million in commodity customer segregated funds that had been managed by Sentinel Management Group, Inc. (Sentinel).
The Order permanently bans Bloom from trading commodity interests for others and from registration with the CFTC, and prohibits him from further violations of the CEA’s duties in handling customer receipts.
The Order stems from a CFTC Complaint filed against Sentinel, Bloom, and Sentinel’s former Senior Vice President and Head Trader Charles K. Mosley on April 28, 2008, which alleged that Bloom was a controlling person of Sentinel in his role as CEO and President and had knowledge of the improper handling of commodity customer funds, thereby making him liable for Sentinel’s fraud (see CFTC Complaint and Press Release 5494-08). Specifically, the CFTC’s action alleged that from at least May 21, 2007 through August 17, 2007, Sentinel and Bloom commingled and misappropriated commodity customer funds Sentinel received from various Futures Commission Merchants (FCMs) to finance Sentinel’s proprietary trading, failed to treat and deal with customer funds as belonging to the commodity customers, and withdrew customer segregated funds beyond Sentinel’s actual interest therein and used them to collateralize its overnight loan with the Bank of New York (BONY) in violation of Section 4d(b) of the CEA.
The United States Attorney’s Office in Chicago brought a related criminal case against Bloom and Mosley based on the same conduct at issue in the CFTC’s case. (United States v. Eric A. Bloom and Charles K. Mosley, No. 12-cr-00409 (N.D. Ill.). In the criminal proceeding, a jury convicted Bloom of 18 counts of wire fraud and one count of investment adviser fraud on March 25, 2014. Mosley pleaded guilty to two counts of investment adviser fraud on October 8, 2013. On January 30, 2015, Federal District Court Judge Ronald A. Guzman sentenced Bloom to 14 years and Mosley to eight years in prison and ordered the two men to pay over $665 million in restitution, jointly and severally (see FBI Press Release, January 30, 2015). Bloom has appealed his criminal conviction, but began serving his prison sentence in June 2015. Mosley is scheduled to begin serving his prison sentence on December 1, 2015.
The CFTC obtained an injunction against Sentinel on August 3, 2009, which also is the subject of an on-going bankruptcy action (see In re Sentinel Management Group, No. 07-14987 (Brktcy. N.D. Ill.)). The CFTC also obtained an Order of summary judgment against Mosley on August 11, 2015 requiring Mosley to pay $551,000 in disgorgement and a $1,653,000 civil monetary penalty. The Order against Mosley also permanently bans him from trading and becoming registered with the CFTC, and prohibits him from further violations of the CEA (see CFTC Order and Press Release 7217-15).
CFTC Division of Enforcement staff members responsible for this action are Brigitte Weyls, Susan Gradman, Scott Williamson, and Rosemary Hollinger.
Last Updated: November 30, 2015