Case Status Report: Kevin J Steele

November 28, 2005: 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 on 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.

June 13, 2005: On June 13, 2005, the Honorable Milton I. Shadur, Judge of the United States District Court for the Northern District of Illinois, issued an Order of Preliminary Injunction against Defendant Kevin J. Steele. The Order finds that Steele violated the antifraud provisions of the Commodity Exchange Act by making material misrepresentations and omissions to pool participants and creating or causing false statements to be sent to them. The Order bars Steele from engaging in fraud in connection with commodity futures or commodity options transactions during the pendency of the civil action.

In addition, the Order: (1) prohibits Steele and his agents, servants, employees, nominees, or attorneys from “dissipating, withdrawing, transferring, removing, concealing or disposing of cash, cashiers checks, funds, assets or other property” of Steele; (2) enjoins Steele and all persons or entities holding Steele’s “funds, securities, assets or other property of any kind” from transferring, withdrawing, removing or disposing of any such funds or property; (3) restrains Steele and his agents from destroying, mutilating or concealing any of Steele’s books, records or other documents; and (4) prohibits Steele and his agents from denying the Commodity Futures Trading Commission access to Steele’s books or records. Finally, the Order states that the terms of the Statutory Restraining Order entered by the Court on May 26, 2005 shall remain in effect until further order of the Court.

In its ongoing litigation, the CFTC is seeking a permanent injunction against Steele, repayment to defrauded investors, the return of ill-gotten gains from Steele and civil monetary penalties for each violation of the Commodity Exchange Act.

Members of the public who have information to share involving Kevin J. Steele can complete the preliminary questionnaire for Kevin J. Steele Investors (in either Word format or PDF format) and send copies of all relevant records including copies of checks, front and back, bank drafts or wires, statements, correspondence, email, solicitation material, etc. to the CFTC Staff Contact.

Related Documents:

Staff Contact
Mary Beth Spear
CFTC Division of Enforcement
525 West Monroe
Suite 1100
Chicago, IL 60661

Receiver General for Canada
Royal Canadian Mounted Police
401 West Georgia Street
Vancouver, BC V6B5A1

Last Updated: March 23, 2011