August 13, 2012

CFTC Charges Colorado Resident Michael Bruce Gale with Commodity Pool Fraud

Gale also charged with misappropriation, commingling investor funds, false statements, and failure to register

Federal court issues emergency order freezing Gale’s assets and protecting books and records

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it filed a civil anti-fraud enforcement action against Michael Bruce Gale (Gale) of Littleton, Colo., individually and doing business as Capital Management Group (CMG). The CFTC complaint charges Gale with defrauding investors in connection with operating a commodity pool to trade commodity futures contracts, making false statements to pool participants, misappropriating pool funds, commingling investor funds with pool funds, and failing to register as a commodity pool operator with the CFTC.

The complaint alleges that from at least the summer of 2007 through the present, Gale, individually and doing business as CMG, fraudulently solicited and accepted at least $742,606 from at least three individuals to trade commodity futures on the pool’s behalf.

The CFTC’s complaint was filed under seal on July 25, 2012, in the U.S. District Court for the District of Colorado, and subsequently Senior U.S. District Judge John L. Kane entered an emergency order freezing Gale’s assets and prohibiting the destruction or alteration of books and records.

According to the complaint, while soliciting and accepting funds, Gale allegedly misrepresented his past trading success and the pool’s profitability and value. For example, Gale allegedly represented to prospective and actual pool participants that 1) participants earned an approximate 100 percent return on their investments over the prior five years, 2) that Gale made profits over $2.4 million trading commodity futures for himself and others each year between 2006 and 2008, and 3) that the pool’s value exceeded $3.5 million. In reality, according to the complaint, Gale traded commodity futures contracts in two accounts into which he deposited less than $300,000 and lost over $62,000 trading between approximately June 3, 2009, and September 15, 2011. In addition, the complaint charges Gale with misappropriating a significant portion of pool participants’ funds between at least February 9, 2008 and the present rather than trade those funds in the pool as promised.

To conceal and perpetuate the fraud, Gale allegedly provided false tax records to prospective and actual participants, issued at least one fictitious trading account statement, reported false profits to participants, and failed to disclose trading losses and his misappropriation of pool participants’ funds.

In its continuing litigation, the CFTC seeks a civil monetary penalty, restitution, disgorgement of ill-gotten gains, trading and registration bans, and preliminary and permanent injunctions against further violations of the federal commodities laws, as charged.

The CFTC appreciates the assistance of the Department of Justice for the District of Colorado and the Federal Bureau of Investigation.

CFTC Division of Enforcement staff members responsible for this case are Allison Passman, Mary Elizabeth Spear, Ava Gould, Scott Williamson, Rosemary Hollinger, and Richard Wagner.

Media Contact
Dennis Holden

Last Updated: August 13, 2012