Michael J. Leighton, of Torrance, California, has been charged with commodity fraud and issuing false statements, the Commodity Futures Trading Commission (CFTC) announced May 11, 2012. The charges stem from the operation of a commodity trading pool where Leighton allegedly defrauded at least 42 participants out of $1.6 million.
According to a complaint filed with the U.S. District Court for the Central District of California on May 8, 2012, Leighton falsely presented himself as a successful trader and claimed his pool was profitable to attract investors. Between July 2008 and the present, Leighton deposited the $1.6 million in trading accounts, funds which primarily belonged to the pool participants. However, Leighton reportedly lost over $1.3 million trading these accounts.
The CFTC alleges Leighton concealed these losses from investors and instead provided false information about the pool’s performance and the value of their shares. He also allegedly failed to fulfill withdrawal requests from participants, fabricating reasons for the delays, including a non-existent regulatory audit preventing distributions.
The CFTC is seeking a civil monetary penalty, restitution, disgorgement of ill-gotten gains, trading and registration bans, and both preliminary and permanent injunctions against Leighton. Simultaneously, the U.S. Attorney’s Office for the Central District of California has charged Leighton with one count of commodities fraud in a related criminal case (Case No. 2:12-cr-00439). Leighton is scheduled to appear in federal court for arraignment on June 4, 2012.
The CFTC acknowledged the assistance of the U.S. Attorney’s Office and the Los Angeles field office of the Federal Bureau of Investigation in this matter.
Source: CFTC.gov
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