COMMODITY FUTURES TRADING COMMISSION SETTLES CHARGES AGAINST THREE FORMER AGENTS OF CONVICTED FELON JOHN WHEELER
Defendants Michael Fagan, Robert Mendoza, and Gary Wood Agree to Turn Over Money They Received from Wheeler as Commissions
Washington, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced today the settlement of an enforcement action against relief defendants Michael Fagan of Lacombe, Louisiana, Robert Mendoza of Reno, Nevada, and Gary Wood of Shingle Springs, California.
The CFTC complaint, filed on January 30, 2003, charged John Wheeler and his two limited liability companies with fraudulently soliciting at least $35 million from at least 810 customers for the purpose of trading foreign currency futures contracts and with misappropriating at least $8.4 million of those funds.
The complaint further alleged that Fagan, Mendoza, Wood, along with two other relief defendants, including Walter S. Cole, received a total of $1.8 million in ill-gotten gains in the form of commissions that Wheeler paid them for referring customers. The complaint sought disgorgement of the commissions, alleging that the relief defendants had no legitimate entitlement to those funds. The complaint did not allege any wrongdoing by any of the relief defendants. (See CFTC News Release 4750-03, February 5, 2003.)
The federal consent orders, entered on June 15 and 16, 2004, require disgorgement of the following commissions: Fagan - $92,000; Mendoza - $50,000; and Wood - $500,000.
CFTC Also Obtains Summary Judgment Against Other Relief Defendant, Walter S. Cole, of Hardin, Texas
In June 2004, a Texas federal court entered an order granting the CFTC summary judgment against relief defendant Walter S. Cole, of Hardin, Texas. In the order, the court found that Cole received $318,169 in ill-gotten gains as a result of his dealings with the Wheeler and his companies, representing commissions and interest in excess of the amounts he personally invested. The order requires Cole to pay back all of the $318,169 he received from the defendants.
Earlier, in June 2003, the CFTC settled its enforcement action against John Wheeler and his two companies. The United States District Court for the Eastern District of Texas issued a consent order which required Wheeler and his two companies to pay over $23 million in restitution to defrauded customers and a contingent civil monetary penalty of $8.4 million, after they have paid full restitution to investors. (See CFTC News Release 4796-03, June 16, 2003.)
Finally, another relief defendant originally charged in the complaint, Marc Donatelli, was recently severed from this action, and proceedings against him continue in a separate action.
The United States Attorney’s Office for the Eastern District of Texas, Lufkin Division, provided valuable assistance to the CFTC in its litigation of this case. Wheeler was charged by Information with one count of wire fraud, pleaded guilty on February 10, 2003, and on September 15, 2003, was sentenced to 60 months in the penitentiary and ordered to pay restitution totaling over $23 million. The court appointed a Receiver who is currently liquidating Wheeler’s assets to make restitution to defrauded investors. United States v. John Allen Wheeler, Criminal No. 9:02-CR-34, Eastern District of Texas, Lufkin Division.
The following CFTC Division of Enforcement staff are responsible for this
case: Frank Ferrara, Thomas Koprowski, Diane M. Romaniuk, Ava M. Gould,
Rosemary Hollinger, and Scott R. Williamson.
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