Release Number 7217-15
August 25, 2015
Federal Court in Illinois Orders Former Sentinel Management Group, Inc. Senior Vice President Charles K. Mosley to Pay More than $2 Million for Misusing Customer Funds
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 of Permanent Injunction against Charles K. Mosley of Vernon Hills, Illinois, resolving charges of customer funds segregation violations of Section 4d(b) of the Commodity Exchange Act (CEA) concerning Mosley’s role as trader and former Senior Vice President in the handling of $562 million in commodity customer segregated funds that had been managed by Sentinel Management Group, Inc. (Sentinel).
The Order, entered on August 11, 2015, requires Mosley to pay $551,000 in disgorgement and a $1,653,000 civil monetary penalty. The Order also imposes a permanent trading and registration ban on Mosley and prohibits him from further violations of the CEA, as charged.
The Order stems from a CFTC Complaint filed against Sentinel, Mosley, and Sentinel’s former President and Chief Executive Officer Eric A. Bloom (Bloom) on April 28, 2008, which charged Mosley with aiding and abetting Sentinel’s commingling and misappropriation of commodity customer funds it received from various Futures Commission Merchants from at least May 21, 2007 through August 17, 2007 (see CFTC Press Release 5494-08). According to the Order, Sentinel improperly commingled and misappropriated customer funds to finance Sentinel’s proprietary trading, failed to treat and deal with customer funds as belonging to its commodity customers, withdrew customer segregated funds beyond Sentinel’s actual interest therein, and used the funds to collateralize its overnight loan with the Bank of New York, in violation of Section 4d(b) of the CEA. The Order also finds that Mosley aided and abetted these violations.
The U.S. Attorney’s Office in Chicago brought a related criminal case against Mosley and Bloom 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 that proceeding, on October 8, 2013, Mosley pleaded guilty to two counts of investment adviser fraud, and on March 25, 2014, a jury convicted Bloom of 18 counts of wire fraud and one count of investment advisor fraud after a four-week trial. On January 30, 2015, Federal District Court Judge Ronald A. Guzman sentenced Mosley to eight years in federal prison and Bloom to 14 years in prison and ordered the two men jointly to pay over $665 million in restitution (see FBI Press Release, January 30, 2015). Mosley is scheduled to begin serving his prison sentence on September 9, 2015. Bloom has appealed his criminal conviction, but he began serving his prison sentence in June 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’s case against Bloom is still pending.
CFTC Division of Enforcement staff members responsible for this action are Brigitte Weyls, Susan Gradman, Scott Williamson, and Rosemary Hollinger.
Last Updated: August 25, 2015