DANA POINT, CA – December 14, 2010 – Patrick J. Dailey, of Dana Point, California, has been ordered to pay over $2.8 million in restitution and penalties following a federal judgment for commodity fraud, the U.S. Commodity Futures Trading Commission (CFTC) announced today.
The order, entered on December 8, 2010, by the Honorable Sam Sparks of the U.S. District Court for the Western District of Texas, requires Dailey and his company, Strongbow Investments GP, LLC, to jointly and severally pay $1.95 million in restitution and an $850,000 civil monetary penalty. Dailey and Strongbow are also permanently banned from engaging in any commodity-related activity, including trading and registering with the CFTC.
The CFTC initially filed a complaint against Dailey and Strongbow on June 30, 2009, alleging fraud and recordkeeping violations. The investigation revealed that the defendants operated a multi-million dollar fraudulent commodity pool, violating registration requirements and failing to adhere to CFTC regulations.
From at least July 2005, Dailey and Strongbow reportedly solicited approximately $17 million from around 22 members of the public, ostensibly for investment in Strongbow and Strongbow Investments Fund II, a commodity pool. However, the CFTC found that the defendants commingled participant funds with their own personal and third-party accounts, rather than solely utilizing them for commodity futures and options trading.
The order details that Dailey allegedly borrowed from pool participant assets for personal gain, including up to $1 million to cover his home equity credit line, without disclosing this activity to investors. An audit conducted by the National Futures Association in June 2009 revealed limited documentation supporting the fund’s operations and a failure to produce required records.
Relief defendants Suzi Dailey and the Dailey Family Limited Partnership were dismissed from the case by the court on December 8, 2010. The CFTC acknowledged the assistance of the National Futures Association in the investigation.
Source: CFTC.gov
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