Chicago, IL – On April 24, 2008, the U.S. District Court in Chicago, Illinois, entered a default judgment against The Lake Shore Group of Companies Inc., Ltd., 12 affiliated commodity pools operating under the name Lake Shore Alternative Financial Asset Account (or Fund), and Hanford Investments Ltd. The judgment, obtained by the U.S. Commodity Futures Trading Commission (CFTC), permanently prohibits these entities from engaging in further fraudulent conduct and trading commodity futures.
The case stems from a second amended complaint alleging that Philip J. Baker, along with Lake Shore Asset Management Limited (LSAM) and the aforementioned entities, operated the commodity pools as a fraudulent common enterprise. They are accused of defrauding hundreds of investors who collectively invested at least $300 million in commodity futures contracts on U.S. markets. While the court has yet to rule on the liability of Baker and LSAM, the default order was issued against the other defendants due to their failure to respond to the CFTC’s complaint.
The court found that the default defendants misappropriated over $11 million of investor funds. They are also accused of misrepresenting pool profits and losses, failing to disclose critical trading losses and other material facts, and facilitating the issuance of false statements to investors. The judgment includes an asset freeze against the defendants and anyone acting in concert with them, preventing the destruction or concealment of records. CFTC representatives and a court-appointed Receiver will have immediate access to these records.
Furthermore, the court has ordered funds held at Sentinel Management Group Inc. (currently in bankruptcy), MF Global UK Limited, Newedge Group SA, and Lehman Brothers International Europe to be transferred to the Receiver. These funds will be distributed to Lake Shore clients as determined by the court. The court has reserved the right to determine the appropriate restitution for defrauded investors and assess civil monetary penalties against the default defendants.
The CFTC’s ongoing litigation against Baker and LSAM seeks permanent injunctions, the return of fraudulently obtained funds, repayment of ill-gotten gains, and civil monetary penalties for violations of the Commodity Exchange Act. The CFTC’s Enforcement Division received assistance from several international regulatory bodies including the Barbados Securities Commission, and others.
Source: CFTC.gov
Related Federal Cases
- Letitia James, Securities Fraud, New York 2023 · Washington
- Eric Holub, Tax Withholding Fraud, Cedar Rapids IA, 2023 · Illinois
- Terry L. Gantt, ID Theft and Wire Fraud, Cedar Rapids IA, 2012 · Illinois
- Abel Hernandez-Labra, Passport Fraud, Hampton IA, 2023 · Illinois
- Princess L. Eatmon, Student Loan Wire Fraud, Albany GA, 2023 · Illinois
MORE FEDERAL CRIME NEWS
US NewsUS NewsUS NewsUS News