Atlanta, GA – Layne D. Gersteland and three associates were ordered to pay over $6.75 million in penalties and restitution for defrauding over 274 customers, the U.S. Commodity Futures Trading Commission (CFTC) announced December 16, 2009. The civil penalties and restitution were outlined in a consent order entered on December 15, 2009, in the U.S. District Court for the Northern District of Georgia.
Gersteland, along with Devereaux D. Booth, David N. Mittler, and the firm American Derivatives Corp. (ADC), were charged with fraudulently soliciting customers to trade commodity options. The CFTC alleged the defendants failed to adequately supervise employees who were committing the fraud. The scheme targeted individuals with high-risk investments in commodity options.
The court order requires the defendants to collectively pay $5,369,000 in restitution to the defrauded customers. In addition to the restitution, a $1.4 million civil penalty was levied against the group. The order also permanently bans Gersteland, Booth, Mittler, and ADC from any future involvement in commodity-related activities, including registration with the CFTC.
This case builds on a previous consent order issued in 2008 against National Commodities Corporation, Inc. (NCCI) and International Commodity Clearing, LLC, both of Fort Lauderdale, Florida. NCCI and ICC, previously registered futures commission merchants and guarantors of ADC, were held jointly and severally liable for a portion of ADC’s restitution obligation, depending on the duration of their guarantee agreements with ADC.
The CFTC’s enforcement action was led by Daniel C. Jordan, Kathleen Banar, James Deacon, Richard Glaser, and Richard Wagner of the Division of Enforcement. The investigation uncovered a pattern of deceptive practices designed to profit from unsuspecting investors.
Source: CFTC.gov
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