Commodities: USD46.9 Million penalties levied in commodity pool fraud

he CFTC complaint charged Bame and Forward with, among other things, providing forged and false commodity trading statements to commodity pool participants that showed that the defendants had millions of dollars under management when they actually had misappropriated most of the $20 million that participants invested.

In a prior permanent injunction order entered on 18 March, 2010, Judge Klausner found that Bame and Forward had breached various anti-fraud provisions of the Commodity Exchange Act by sending participants e-mail updates containing false information regarding their investments and their account value and by providing participants with false account statements.

Among other things, the order found that Bame diverted about USD19 million of investors’ money either to pay off other investors or for his personal use, such as purchasing automobiles or travelling in private jets.

In a related criminal action, Bame pleaded guilty on 29 May, 2009, to wire fraud and engaging in monetary transactions with property derived from specified unlawful activity (U.S. v. Bame, 08-1368(A) JFW (C.D. Ca.)) (money laundering). Bame was ordered to pay restitution of USD16,038,568.68, an amount equal to the restitution entered in the CFTC order.

Bame is currently serving a 97-month prison sentence.