Oceanside, California resident Charles DeFazio has been ordered to pay $1.43 million in sanctions following a settlement with the U.S. Commodity Futures Trading Commission (CFTC) for commodity pool fraud. The consent order was entered on February 13, 2008, in the United States District Court for the Southern District of California, stemming from a complaint originally filed on January 5, 2006.
The CFTC found that DeFazio failed to disclose a history of prior trading losses to prospective investors in Galaxy Resources 2000, LLC (Galaxy), the commodity pool he managed. Investigators determined DeFazio knowingly or recklessly misrepresented his registration status with the CFTC, falsely claiming to be registered when he was not. He also falsely reported profitable trading results to pool participants and potential investors.
Furthermore, the order details that DeFazio misappropriated at least $122,500 in funds from pool participants, diverting the money to personal expenses including mortgage payments and credit card charges.
As part of the settlement, DeFazio and Galaxy were ordered to pay $1,035,470 in restitution to defrauded customers and a civil monetary penalty of $400,000. The court permanently enjoined DeFazio and Galaxy from engaging in future commodity trading, either for themselves or on behalf of others, and from violating the Commodity Exchange Act and CFTC regulations.
The case was led by CFTC Division of Enforcement staff members William Janulis, Michael Tallarico, Cynthia Cannon, Scott Williamson, Rosemary Hollinger, and Richard Wagner. The settlement was announced on February 14, 2008.
Source: CFTC.gov
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