Thomas B. Breen, of Orange County, California, has been ordered to pay over $1.75 million in restitution and penalties for defrauding customers through a commodity futures scheme, the Commodity Futures Trading Commission (CFTC) announced November 13, 2013. The U.S. District Court for the Central District of California issued the order on November 5, 2013, following a CFTC complaint filed November 8, 2011.
Breen, a principal of National Equity Holdings, Inc. (National Equity), was found to have fraudulently solicited over $1.4 million from investors between June 2009 and May 2010 to trade commodity futures contracts. The CFTC found that Breen and National Equity made false claims about the trading experience of Francis Franco, misrepresented potential profits and risks, failed to disclose their lack of proper CFTC registration, and concealed how participant funds would be used.
According to the Order, Breen and National Equity only traded a portion of the collected funds, sustaining significant losses. They then concealed these losses by issuing falsified account statements showing fabricated profits to investors. After approximately one year, investors were told their funds had been lost in trading, but were promised a return of their principal.
Breen was ordered to jointly pay $1,059,096 in restitution to defrauded customers, in accordance with a related criminal restitution order. He also faces a $700,000 civil monetary penalty and a permanent ban from trading and registering with the CFTC. Breen was sentenced to 40 months in federal prison in a related criminal case.
Robert J. Cannone and Francis Franco, also named in the original CFTC complaint, have also faced consequences. Cannone was sentenced to 27 months in prison and ordered to pay $1.05 million in restitution. Franco received a 25-month sentence. Cannone and National Equity previously settled with the CFTC, agreeing to pay over $3.6 million in restitution and penalties. The CFTC’s litigation against Franco continues to determine the appropriate monetary penalty and potential trading ban.
The CFTC acknowledged the assistance of the Federal Bureau of Investigation, Orange County Office, and the U.S. Attorney’s Office for the Central District of California, Santa Ana Office, in this case.
Source: CFTC.gov
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