U S Commodity Futures Trading Commission v. Michael J Leighton
Filing
8
CONSENT ORDER FOR PRELIMINARY INJUNCTION And Other Ancillary Relief Against Defendant Michael J. Leighton by Judge Philip S. Gutierrez. (bm)
<![CDATA[
E-FILED: 05-10-2012
1
2
3
4
5
6
7
8
9
Elizabeth N. Pendleton IL ARDC No. 6282050
ependleton@cftc. gov
William P. Janulis IL ARDC No. 1326449
wjanulis@cftc. gov
Rosemary Hollinger IL ARDC No. 3123647
rhollinger@cftc.gov
Commodity Futures Trading Commission
525 W. Monroe St., #1100
Chicago, IL 60661
Telephone: (312) 596-0629 (Pendleton)
Telephone: (312) 596-0700 (General)
Facsimile: (312) 596-0714
UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT CALIFORNIA
WESTERN DIVISION
10
11
12
13
14
15
U.S. COMMODITY FUTURES.
TRADING COMMISSION,
Plaintiff,
16
17
18
Case No: CV12-4012 PSG
(SSx)
[Proposed} CONSENT
ORDER FOR
PRELIMINARY
INJUNCTION AND OTHER
ANCILLARY RELIEF
AGAINST DEFENDANT
MICHAEL J. LEIGHTON
v.
MICHAEL J. LEIGHTON
19
20
Defendant.
21
22
.,
'
23
· On May 8, 2012, plaintiff Commodity Futures Trading Commission
24
("CFTC" or "Commission") filed a complaint seeking injunctive and other
25
26
27
equitable relief against defendantMichael J. Leighton ("defendant" or "Leighton")
for violating the anti-fraud and other provisions of Commodity Exchange Act, as
28
1
1
amended ("Act"), to be codified at 7 U.S. C. §§ 1 et seq., I and the Commission's
2
Regulations ("Regulations") promulgated thereunder, 17 C.F .R. § § 1.1 et seq.
3
4
(2011).
5
6
Defendant, without admitting or denying the allegations of the CFTC's
complaint for the purposes of this Consent Order for Preliminary Injunction and
7
8
Other Ancillary Relief ("Order") except as to jurisdiction and venue which he
9
admits, consents to the entry of this Order and states that the consent is entered
10
11
12
13
14
voluntarily and that no promise or threat has been made by the CFTC or any
member, officer, agent or representative thereof, to induce him to consent to this
Order.
15
THE PARTIES AGREE AND THE COURT FINDS THAT:
16
This Court has jurisdiction over the subject matter of this action and the
17
18
defendant hereto pursuant to Section 6c(a) of the Act, 7 U.S.C. § 13a-1(a) (2006),
19
which authorizes the CFTC to seek injunctive relief against any person whenever it
20
21
shall appear that such person has engaged, is engaging or is about to engage in any
22
23
24
25
26
27
28
The Commodity Exchange Act, as amended by the Food, Conservation, and
Energy Act of 2008, Pub. L. No. 110-246, Title XIII (the CFTC Reauthorization
Act of 2008 ("CRA")), §§ 13101-13204, 122 Stat. 1651 (enacted June 18, 2008)
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 201Q), §§701-774, 124 Stat. 1376 (enacted July 16,
2010).
I
2
1
act or practice constituting a violation of any provision of the Act or any rule,
2
regulation or order thereunder.
3
4
5
6
Defendant acknowledges receipt of the complaint and waives formal service
of summons.
Venue properly lies with this Court pursuant to Section 6c( e) of the Act,
7
8
7 U.S.C. § 13a~1(e) (2006), in that defendant is found in, inhabits, or has transacted
9
business in this district, and the acts and practices in violation of the Act and
10
11
12
13
Regulations have occurred, are occurring, or are about to occur within this district,
among other places.
Defendant waives the entry of findings of fact and conclusions of law for the
14
15
purposes of this Order pursuant to Rule 52 of the Federal Rules of Civil Procedure.
16
I.
DEFINITIONS
17
18
For the purposes of this Order, the following definitions apply:
19
"Assets" means any legal or equitable interest in, right to, or claim to, any
20
21
22
23
real or personal property, including but not limited to chattels, goods, instruments,
equipment, fixtures, general intangibles, effects, leaseholds, mail or other
deliveries, inventory, checks, notes, accounts including bank accounts and
24
25
accounts at financial
institutions, brokerage firms or futures commission
26
merchants, credits, receivables, lines of credit, contracts including spot and futures
27
28
contracts, insurance policies, and all cash, wherever located.
