July 12, 2013
CFTC Obtains Default Judgment and Permanent Injunction against California Resident Michael J. Leighton for Defrauding Commodity Pool Participants
Court Orders Leighton to Pay over $2.3 Million in Sanctions and Restitution and Permanently Bars Him from the Commodities Industry
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Philip S. Gutierrez of the U.S. District Court for the Central District of California entered an Order of Default Judgment and Permanent Injunction against Michael J. Leighton of Torrance, California. The Order, entered on July 8, 2013, stems from a CFTC enforcement action filed on May 8, 2012 charging Leighton with solicitation fraud and issuing false statements in connection with the operation of a commodity trading pool (see CFTC Release 6256-12).
The Order requires Leighton to pay $1,650,230 in restitution to defrauded pool participants and a $700,000 civil monetary penalty. It also permanently enjoins Leighton from violating the anti-fraud provisions of the Commodity Exchange Act and Commission Regulations, as charged, and permanently bans Leighton from trading or engaging in activity requiring registration with the CFTC.
The Order finds that Leighton defrauded and deceived at least 48 pool participants who invested at least $1.65 million in a commodity pool he operated from at least July 2008 to March 2012. The Order also finds that Leighton willfully or recklessly misrepresented to pool participants and prospective participants that he was a successful trader and that his pool was profitable. It further finds that Leighton lost over $1.3 million of pool participant funds through trading. Leighton did not disclose those loses and, instead, issued false written statements to pool participants misrepresenting the profitability and value of their respective shares of the Leighton pool. The Order further finds that Leighton falsely represented that the National Futures Association (NFA) and CME Group, Inc. were conducting an audit or review of the pool that prevented him from making any distributions or cash withdrawals to pool participants. The Order additionally finds that, in fact, no such audits or reviews occurred and that Leighton also created and distributed a fabricated document that purported to be an audit report issued by the NFA.
In a related criminal action filed on May 9, 2012, the U.S. Attorney’s Office for the Central District of California charged Leighton with one count of commodities fraud in violation of Title 18, U.S.C. § 1348(2). United States v. Leighton, Case No. 2:12-cr-00439. Leighton entered a guilty plea in the related criminal action on July 11, 2012, and was sentenced to 60 months imprisonment on March 4, 2013.
The CFTC thanks the U.S. Attorney’s Office for the Central District of California, the Los Angeles Office of the Federal Bureau of Investigation, and the NFA for their assistance and cooperation in this action.
CFTC Division of Enforcement staff members responsible for this case are Elizabeth N. Pendleton, Melissa Glasbrenner, William P. Janulis, Scott Williamson, Rosemary Hollinger, and Richard B. Wagner.
Last Updated: July 12, 2013