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Outcome Objective 2.1: Violations of Federal commodities laws are detected and prevented.

• Annual Performance Goal 2.1: Violators have a strong probability of being detected and sanctioned.

Performance Measure 2.1.1: Number of enforcement investigations opened during the fiscal year.

Status: Effective Data Source: Agency documentation and reports maintained in the DOE eLaw system. Verification: Internal reports on investigations and litigation documented and maintained in the DOE eLaw system.
ACTUAL FY 2007	ACTUAL FY 2008	ACTUAL FY 2009	ACTUAL FY 2010	PLAN FY 2010
99	215	251	419	195

Lead Program Office

Division of Enforcement

FY 2010 Performance Results

419

Performance Analysis & Review

DOE met the performance target for FY 2010. Commencing in 2002, the complexity of the Commission’s investigations has increased substantially over prior fiscal years (e.g., the Commission’s investigation of alleged energy market manipulation). As a result of these investigations, the complexity of the Commission’s cases filed and litigated also has increased substantially since FY 2002. The Commission’s FY 2010 Plan target for this performance measure took into account these factors, and historical performance and staffing constraints of DOE. Despite these factors and constraints, the Commission exceeded its target for this performance measure. The number of investigations opened has risen sharply due to a combination of factors including the clarification of the Commission’s authority over off-exchange traded forex, cooperative enforcement efforts, and the exposure to Ponzi schemes due to the financial downturn.

Performance Highlights

The Commission conducts enforcement investigations on a confidential basis.

Performance Measure 2.1.2: Number of enforcement cases filed during the fiscal year.

Status: Effective Data Source: Agency documentation and reports maintained in the DOE eLaw system. Verification: Final complaints for each litigation are recorded in the DOE eLaw system and made public via the Commission’s Web site.
ACTUAL FY 2007	ACTUAL FY 2008	ACTUAL FY 2009	ACTUAL FY 2010	PLAN FY 2010
41	40	50	57	51

Lead Program Office

Division of Enforcement

FY 2010 Performance Results

57

Performance Analysis & Review

DOE met the performance target for FY 2010. Commencing in 2002, the complexity of the Commission investigations has increased substantially over prior fiscal years (e.g., the Commission’s investigation of alleged energy market manipulation). As a result of these investigations, the complexity of the Commission’s cases filed and litigated also has increased substantially since FY 2002. The Commission’s FY 2010 Plan target for this performance measure took into account these factors, DOE’s historical performance, and DOE’s staffing constraints.

Performance Highlights

Among the significant enforcement actions filed by the Commission, during FY 2010, are the following:

• In re EMF Fin. Products, LLC
  
  On November 13, 2009, the Commission simultaneously filed and settled an administrative enforcement action against hedge fund operator EMF Financial Products, LLC (EMF), which is registered as a CTA and CPO, finding that in August 2005 it made false statements and failed to disclose material information concerning its market positions and financing to the CBOT in connection with the September 2005 U.S. Treasury Note Futures Contract. In re EMF Fin. Products, LLC, CFTC Docket No. 10-02 (CFTC filed Nov. 13, 2009);
  
  
• In re MF Global Inc., et al.
  
  On December 17, 2009, the Commission simultaneously filed and settled an administrative enforcement action against registered FCM MF Global Inc. and its predecessor corporation, Man Financial Inc., finding risk supervision failures in four separate instances between 2003 and 2008. In re MF Global Inc., et al., CFTC Docket No. 10-03 (CFTC filed Dec. 17, 2009);
  
  
• In re Pinemore, L.P., et al., and In re Scotia Capital Inc.
  
  On January 28, 2010, the Commission simultaneously filed and settled related administrative enforcement actions against Pinemore, L.P. and Birchmore, L.P. for engaging in unlawful wash sales in NYMEX natural gas futures contracts during November and December of 2006, and investment dealer Scotia Capital Inc. for prearranging these fictitious and noncompetitive trades through its retail brokerage division. In re Pinemore, L.P. et al., CFTC Docket No. 10-04 (CFTC filed Jan. 28, 2010); and In re Scotia Capital Inc., CFTC Docket No. 10-05 (CFTC filed Jan. 28, 2010);
  
  
• In re Moore Capital Mgmt., LP, et al.
  
