The opinion of the court was delivered by: Hon. Otis D. Wright II
FINAL JUDGMENT AND ORDER OF PERMANENT INJUNCTION, CIVIL MONETARY PENALTY AND OTHER EQUITABLE RELIEF AGAINST DEFENDANTS GORDON A. DRIVER, AXCESS AUTOMATION LLC AND AXCESS FUND MANAGEMENT LLC
On May 14, 2009, Plaintiff U.S. Commodity Futures Trading Commission (the "Commission" or "CFTC") filed a Complaint against Defendants Gordon A. Driver ("Driver"), Axcess Automation LLC ("Axcess Automation") and Axcess Fund Management LLC ("Axcess Fund") (collectively "Defendants") for Permanent Injunction, Civil Penalties, and Other Equitable Relief for violations of the Commodity Exchange Act, as amended (the "Act"), 7 U.S.C. §§ 1 et seq. (2008), and CFTC's Regulations, 17 C.F.R. §§ 1 et seq. (2012). A Statutory Restraining Order ("SRO") was issued on May 14, 2009, and on August 17, 2009, the Court issued an Order of Preliminary Injunction and Other Relief against Defendants ("PI Order").
On April 30, 2012, the CFTC filed an unopposed motion for summary judgment against all Defendants, and on July 5, 2012 the Court entered an Order Granting Plaintiff's Motion for Summary Judgment ("SJ Order"). In the SJ Order, the Court made findings of fact and conclusions of law and found that between at least February 2006 and May 2009 (the "Relevant Period"):
1. Defendants committed fraud and misappropriation of commodity pool funds in violation of Section 4b(a)(2)(i)-(iii) of the Act, 7 U.S.C. § 6b(a)(2)(i)-(iii), for acts prior to October June 18, 2008, and in violation of Section 4b(a)(1)(A)-(C) of the Act, as amended by the Food, Conservation, and Energy Act of 2008, Pub.
L. No. 110-246, Title XIII (the CFTC Reauthorization Act ("CRA")), § 13102, 122 Stat. 1651 (effective June 18, 2008), to be codified at 7 U.S.C. § 6b(a)(1)(A)-(C), for acts on or after June 18, 2008;
2. During the Relevant Period, Defendant Axcess Fund, a registered CPO, and Defendant Driver, an Associated Person of Axcess Fund, misrepresented or omitted material facts and misappropriated pool funds in violation of Section 4o(1)(A)-(B) of the Act, 7 U.S.C. § 6o(1)(A)-(B);
3. Defendants Driver and Axcess Automation acted as unregistered CPOs in violation of Section 4m(1) of the Act, 7 U.S.C. § 6m(1);
4. Defendants Driver, Axcess Automation, and Axcess Fund, while acting as CPOs (regardless of registration status), commingled pool funds with the non-pool property in violation of Regulation 4.20(c), 17 C.F.R. § 4.20(c);
5. Defendant Axcess Fund, a registered CPO, failed to comply with a CFTC document request by failing to timely produce emails and subscription agreements in violation of Section 4n(3)(A) of the Act, 7 U.S.C. § 6n(3)(A), and Regulations 1.31(a) and 4.23, 17 C.F.R. §§ 1.31(a) and 4.23;
6. Defendant Driver is liable for Axcess Automation's and Axcess Fund's (the "Axcess Defendants") violations of the Act and Regulations as a controlling person pursuant to Section 13(b) of the Act, 7 U.S.C. 13c(b); and
7. The Axcess Defendants are liable for Driver's violations of the Act and Regulations, as Driver was an official or employee of the Axcess Defendants and acted within the course and scope of his employment or office pursuant to Section 2(a)(1)(B) of the Act, 7 U.S.C. § 2(a)(1)(B), and Regulation 1.2, 17 C.F.R. § 1.2.
II.PERMANENT INJUNCTION IT IS HEREBY ORDERED THAT:
1. Pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1, Defendants are permanently restrained, enjoined, and prohibited from directly or indirectly:
a. in connection with any order to make, or the making of, any contract of sale of any commodity for future delivery in interstate commerce or for future delivery that is made, or to be made, on or subject to the rules of a designated contract market, for or on behalf of any other person, (A) cheating or defrauding or attempting to cheat or defraud other persons, (B) willfully making or causing to be made to other persons any false report or statement or willfully entering or causing to be entered for other persons any false report, or (C) willfully deceiving or attempting to deceive other persons by any means whatsoever in regard to any order or contract or the disposition or execution of any order or contract, by (i) falsely claiming profitable trading returns, (ii) falsely claiming a successful trading track record,
(iii) sending false reports or statements that fail to disclose the actual trading results, and (iv) misappropriating pool funds for personal or business expenses, including investor redemptions based on nonexistent profits in a manner known as a Ponzi scheme, in violation of Section 4b(a)(1)(A)-(C) of the Act as amended by the CRA, to be codified at 7 U.S.C. § 6b(a)(1)(A)-(C), and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Pub. L. No. 111-203 ("Dodd-Frank Act"), Title VII (the Wall Street Transparency and Accountability Act of 2010), §§ 701-774, 124 Stat. 1376 (enacted July 16, 2010);
b. while acting as a CPO, as that term is defined in Section 1a(5) of the Act, 7 U.S.C. § 1a(5), or an Associated Person of a CPO, as that term is defined in Regulation 1.3(aa), 17 C.F.R. § 1.3(aa), by use of the mails or any means or instrumentality of interstate commerce, directly or indirectly, (A) employing any device, scheme, or artifice to defraud any client or participant or prospective client or participant, or (B) engaging in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or participant or prospective client or participant, by (i) falsely claiming profitable trading returns, (ii) falsely claiming a successful trading track record,
(iii) sending false reports or account statements that fail to disclose the actual trading results, and (iv) misappropriating pool funds for personal or other expenses, including Ponzi payments based on non-existent profits, in violation of ...