BURLINGTON, VT – Gary F. Scholze, a resident of Pennsylvania, has been ordered to pay a $1 million civil penalty and is permanently banned from the commodity futures and options markets, the U.S. Commodity Futures Trading Commission (CFTC) announced today, September 18, 2008.
The judgment, entered by the U.S. District Court for the District of Vermont, stems from a CFTC enforcement action originally filed on June 8, 2006. Court findings reveal that beginning in August 2001, Scholze fraudulently obtained approximately $2.1 million from roughly 30 investors, promising to trade commodity futures and options on their behalf.
However, Scholze allegedly suffered trading losses and misappropriated around $1.5 million of the invested funds for personal use. To conceal his actions, he is accused of issuing falsified account statements that falsely indicated profitable trading activity.
The court considered the severity of the violations, the deliberate nature of Scholze’s scheme, the harm inflicted upon investors and the financial system, and the necessity for deterring similar misconduct when determining the $1 million penalty. Notably, Scholze is also required to pay approximately $2.1 million in restitution as part of a separate criminal case.
Scholze previously pled guilty to multiple fraud counts in the related criminal action and is currently serving a 63-month sentence in a federal correctional institution. The CFTC collaborated with the United States Attorney’s Office for the District of Vermont and the Federal Bureau of Investigation throughout the investigation.
Source: CFTC.gov
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