3
1
2
The term "document" is synonymous in meaning and equal in scope to the
usage of the term in Federal Rule· of Civil Procedure 34(a), and includes, but is not
3
4
5
6
limited to, writings, drawings, graphs, charts, photographs, audio and video
recordings, computer records, and other data compilations from which information
can be obtained and translated, if necessary, through detection devices into
7
8
reasonably usable form.
9
within the meaning of the term.
A draft or non-identical copy is a separate document
10
II.
11
INJUNCTIVE RELIEF REGARDING THE ACT AND
REGULATIONS GRANTED
12
13
IT IS THEREFORE ORDERED THAT:'
14
Defendant is restrained, enjoined and prohibited, until further order of the
15
16
17
Court, from directly or indirectly:
A.
Cheating or defrauding or attempting to cheat or defraud to any other
person, or willfully deceiving or attempting to deceive any other
person by any means whatsoever, in violation of Section 4b(a)(1)(A)(C) of the Act, as amended, to be codified at 7 U.S.C. § 6b(a)(l)(A)(C); Regulation 180.1(a)(2), to be codified at 17 C.P.R.§ 180.1(a)(2);
B.
Employing any device, scheme, or artifice to defraud any participant
or prospective participant, or engaging in any transaction, practice, or
course of business. which operates as a fraud or deceit upon any
participant or prospective participant, by use of the mails or any
means or instrumentality of interstate commerce, in violation of
Sections 4o(1)(A), (B) and 6(c)(1) of the Act, 7 U.S.C. §§ 6o(l)(A),
(B)and9andRegulation 180.1(a), 17C.F.R. § 180.1(a);and
c.
Acting in any capacity requiring registration with the Commission
without the benefit of registration and commingling of pool funds, in
18
19
20
21
22
23
24
25
26
27
28
4
violation of Sections 4m of the Act, 7 U.S.C. § 4m (2006) and
Regulation 4.20, 17 C.P.R.§ 4.20 (2011).
1
2
3
4
Defendant is further restrained, enjoined and prohibited, until further order
of the Court, from directly or indirectly:
5
6
A.
Trading on or subject to the rules of any registered entity (as that term
is defined in Section·1a(29) ofthe Act, 7 U.S.C. § 1a(29) (2006));
B.
Entering into any transactions involving commodity futures, options
on commodity futures, commodity options (as that term is defined in
Regulation 1.3(hh), 17 C.P.R. § 1.3(hh) (2011)) ("commodity
options"), security futures products, and/or foreign currency (as
described in Sections 2(c)(2)(B) and 2(c)(2)(C)(i) of the Act, as
amended.by the CRA, to be codified at 7 U.S.C. §§ 2(c)(2)(B) and
2( c )(2)(C)(i)) ("forex contracts") for any personal account or for any
account in which they have a direct or indirect interest;
C.
Having any commodity futures, options on commodity futures,
commodity options, and/or forex contracts traded on his behalf;
D.
Controlling or directing the trading for or on behalf of any other
person or entity, whether by power of attorney or otherwise, in any
account involving commodity futures, options on commodity futures,
commodity options, and/or forex contracts;
E.
Soliciting, receiving, or accepting any funds from any person for the
purpose of purchasing or selling any c6mmodity futures, options on
commodity futures, commodity options, and/or forex contracts;
F.
Applying for registration or claiming exemption from registration
with the Commission in any capacity, and engaging in any activity
requiring such registration or exemption from registration with the
Commission, except as provided for in Regulation 4.14(a)(9),
17 C.P.R.§ 4.14(a)(9) (2011); and
G.
Acting as a principal (as that term is defined in Regulation 3.1 (a),
17 C.P.R. § 3.1(a) (2011)), agent or any other officer or employee of
any person registered, exempted from registration or required to be
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
5
registered with the Commission, except as provided for in Regulation
4.14(a)(9), 17 C.F.R; § 4.14(a)(9) (2011).
1
2
III.
3
4
ADDITIONAL INJUNCTIVE RELIEF GRANTED
IT IS FURTHER ORDERED THAT:
5
6
A.
