The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil enforcement action in the U.S. District Court, Northern District of Illinois, charging Defendants Gerald J. Considine, a/k/a Jerry J. Considine, of Oak Park, Illinois, and his companies, Novo Trading LLC (Novo) and Considine Trading Corp. (CTC), with fraudulently soliciting more than $2.4 million from at least nine customers to open managed commodity futures or foreign exchange (forex) accounts and misappropriating more than $1.65 million of those funds.
According to the CFTC, Mr. Considine allegedly used customer funds for personal expenses, funding a luxurious lifestyle which included country club fees, automobiles, dinners, entertainment, and health and pet care.
Specifically, the CFTC Complaint alleges that from at least January 2010 through December 2013, Mr. Considine and his two companies fraudulently solicited customers to purportedly open individual managed commodity futures or forex trading accounts and grant Novo or CTC discretionary authority to trade such accounts.
However, instead of instructing customers to open and fund individual trading accounts at registered Futures Commission Merchants for Novo and CTC to trade on their behalf, Mr. Considine instructed customers to transfer their funds directly to CTC or Novo.
As alleged, Mr. Considine never opened or funded any individual trading accounts for customers with the customer funds received. Instead, Mr. Considine and his companies allegedly misappropriated approximately $1,650,127 of customers’ funds for their own purposes, including opening and funding commodity futures and forex accounts in Defendants’ names and paying Mr. Considine’s personal expenses, such as country club fees, automobiles, dinners, entertainment, and health and pet care during the four-year period.
The Complaint also charges Defendants with defrauding customers by issuing account statements that falsely represented that Defendants had funded individual customer trading accounts and depicted fictitious trading results and account balances.
Defendants violated the registration provisions of the Commodity Exchange Act because at times during the period, CTC and Novo were acting as Commodity Trading Advisors (CTAs) and Mr. Considine was acting as an Associated Person of the CTAs without being appropriately registered with the CFTC.
In its continuing litigation against the Defendants, the CFTC seeks restitution, civil monetary penalties, disgorgement of ill-gotten gains, trading and registration bans, and a permanent injunction against further violations of the commodities laws, as charged.
The CFTC appreciates the assistance of the Federal Bureau of Investigation and the U.S. Attorney’s Office for the Northern District of Illinois, which filed an indictment against Considine on September 4, 2014.
CFTC Division of Enforcement staff members responsible for this case are Diane M. Romaniuk, Ava M. Gould, William Janulis, Mary Elizabeth Spear, Scott R. Williamson, and Rosemary Hollinger.
To read the full report from the CFTC, click here.