Commodities trader ordered to pay more than $41M
LOS ANGELES (Legal Newsline) - A California federal court has entered a $41 million judgment and permanent injunction against Gordon Driver, Axcess Automation and Axcess Fund Management in a case brought by the U.S. Commodity Futures Trading Commission.
According to the CFTC, the defendants, of Nevada, defrauded more than 100 participants in the United States and Canada of more than $14 million using a commodity pool Ponzi scheme.
Driver fraudulently solicited approximately $14,319,905 from more than 100 participants from February 2006 to May 2009 by telling pool participants that he had a successful software trading program, the CFTC says.
He also allegedly said he had profitable returns averaging one to five percent per week (or 20 percent per month); had profitable returns in seven or eight out of 10 trades; and minimized risk by terminating trading after three losing trades in one day.
But Driver's trading was "abysmally unprofitable," according to the court. He traded only $3.7 million of the $14.3 million in pool funds he had received and lost 94 percent of those funds.
Driver spent more than $10 million of the investors' money for personal recreational purposes, the CFTC said. Among the items listed were $1.6 million of pool funds on gambling in Las Vegas casinos, rent, meals, travel, entertainment, car payments, computer equipment, clothing, and cash withdrawals.
The court imposed permanent trading and registration bans against the defendants and required them jointly and severally to pay restitution of more than $9.5 million to defrauded pool participants and a $31.8 million civil monetary penalty. The order also permanently prohibits the defendants from further violations of the Commodity Exchange Act and CFTC regulations.