New York City resident Nathan Schleifer and his firm, Galileo Trading, LLC, have been slapped with hefty penalties by the Commodity Futures Trading Commission (CFTC) for a long-running fraud scheme, according to an order released today. The CFTC alleges Schleifer fraudulently solicited over $2.8 million from investors between 1999 and 2014 with false promises of profitable commodity futures trading.
The investigation revealed two distinct facets to the fraud. A pooled investment scheme saw Schleifer and Galileo collect at least $960,000 from investors by falsely claiming a history of successful futures trading and guaranteeing returns. In reality, the firm consistently lost money, and most investors never recovered their funds. Schleifer allegedly fabricated account statements and tax forms to perpetuate the illusion of profitability. When a customer requested a withdrawal, Schleifer initially blamed the 2010 “flash crash” before admitting the funds were lost years prior.
Separately, Schleifer secured over $1.8 million to manage in 12 individual futures trading accounts, again relying on misrepresentations about his trading expertise. The CFTC found Schleifer suffered losses in every year between 2008 and 2014, yet continued to falsely portray himself as a profitable trader to attract new clients.
The CFTC order mandates Schleifer and Galileo jointly pay $1,150,618.28 in restitution to defrauded customers, a $420,000 civil penalty, and $38,022 in disgorgement – funds representing ill-gotten gains. Furthermore, both Schleifer and Galileo are permanently banned from registering with the CFTC and engaging in futures trading. The order also requires them to cease and desist from further violations of the Commodity Exchange Act.
Adding to the severity of the charges, Schleifer is accused of repeatedly lying to the National Futures Association (NFA) during routine audits, falsely claiming Galileo had no clients and did not trade on behalf of others. The CFTC acknowledged the assistance of the NFA and the New York County District Attorney’s Office during the investigation. The CFTC cautioned that restitution orders do not guarantee victims will recover their losses.
Source: CFTC.gov
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