Illinois Federal Court Requires Canadian Commodity Pool Operator To Pay Over $7 Million In Restitution To Defrauded Investors In CFTC Enforcement Action
WASHINGTON, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that an Illinois Federal District Court entered an order of default judgment against Kevin J. Steele, a Canadian citizen and commodity pool operator, requiring Steele to pay over $7 million in restitution to defrauded pool investors and a contingent civil monetary penalty of $6.2 million as a result of his violations of federal commodities laws.
The court’s order stems from a complaint filed by the CFTC against Kevin J. Steele in the United States District Court for the Northern District of Illinois on May 25, 2005 (see CFTC Press Release 5080-05, May 27, 2005). Steele never responded to the CFTC’s allegations, and the court entered the default judgment order against him on November 22, 2005.
The order finds that Steele defrauded and deceived pool investors by misappropriating at least $3.1 million of their funds, misrepresenting the value of the commodity pool, failing to disclose trading losses, and causing false statements to be issued to pool participants that misrepresented the balance of the participants’ respective interests in the pool.
Specifically, the order requires Steele to pay restitution to injured investors in the amount of US$7,409,194.75 and to pay a civil monetary penalty of US$6.2 million after he has paid to the investors the full restitution amount. The order also releases to the Receiver General for Canada, in care of the Royal Canadian Mounted Police, any funds held in two commodity trading accounts held in Steele’s name at Interactive Brokers LLC and any funds held in Steele’s bank account at Bank of America in order to pay restitution to injured investors.
The order also permanently enjoins Steele from further fraudulent conduct and from trading commodity futures or options on commodity futures or foreign currency.
This litigation was part of a coordinated cooperative enforcement effort with the Royal Canadian Mounted Police-Integrated Market Enforcement Team (RCMP-IMET) and the British Columbia Securities Commission, who offered invaluable assistance to the CFTC during its investigation and litigation. Because most of the injured investors are Canadian citizens, the Receiver General for Canada, in care of Inspector George Pemberton, RCMP, Vancouver, British Columbia, will administer the restitution award.
The following CFTC Division of Enforcement staff were responsible for this case: Diane M. Romaniuk, Ava M. Gould, Mary Elizabeth Spear, Rosemary Hollinger, and Scott R. Williamson.
* * * * * * * * * * * * * *
The CFTC encourages members of the public to bring to our attention any suspicious activities involving futures or commodity options, including matters involving foreign currency (forex) investments or suspicious Internet websites.
You may contact the CFTC at 1-866-FON-CFTC (1-866-366-2382), visit us at our Customer Protection web page (www.cftc.gov/cftc/cftccustomer.htm), or fill out our Internet Report Form identifying your concerns (www.cftc.gov/enf/enfform.htm).
In addition, the CFTC publishes a series of Consumer Advisories at http://www.cftc.gov/cftc/cftccustomer.htm#advisory alerting the public to warning signs of possible fraudulent activity and offering precautions individuals should take before committing funds.
# # #