CFTC Charges Chicago-Based Firm and Six Individuals in Multi-Million Dollar Options Fraud Scheme

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CFTC

CFTC Charges Chicago-Based Firm and Six Individuals in Multi-Million Dollar Options Fraud Scheme

June 30, 2020

Investigating Spoofing, poolWashington, D.C. — The Commodity Futures Trading Commission – CFTC today announced the filing of a civil enforcement action in the U.S. District Court for the Northern District of Illinois against Long Leaf Trading Group, Inc., its principals James A. Donelson of Aurora, Illinois, and Timothy M. Evans of Tulum, Mexico, and former Long Leaf associated persons Jeremey S. Ruth of Austin, Texas, and Andrew D. Nelson of Elmhurst, Illinois. The defendants are charged with defrauding customers in connection with options on futures transactions.  Some of the defendants are also charged with registration and disclosure violations. The CFTC also issued two orders filing and simultaneously settling charges against two additional former associated persons of Long Leaf, Scott J. Gecas, of Tinley Park, Illinois, and James E. Leeney, of Chicago, Illinois for their participation in the firm’s fraud scheme.

James McDonald, CFTC’s Director of the Division of Enforcement
James McDonald, CFTC’s Director of the Division of Enforcement

“The CFTC is committed to stamping out fraud in its markets, particularly with respect to conduct like that alleged here where there is an abuse of registration status to systematically mislead customers,” said CFTC Director of Enforcement James McDonald. “The CFTC urges customers to exercise caution when investing in so-called ‘trading programs’ offered by brokers or advisors.”

The complaint alleges that from at least June 2015 through December 2019, Long Leaf, at the direction of Donelson and Evans, and through its agents and employees, including Ruth and Nelson, knowingly made numerous false and misleading statements to customers and prospective customers about the success of Long Leaf’s “Time Means Money” options trading program. According to the complaint, all of Long Leaf’s customers lost money trading pursuant to the program. The defendants were aware of the losses, and knowingly or recklessly failed to disclose them to customers and prospective customers. In total, more than 400 customers lost approximately $6.1 million, while Long Leaf made more than $4.4 million from its trading recommendations, which were designed primarily to generate commissions.

In its continuing litigation, the CFTC seeks restitution for defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged, as well as permanent trading and registration bans.

Pursuant to the two CFTC orders filing and simultaneously settling charges, Gecas was ordered to pay a civil monetary penalty of $150,000, and is subject to a four-year registration and trading ban, while Leeney was ordered to pay a civil monetary penalty of $350,000, and is subject to a five-year registration and trading ban. Gecas and Leeney are ordered to cease and desist from further violations of the CEA and CFTC regulations, as charged.

The CFTC appreciates the assistance of the National Futures Association in this matter.

The Division of Enforcement staff members responsible for this case are Ashley J. Burden, Joseph J. Patrick, Elizabeth M. Streit, Scott R. Williamson, and Robert T. Howell. The staff of the Division of Swap Dealer & Intermediary Oversight also contributed to this matter.

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