For Release: October 24, 2008
Western Virginia Man Found Guilty of 37 Counts Related to Defrauding Commodity Pool Investors out of Millions
The CFTC Commends the Cooperative Enforcement Efforts that Resulted in this Verdict
Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) commends the U.S. Attorney’s Office for the Western District of Virginia for the successful prosecution of Ted James Johnson of Pearisburg, Virginia.
Following an almost three-week jury trial, Johnson was found guilty on October 17, 2008 on 37 criminal counts in the U.S. District Court for the Western District of Virginia in Roanoke in connection with the operation of an illegal commodity pool. CFTC professional staff assisted the U.S. Attorney’s Office and provided expert testimony in the criminal prosecution of Johnson for commodity pool fraud, embezzlement of commodity pool funds, and acting as an unregistered commodity pool operator.
The Federal jury found Johnson guilty of several counts under the Commodity Exchange Act (CEA) including fraud by a commodity pool operator, embezzlement of commodity pool funds, acting as an unregistered commodity pool operator, in addition to other criminal counts including mail fraud, wire fraud, money laundering, and securities fraud.
In July 2007, Johnson and his partner, Frank Graham Farrier, were indicted and charged with 42 criminal counts in connection with a multimillion dollar Ponzi scheme related to commodity futures. Contrary to their representations to investors, instead of using the money to trade commodity futures contracts, many investors’ funds were used by Johnson and Farrier to make payments to other investors.
Earlier this month, Farrier pled guilty to two counts of mail fraud, one count of money laundering conspiracy, one count of securities fraud, and one count of being an unregistered commodity pool operator. Farrier agreed to forfeiture of his assets.
The maximum penalty faced by Johnson and Farrier is 85 years imprisonment and a fine of more than $4.5 million. The sentencing hearing is yet to be held.
The CFTC appreciates the cooperative enforcement efforts of the U.S. Department of Justice Fraud Section, the Federal Bureau of Investigation, the United States Postal Inspection Service, the Internal Revenue Service, and the Virginia State Corporation Commission.
Last Updated: October 24, 2008