7
Defendant is further restrained, enjoined and prohibited, until further order
8
ASSET FREEZE
of this Court, from directly or indirectly dissipating, withdrawing, selling,
9
10
alienating,
liquidating, encumbering, pledging, leasing, loaning, assigning,
11
converting, removing, transferring, concealing or otherwise disposing of any cash,
12
13
cashier's checks, funds, assets or other property of, or within the custody, control
14
or actual or constructive possession of, defendant, including, but not limited to, all
15
16
17
18
funds, personal property, money or securities held in any defendant' name, jointly
or individually, whether held or maintained in safety deposit boxes, and including
all funds or securities on deposit with any firm, bank or savings and loan, financial
19
20
or brokerage institution, futures commission merchant, corporation, partnership,
21
association, held by, under the actual or constructive control of, or in the name of
22
23
24
I
'
defendant, jointly or individually, and including any funds or property of
defendant's investors, wherever located, whether held in the name of defendant,
'
25
jointly or individually, or any other entity owned or controlled by defendant, and
26
27
28
the assets affected by this paragraph shall include both existing assets and income
and assets acquired after the effective date of this Order.
6
1
Until further order of this. Court, any firm, bank, savings and loan, financial
2 or brokerage
ins~itution, futures commission merchant, corporation, partnership,
3
4
5
6
association or other person or entity which holds, controls, or maintains custody of
any such funds, .securities, assets or other property of any kind held in any
defendant' name, either individually or jointly, and who receives notice of this
7
8
Order by personal service or otherwise, including by Federal Express, United
9
Parcel Service or other commercial overnight service, email or facsimile shall:
10
11
1.
Prohibit defendant and any other person from directly or indirectly
withdrawing,
removing,
assigning,
transferring,
pledging,
encumbering, disbursing, dissipating, converting, selling or otherwise
disposing of any such funds, securities or assets or other property
except as directed by further order of the Court;
2.
Deny defendant and any other person access to any safe deposit box
that is titled in the name of defendant, either individually or jointly; or
otherwise subject to access by the defendant; and
3.
Cooperate with all reasonable requests of the CFTC relating to
implementation of this Order, including producing records related to
defendant's accounts and defendant's businesses.
B.
PRESERVATION OF BOOKS AND RECORDS
12
13
14
15
16
17
18
19
20
21
Defendant and his aget1ts, servants, employees, successors, assigns,
22
23
attmneys and all persons insofar as they are acting in active concert or participation
24
with them who receive actual notice of this Order by personal service or otherwise,
25
26
including by Federal Express, United Parcel Service or other commercial overnight
27
service, email or facsimile, are restrained and enjoined from directly or indirectly
28
destroying, mutilating, concealing, altering or disposing of, in any manner, any of
7
1
the
books
and records,
documents,
correspondence,
brochures,
manuals,
2 electronically stored data, tape records or other propel):y of defendant, wherever
3
4
5
6
located, including all such records concerning the defendant' business operations.
C.
CFTC ACCESS TO BOOKS AND RECORDS
Defendant shall permit representatives of the plaintiff CFTC to immediately
7
8
inspect the books, records and other electronically stored data, tape recordings, and
9
other documents of the defendant and his agents, including all such records of
10
11
12
13
defendant's business operations, wherever they are situated and whether they are in
the possession of the defendant or others, and to copy said documents, data, and
records either on or off the premises where they may be situated and whether they
14
15
are in the possession of the defendant or others, and to copy said documents, data
16
and records, either on or off the premises where they may be situated.
17
18
Defendant and his agents, servants, employees, successors, assigns,
19
attorneys and all persons insofar as they are acting in active concert or participation
I
20
21
22
23
with them who receive actual notice of this Order by personal service or otherwise,
are restrained and enjoined from directly or indirectly refusing to make available
for inspection by the CFTC, when as requested, any books, records, documents,
24
25
correspondence, brochures, manuals, electronically stored data, tape records or
26
other property of defendant wherever located, including, but not limited to, all such
27
28
records of defendant's business operations.
8
1
D.
2
Defendant shall prepare, sign and file with the Court, within thirty (30)
REQUIRED ACCOUNTING
3
4
calendar days of the date of this Order, a complete and accurate accounting for the
,I;
5 period of January 1, 2008, to the date of such accounting, which shall be no earlier
6
7
8
9
than the date of this Order. Such accounting shall include, without limitation, the
identification of:
1.