  On April 29, 2010, the Commission simultaneously filed and settled an administrative enforcement action against hedge fund operator Moore Capital Management, LP, which is a registered CTA, and its affiliates, registered CPOs Moore Capital Advisors, LLC and Moore Advisors, Ltd., for attempting to manipulate the settlement prices of NYMEX platinum and palladium futures contracts since at least November 2007 through May 2008. In re Moore Capital Mgt., LP, et al., CFTC Docket No. 10-09 (CFTC filed Apr. 29, 2010);
  
  
• In re Morgan Stanley Group, Inc., and In re UBS Securities LLC
  
  On April 29, 2010, the Commission simultaneously filed and settled related administrative enforcement actions against Morgan Stanley Capital Group, Inc. for concealing from the NYMEX the existence of a large Trade at Settlement block crude oil futures contract trade on February 6, 2009, and UBS Securities Inc. for aiding and abetting that concealment. In re Morgan Stanley Group, Inc., CFTC Docket No. 10-10 (CFTC filed Apr. 29, 2010); and In re UBS Securities LLC, CFTC Docket No. 10-11 (CFTC filed Apr. 29, 2010);
  
  
• CFTC v. Theye, et al.
  
  On June 1, 2010, the Commission filed a civil injunctive enforcement action charging Richard D. Theye and his company, Micind Capital Management, Inc., with fraud in connection with running a multi-million dollar Ponzi scheme, in which they encouraged prospective investors to roll over their 401(k)s, IRAs and pension funds into two commodity pools. CFTC v. Theye, et al., No. A10CA 385SS (W.D. Tex. filed June 1, 2010);
  
  
• CFTC v. Milton, et al.
  
  On June 22, 2010, the Commission filed a civil injunctive enforcement action charging Phillip Milton and William Center, and their company, Trade LLC, with operating a $28 million Ponzi scheme involving at least 900 commodity pool participants. CFTC v. Milton, et al., No. 10-80738-Marra (S.D. Fla. filed June 22, 2010);
  
  
• In re ConAgra Trade Group, Inc.
  
  On August 16, 2010, the Commission simultaneously filed and settled an administrative enforcement action against ConAgra Trade Group, Inc. for causing a non-bona fide price to be reported in the NYMEX crude oil futures contract on January 2, 2008. In re ConAgra Trade Group, Inc., CFTC Docket No. 10-14 (CFTC filed Aug. 16, 2010);
  
  
• In re Vitol, Inc., et al.
  
  On September 14, 2010, the Commission simultaneously filed and settled an administrative enforcement action against Vitol Inc. and Vitol Capital Management Ltd. finding that they willfully failed to disclose material facts to the NYMEX concerning the relationship between the two companies, which resulted in the exchange failing to aggregate the market positions of the two companies for position limit and accountability limit purposes for almost two years. In re Vitol, Inc., et al., CFTC Docket No. 10-17 (CFTC filed Sept. 14, 2010); and
  
  
• In re Rosenthal Collins Group, L.L.C.
  
  On September 30, 2010, the Commission simultaneously filed and settled an administrative enforcement action against registered FCM Rosenthal Collins Grouop, L.L.C. (RCG) finding that it failed to supervise diligently its employees’ handling of accounts held at RCG. In re Rosenthal Collins Group, L.L.C., CFTC Docket No. 10-21 (CFTC filed Sept. 30, 2010).

Performance Measure 2.1.3: Percentage of enforcement cases closed during the fiscal year in which the Commission obtained sanctions (e.g., civil monetary penalties, restitution and disgorgement, cease and desist orders, permanent injunctions, trading bans, and registration restrictions).

Status: Effective Data Source: Agency documentation and reports maintained in the Monthly Status Report, DOE eLaw system, Commission Proceedings Bulletin, and press releases. Verification: Final orders for each litigation recorded in the DOE eLaw system.
ACTUAL FY 2007	ACTUAL FY 2008	ACTUAL FY 2009	ACTUAL FY 2010	PLAN FY 2010
98%	97%	98%	100%	98%

Lead Program Office

Division of Enforcement

FY 2010 Performance Results

100%

Performance Analysis & Review

Performance target was met for FY 2010. During FY 2010, DOE closed a total of 38 enforcement cases. In all of these closed cases, the Commission obtained sanctions (e.g., civil monetary penalties, restitution and disgorgement, cease and desist orders, permanent injunctions, trading bans, and registration restrictions) against one or more of the respondents/defendants.

