Federal Court Orders Ohio Resident and Multi-Million Dollar Ponzi Scheme Fraudster Permanently Banned from Trading and Registering with the CFTC

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— The Commodity Futures Trading Commission announced today that Judge Michael R. Barrett, of the U.S. District Court for the Southern District of Ohio entered a Consent Order for Permanent Injunction and Other Equitable Relief against Glen Galemmo finding, among other things, that Galemmo fraudulently solicited individuals to place funds in a commodity pool to trade commodity futures, commodities, stocks and bonds and misappropriated millions of dollars. The order imposes on Galemmo permanent trading and registration bans.

The order resolves a CFTC action against Galemmo filed in the Southern District of Ohio on September 15, 2014. [See CFTC Press Release No. 7001-14]

Case Background

According to the order, and as Galemmo admitted in his plea agreement in a separate, parallel criminal action, from February 18, 2010 through at least July 17, 2013, Galemmo, through his firm, QFC, LLC, made material misrepresentations to commodity pool participants, including falsely illustrating that the pool generated returns of 17 to 40 percent from 2008 through 2012. Galemmo also failed to disclose that he failed to trade pool participants’ funds for a substantial period, and sent investors fraudulent account statements showing false purported trading profits. Through his scheme, Galemmo solicited more than $116 million from pool participants, which he represented would be used for trading futures, commodities and other financial products. In fact, Galemmo only deposited approximately $4.7 million of over $116 million solicited from pool participants into futures accounts that he controlled and sustained total trading losses of approximately $1.2 million. Galemmo also allegedly withdrew or caused to be withdrawn $2.7 million in pool participants’ funds from these futures accounts. Galemmo misappropriated the vast majority of the remaining funds for personal and other business uses.

Parallel Criminal Action

In a separate, parallel criminal action brought by the U.S. Attorney for the Southern District of Ohio, Galemmo previously pleaded guilty to wire fraud and money laundering in connection with the scheme.  [See United States v. Glen Galemmo, Case No. 1:13-cr-00141-HJW, ECF No. 2 (S.D. Ohio Dec. 17, 2013)] On August 28, 2014, Galemmo was sentenced to 188 months in federal prison and ordered to pay $34.5 million in restitution to his victims.

The CFTC cautions that orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

The CFTC appreciates the cooperation and assistance of the U.S. Attorney’s Office for the Southern District of Ohio in this matter.

CFTC Division of Enforcement staff members responsible for this case are Dmitriy Vilenskiy, Luke B. Marsh and Paul G. Hayeck, and former Division of Enforcement attorneys Eugene Smith and Peter M. Haas.

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Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the Commodity Exchange Act.