Gregory M. Schneider, of Mount Juliet, Tennessee, is facing charges of fraud following a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) on August 10, 2011. The complaint, filed in the U.S. District Court for the Middle District of Tennessee, alleges that Schneider and his firm, Blue Sky Capital Management Corp., of Lebanon, Tennessee, intentionally misled the National Futures Association (NFA) during an audit.
According to the CFTC, Schneider and Blue Sky misrepresented the scope of their business to the NFA on or around October 21-23, 2008. They allegedly claimed to manage only 10 customer accounts with a combined equity of roughly $20,000, stating they had only been managing accounts since March 2008 and had received no customer complaints. However, the CFTC alleges these statements were false.
The complaint details that Schneider and Blue Sky had actually managed approximately 80 customer accounts in 2007, totaling around $1.2 million in equity. These accounts reportedly suffered net losses of about 30% of the invested equity. Furthermore, the CFTC alleges the defendants failed to disclose repeated complaints from a customer regarding their Blue Sky account, even during the NFA audit. When questioned by the NFA in January 2009, Schneider and Blue Sky allegedly continued to make false statements concerning the undisclosed 2007 accounts and the customer complaint.
The CFTC is seeking permanent bans on Schneider and Blue Sky from trading and registering with the CFTC, as well as a civil monetary penalty and permanent injunctions against future violations of federal commodities laws. The NFA had already permanently barred both Schneider and Blue Sky from NFA membership in November 2009. Stephanie Reinhart, Joseph Konizeski, Judith McCorkle, Scott Williamson, Rosemary Hollinger, and Richard Wagner of the CFTC Division of Enforcement are leading the litigation.
Source: CFTC.gov
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