For Release: February 14, 2008
Charles DeFazio and Galaxy Resources 2000, LLC to Pay $1.43 Million in Sanctions to Settle CFTC Pool Fraud Action
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) announced today that it settled a commodity pool fraud action against Oceanside, California resident Charles DeFazio and his company, Galaxy Resources 2000, LLC (Galaxy), which requires them to pay $1.43 million in sanctions.
This consent order stems from a complaint filed on January 5, 2006 in the United States District Court for the Southern District of California. (See CFTC News Release 5152-06, January 25, 2006.)
The consent order, which the court entered on February 13, 2008, finds that DeFazio did not disclose his history of prior trading losses when soliciting and accepting funds from prospective Galaxy pool participants. The order finds that DeFazio sent pool participants and prospective pool participants a number of documents and statements in which he knowingly or recklessly misrepresented that he was registered with the CFTC, when he was not, and that trading results on behalf of the pool were profitable, when they were not. The order also finds that DeFazio misappropriated at least $122,500 of pool participant funds and used some of those funds to pay a mortgage, credit card charges and other personal expenses.
DeFazio and Galaxy were ordered to pay $1,035,470 to their defrauded customers as restitution and to pay a civil monetary penalty of $400,000. The order also permanently enjoins DeFazio and Galaxy from any future commodity trading on behalf of themselves or others, and from further violations of the Commodity Exchange Act and CFTC regulations.
The following CFTC Division of Enforcement staff were responsible for this case: William Janulis, Michael Tallarico, Cynthia Cannon, Scott Williamson, Rosemary Hollinger, and Richard Wagner.
Last Updated: February 14, 2008