Commodity Futures Trading Comm'n v. Kratville, No. 14-2181 (8th Cir. 2015)
Annotate this CaseThe U.S. Commodity Futures Trading Commission (CFTC) sued Arrington, Kratville, Welke, Elite Holdings, and MJM, alleging that they fraudulently induced more than 130 individuals to invest $4.7 million in commodity pools, in violation of the Commodity Exchange Act (CEA), 7 U.S.C. 1. The district court granted summary judgment against Kratville. The Eighth Circuit affirmed, upholding denial of his request for more time to review purportedly new evidence; consideration affidavits from investors who signed releases and from investors who allegedly lacked credibility; refusal to consider the affidavit of an expert opining on the authenticity of emails; summary judgment on the CFTC's claim that Kratville committed fraud and related violations of the CEA and CFTC regulations in soliciting persons to invest and maintain funds in commodity investment pools; and a determination that the litigation strategy of Kratville's attorney was not excusable neglect warranting relief under FRCP 60(b)(1). Kratville's misrepresentations and omissions related to potential profit and risk, the identities of brokers, and ownership of a proprietary trading system were material. He hid from investors that pool funds were being sent out of the country and that the Nebraska Department of Banking and Finance had ordered Elite Pools to be closed and participants’ funds to be returned.
Court Description: Smith, Author, with Wollman and Benton, Circuit Judges] Civil case - Commodities Exchange Act. The district court did not abuse its discretion in denying defendant's motion for additional time to review documents contained on a CD ROM the U.S. Attorney had provided his attorney in a related criminal prosecution; the district court was not barred from considering investor affidavits provided in support of the Commission's motion for summary judgment because the Commission was not a party to the settlement agreements between those investors and defendant; the district court did not err in rejecting defendant's crediblity-based challenges to certain investor affidavits; no error in refusing to consider an affidavit from defendant's expert when he had not been timely disclosed as an expert; the district court did not err in granting the Commission's motion for summary judgment on its claim defendant committed fraud in violation of the Commodities Exchange Act and its implementing regulations as the Commission showed misrepresentations, scienter and materiality; no error in denying defendant's Rule 60(b) motion based on a claim his former attorney had not provided competent counsel during discovery and the pretrial process.
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