Asset Freezing: USA Commodity Futures Trading Commission v Guidry & ors

The U.S. Commodity Futures Trading Commission (CFTC) has obtained (24 November 2009) a court order freezing the assets of defendants William Charles Guidry of Jacksonville, Fla., Matthew Brian Pizzolato of Tickfaw, La., and Capital Funding Consultants, L.L.C. (Capital Funding) of Covington, La.

The court’s order also prohibits the destruction of books and records. The Honourable Judge Mary Ann Vial Lemmon of the U.S. District Court for the Eastern District of Louisiana set a hearing on the CFTC’s motion for a preliminary injunction on 7 December, 2009.

The court’s order stems from a CFTC civil anti-fraud complaint filed in the U.S. District Court for the Eastern District of Louisiana on 20 November, 2009, charging Guidry, Pizzolato and Capital Funding with fraud in connection with the operation of a commodity pool.

The CFTC complaint was filed on the heels of a federal criminal indictment of Pizzolato the same day. The criminal indictment charges Pizzolato with 64 counts for operating an investment Ponzi scheme. Pizzolato was taken into custody later the same day and will appear before the Honourable Judge Lance M. Africk in connection with those charges.

Specifically, the CFTC charged the defendants with defrauding at least 15 members of the public, mostly elderly investors residing in southeastern Louisiana, of more than USD2 million. Pizzolato and Capital Funding allegedly solicited USD19.5 million from more than 160 mostly elderly customers to invest in purportedly safe, secure investments with guaranteed rates of return.

Pizzolato, however, did not use investor funds as he had represented, but rather gave more than USD2 million of investor funds to Guidry. Guidry and Capital Funding are charged with misappropriating at least USD135,000 of these investor funds for personal purposes, while using some funds to trade commodity futures in accounts owned by Capital Funding.

Investors were not informed by Pizzolato that Guidry’s trading resulted in losses, the complaint alleges. Guidry and Capital Funding are also charged with commingling the funds of the pool participants with the funds of other persons.

The CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties and permanent injunctions against further trading.

The CFTC was assisted by the Louisiana Office of Financial Institutions.