Littleton, Colorado resident Michael Bruce Gale is facing charges of commodity fraud following a civil enforcement action filed by the U.S. Commodity Futures Trading Commission (CFTC) on July 25, 2012, in the U.S. District Court for the District of Colorado. The CFTC alleges Gale defrauded investors through his operation of Capital Management Group (CMG), a commodity pool used to trade commodity futures contracts.
According to the complaint, Gale fraudulently solicited and accepted at least $742,606 from at least three individuals beginning in the summer of 2007. He is accused of making false statements to pool participants, misappropriating funds, commingling investor and pool funds, and failing to register as a commodity pool operator with the CFTC.
The CFTC alleges Gale misrepresented his trading history and the pool’s financial performance. He reportedly told investors they had earned a 100 percent return on their investments over five years, that he personally profited over $2.4 million annually between 2006 and 2008, and that the pool’s value exceeded $3.5 million. However, the complaint states that Gale traded with less than $300,000 and lost over $62,000 between June 3, 2009, and September 15, 2011.
Furthermore, the CFTC contends that Gale misappropriated a significant portion of investor funds, instead of using them for trading as promised. To conceal the scheme, he allegedly provided false tax records, a fictitious trading account statement, and reported false profits while failing to disclose losses and misappropriation.
On July 25, 2012, Senior U.S. District Judge John L. Kane issued an emergency order freezing Gale’s assets and prohibiting the destruction of relevant records. The CFTC is seeking a civil monetary penalty, restitution, disgorgement of ill-gotten gains, trading and registration bans, and injunctions against further violations of federal commodities laws. The Department of Justice and the Federal Bureau of Investigation assisted in the investigation.
Source: CFTC.gov
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