Chicago, IL – Jay C. Nolan, 51, of Wilmette, Illinois, was ordered to pay $825,000 in penalties and permanently banned from trading and registering with the Commodity Futures Trading Commission (CFTC) following a consent order entered by Judge Charles R. Norgle of the U.S. District Court for the Northern District of Illinois on July 27, 2011.
Nolan, along with his company Lodge Capital Group, LLC, was found to have engaged in commodity pool fraud from January 2005 through November 2009. The CFTC alleged that Nolan solicited approximately $3.9 million from around 10 customers, promising investment in his Lodge Diversified Fund, LP, commodity pool.
According to court documents, Nolan and Lodge Capital traded and lost roughly $2.3 million of the investors’ funds and misappropriated at least $550,000 for personal expenses. These expenses included country club dues, sporting event tickets, and personal credit card bills, the CFTC stated.
The court found that Nolan falsely told investors their funds would be secured by U.S. Treasury bills held in a Winnetka, Illinois bank. He also allegedly misrepresented the pool’s profitability, claiming monthly profits of 1 to 2 percent despite significant losses. False account statements were sent to participants, inflating the value of assets and masking the true financial status of the fund.
This civil penalty comes in addition to a criminal sentence handed down on March 11, 2011, where Judge Milton I. Shadur sentenced Nolan to 60 months in prison and ordered him to pay $3.3 million in restitution. The CFTC collaborated with the Federal Bureau of Investigation and the U.S. Attorney’s Office for the Northern District of Illinois on both the civil and criminal investigations.
Source: CFTC.gov
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