Staff is required to submit all final orders for each litigation as part of closing activities for their files. These orders are recorded in the internal DOE eLaw system.

Performance Highlights

Among the significant enforcement actions closed by the Commission, during FY 2010, are the following:

• In re EMF Fin. Products, LLC, CFTC Docket No. 10-02 (CFTC filed Nov. 13, 2009) (false statements to a registered entity and failure to supervise; sanctions assessed include a $4 million civil monetary penalty, cease and desist order and three-year registration restriction);
  
  
• In re MF Global Inc., et al., CFTC Docket No. 10-03 (CFTC filed Dec. 17, 2009) (failure to supervise; sanctions assessed include $10 million civil monetary penalty, cease and desist order, and order to comply with certain undertakings, including enacting policies and procedures to enhance risk monitoring procedures, training, compliance procedures and compliance audit procedures);
  
  
• In re Pinemore, L.P., et al., CFTC Docket No. 10-04 (CFTC filed Jan. 28, 2010) (wash sales; sanctions assessed include cease and desist orders and $500,000 in total civil monetary penalties);
  
  
• In re Scotia Capital Inc., CFTC Docket No. 10-05 (CFTC filed Jan. 28, 2010) (prearranged trading; sanctions assessed include a cease and desist order and a $250,000 civil monetary penalty);
  
  
• In re San Diego Gas & Elec. Co., CFTC Docket 10-08 (CFTC filed Apr. 22, 2010) (wash sales; sanctions include a cease and desist order, an $80,000 civil monetary penalty and implementation of procedures to prevent future violations);
  
  
• In re Moore Capital Mgmt., LP, et al., CFTC Docket No. 10-09 (CFTC filed Apr. 29, 2010) (attempted manipulation and failure to supervise; sanctions assessed include cease and desist orders, $25 million civil monetary penalty, and three-year registration restrictions);
  
  
• In re Morgan Stanley Group, Inc., CFTC Docket No. 10-10 (CFTC filed Apr. 29, 2010) (concealment from a board of trade; sanctions assessed include a cease and desist order and $14 million civil monetary penalty);
  
  
• In re UBS Securities LLC, CFTC Docket No. 10-11 (CFTC filed Apr. 29, 2010) (aiding and abetting concealment from a board of trade; sanctions assessed include a cease and desist order and $200,000 civil monetary penalty);
  
  
• In re Noble Americas Corp., CFTC docket No. 10-12 (CFTC filed May 3, 2010) (wash and fictitious sales; sanctions include a cease and desist order, $130,000 civil monetary penalty and institution of internal controls and policies necessary to ensure future compliance);
  
  
• In re ConAgra Trade Group, Inc., CFTC Docket No. 10-14 (CFTC filed Aug. 16, 2010) (reporting of non-bona fide prices; sanctions assessed include a cease and desist order, $12 million civil monetary penalty, and an order to comply with certain undertakings, including appointing an independent person to the Board of Directors, forming a Compliance Committee of the Board and providing enhanced compliance training);
  
  
• In re Vitol, Inc., et al., CFTC Docket No. 10-17 (CFTC filed Sept. 14, 2010) (false statements to a registered entity; sanctions assessed include a cease and desist order and a $6 million civil monetary penalty); and
  
  
• In re Triland USA Inc., CFTC Docket No. 10-22 (CFTC filed Sept. 30, 2010) (failure to secure funds of foreign futures and option customers; sanctions include a cease and desist order and a $725,000 civil monetary penalty).

Performance Measure 2.1.4: Cases filed by other criminal and civil law enforcement authorities during the fiscal year that included cooperative assistance from the Commission.

