Tuesday, 22 July 2014
Last updated 27 min ago
May 18 2009 | 9:23am ET
The U.S. Commodity Futures Trading Commission last week filed a complaint charging Gordon Driver and his Las Vegas-based firms Axcess Automation and Axcess Fund Management with a $13.5 million fraud involving over 100 investors in the U.S. and Canada.
The Federal District Court in Los Angeles has also entered an order freezing the assets of Axcess Fund Management.
The CFTC complaint alleges that, from at least February 2006, Driver defrauded pool investors, misappropriated investors’ funds and operated two commodity pools as a Ponzi scheme, using newly received participant funds to pay purported profits and withdrawals to other participants.
Driver allegedly misrepresented to prospective pool investors that his trading generated monthly profits of around 20% and issued false account statements to give credibility to these misrepresentations. According to the complaint, despite accepting over $13.5 million, Driver used only about $3.7 million for trading, which resulted in approximately $3.5 million of trading losses, or 95% of the funds invested. Pool investors’ funds were also allegedly commingled with non-pool funds.
According to the CFTC complaint, Driver never informed the pool investors that they had traded only a portion of their funds and never informed them of the trading losses. He also used pool funds for his personal expenses, including cash withdrawals at Las Vegas casinos. In addition, the complaint charges Driver and Axcess Automation each with illegally acting as an unregistered commodity pool operator and Axcess Fund Management, a registered CPO, with failing to keep and produce, upon request by the CFTC, required books and records.
“Domestic and foreign regulators will continue to cooperate and combine our resources to combat the pestilence of Ponzi fraud schemes that cross borders,” said Stephen Obie, CFTC’s acting director of enforcement.
The CFTC is seeking preliminary and permanent injunctive relief, restitution, disgorgement of ill-gotten gains, civil monetary penalties, and other relief.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…