New York, NY – Burton Friedlander, of Greenwich, Connecticut, was permanently barred from the commodities market and ordered to pay over $2 million in restitution following a CFTC enforcement action, announced March 14, 2007. The case, stemming from a complaint filed in October 2003, revealed a fraudulent commodities and securities pool operated by Friedlander and his company, Friedlander Capital Management Corporation (FCMC).
According to the CFTC, between 1998 and 2001, Friedlander solicited approximately $2 million from eight investors for the FCMC pool, falsely claiming it traded commodity futures and generated significant profits. However, instead of investing the funds, Friedlander diverted the money to cover personal and business expenses, including boats, automobiles, country club memberships, and legal fees.
To conceal the losses, Friedlander and FCMC distributed fraudulent annual reports to investors from 1998 through 2000. These reports falsely inflated the value of the pool’s assets, claiming over $5.7 million in assets as of December 31, 2000, when the actual value was less than $227,000. The reports were further fabricated using forged KPMG letterhead and a fraudulent signature.
The consent order, entered by Judge Kimba Wood of the Southern District of New York on February 20, 2007, requires Friedlander and FCMC to make restitution totaling $2,032,674, taking into account prior restitution payments related to a separate criminal case. Friedlander had previously pleaded guilty to related charges in May 2005 and was sentenced to 30 months in prison, two years of supervised release, and a $50,000 fine.
In addition to restitution, Friedlander and FCMC are permanently prohibited from acting as a commodity pool operator and are banned from trading on any CFTC-regulated commodity market. They are also barred from seeking registration or exemption from registration with the CFTC in the future.
The CFTC acknowledged the assistance of the Securities and Exchange Commission, the United States Attorney’s Office for the Southern District of New York, and the Internal Revenue Service in the investigation.
Source: CFTC.gov
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