Status: Effective Data Source: Cooperating authorities provide notice to DOE of related civil complaints, criminal information, and indictments. Cooperative enforcement matters are noted in the DOE eLaw system. Verification: Internal DOE eLaw system and the U.S. Judiciary Public Access to Court Electronic Records Services Center.
ACTUAL FY 2007	ACTUAL FY 2008	ACTUAL FY 2009	ACTUAL FY 2010	PLAN FY 2010
24	31	44	25	25

Lead Program Office

Division of Enforcement

FY 2010 Performance Results

25

Performance Analysis & Review

Performance target was met for FY 2010. The Commission believes that its performance in cooperative criminal and civil enforcement was effective. During the rating period, the Commission continued to devote significant resources to cooperative enforcement with other criminal and civil law enforcement authorities. The performance of DOE, during FY 2010, was influenced by the recent and current financial downturn, which has revealed a number of fraudulent schemes, including Ponzi schemes that could stay afloat only during periods of rising asset values.

Performance Highlights

Among the significant enforcement actions filed by the Commission during FY 2010 that included related action by other civil and/or criminal authorities are the following:

• CFTC v. Trader’s Int’l Return Network, et al.
  
  On October 14, 2009, the Commission filed a civil injunctive action against David Merrick and his company, Trader’s International Return Network, charging them with them with forex fraud involving at least $16.4 million in customer funds. The SEC simultaneously filed a related action; the U.S. Attorney’s Office made a parallel criminal investigation public on October 7, 2009, when it executed numerous simultaneous search and forfeiture seizure warrants. CFTC v. Trader’s Int’l Return Network, et al., No. 6:09-cv-1743-MSS-GJK (M.D. Fla. filed Oct. 14, 2009);
  
  
• CFTC v. Yellowstone Partners, Inc., et al.
  
  On March 9, 2010, the Commission filed a civil injunctive action against Dennis Todd Hagemann and his company, Yellowstone Partners, Inc., charging them with a $700,000 fraud involving forex managed accounts and/or a pooled investment. Hagemann was arrested on March 10, 2010, by North Carolina authorities based on related charges by the North Carolina Department of the Secretary of State, Securities Division. CFTC v. Yellowstone Partners, Inc., et al., No. 5:10-CV-85-FL (E.D.N.C. filed Mar. 9, 2010);
  
  
• CFTC v. Rakotonanahary, et al.
  
  On March 15, 2010, the Commission filed a civil injunctive action against Patrick Rakotonanahary and Cyber Market Group LLC charging them with operating a multi-million dollar forex Ponzi scheme in Hawaii and elsewhere in the United States. The United States Attorney’s Office for the District of Hawaii filed a criminal indictment against Rakotonanhary charging him with fraud in connection with this scheme, and he was arrested on March 15, 2010. Additionally, the State of Hawaii, Department of Commerce and Consumer Affairs, Office of the Securities Commissioner filed an administrative complaint against Rakotonanahary in connection with this scheme. CFTC v. Rakotonanahary, et al., No. CV10 00144 KSC (D. Haw. Mar. 15, 2010);
  
  
• In re Riley, et al.
  
  On April 29, 2010, the Commission simultaneously filed and settled related administrative enforcement actions against Craig A. Riley and his firm, Pressio Capital Management, LP, for fraudulently operating a commodity pool and misappropriating pool participant funds. In a related criminal action, on January 12, 2009, Riley pled guilty to fraud in connection with a scheme to defraud or obtain money or property by means of materially false pretenses, representations or promises. Riley is currently serving a 41-month sentence. Sanctions assessed in the Commission’s action include a cease and desist order and $1 million civil monetary penalty; criminal restitution was set at $3,044,384.59. (United States v. Riley, Case No. SA CR 09-0001 (C.D. Cal. filed Jan. 12, 2009)). In re Riley, et al., CFTC Docket No. 10-06 (CFTC filed Feb. 18, 2010); and
  
  
• CFTC v. Milton, et al.
  
  On June 22, 2010, the Commission filed a civil injunctive action against Phillip Milton, Gregory Center, William Center, and their company, Trade LLC, charging them with commodity pool fraud in connection with their operation of a Ponzi scheme involving approximately $28 million. The SEC simultaneously filed a related action against Trade LLC, Phillip Milton and Gregory Center. CFTC v. Milton, et al., No. 10-80738-Marra (S.D. Fla. filed June 22, 2010).

 

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