All banks, savings and loans, financial or brokerage institutions, or
futures commission merchants, including account numbers, which
hold or have held funds, securities, commodity interests, assets,
liabilities, and other property currently owned or controlled (legally,
equitably or otherwise) directly or indirectly by defendant, whether
individually or jointly; and whether in his own name or in the name of
any entity managed or controlled by defendant, including without
limitation the commodity pool Leighton operated from at least July
2008 (the "Leighton pool"), S&P Index Investment LP ("S&PII") and
S&P Investment Partnership LP ("S&P Partnership"),
2.
All funds, securities, commodity interests, assets, liabilities, and other
property currently owned or controlled (legally, equitably or
otherwise) directly or indirectly by defendant, whether individually or
jointly, and whether in his own name or in the name of any entity
managed or controlled by defendant,· including without limitation the
Leighton pool, S&PII and S&P Partnership;
3.
All funds, securities, commodity interests, assets and other property
received directly or indirectly by defendant, whether individually or
jointly, and whether in his own name or in the name of any entity
managed or controlled by defendant, including without limitation
Leighton pool, S&PII and S&P Partnership, describing the source,
amount, disposition, .and current location of each listed item;
4.
All funds, securities, commodity interests, assets and other property
transferred or otherwise disposed of directly or indirectly by the
defendant, .describing the source, amount, disposition, and current
location of each listf.!d item, including accounts or assets of defendant
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
9
held by any bank, savings and loan, financial or brokerage institution,
or futures commission merchants located inside and/or outside the
territorial United States;
1
2
3
5.
All names and last known addresses, phone numbers, email addresses,
telephone numbers. and account numbers of defendant's pool
participants and other investors, including all deposit and withdrawal
dates and amounts; and
6.
9
The names and last known addresses of each bailee, debtor or other
person or entity currently holding any funds, securities, commodity
interests, assets or other property owned or controlled (legally,
equitably or otherwise) by defendant, whether individually or jointly.
10
At a minimum, the accounting should also include a chronological schedule
4
5
6
7
8
11
12
13
14
of all cash receipts and cash disbursements. In addition, each transaction shall be
classified as business or personal.
business purpose of the transaction.
All business transactions shall disclose the
The accounting shall be provided in an
15
16
electronic format such as Quicken, Excel, or other accounting or electronic format
17
spreadsheet. In addition, the defendant shall supply true and accurate copies of any
18
19
20
21
balance sheets, income statements, statements of cash flow, or statements of
ownership equity previously prepared for the defendant's business(es), and for any
commodity pool operated or controlled by defendant.
22
23
Defendant shall immediately identify and provide an accounting for all
24
funds, securities, assets and property that are currently maintained outside the
25
26
United States, including but not limited to, all funds on deposit in any bank,
27
savings and loan, financial or brokerage institution, or futures commission
28
10
1
merchant, including but not limited to, funds, securities and assets held by, under
2 the control of, or in the name of the defendant, whether individually or jointly.
3
4
5
6
Defendant shall provide the Commission access to all records of defendant
held by banks and financial institutions located within or outside the territorial
United States by signing a Consent to Release of Financial Records.
7
8
Defendant shall immediately take all steps within his power to repatriate all
9
funds, securities, assets and other property held by, under the control of, or in the
10
11
12
13
name of the defendant, whether individually or jointly, outside the United States,
including, but not limited to, all funds and securities on deposit in any firms,
banks, financial or brokerage institutions, futures commissions merchants, or other
14
15
financial institutions, by paying them to this Court's Registry or as otherwise
16
ordered by the Court, for further disposition in this case.
17
18
19
IV.
SCOPE OF ORDER
The injunctive provisions of this Order shall be binding on defendant, upon
20
21
22
23
any person insofar as he or she is acting in the capacity of officer, agent, servant,
employee or attorney of defendant, and upon any person who receives actual notice
of this Order by personal service or otherwise, including by Federal Express,
24
25
United Parcel Service or other commercial overnight service, email or facsimile,
26
insofar as he or she is acting in active concert or participation with defendant.
27
28
11
v.
1
2
3
4
5
BOND NOT REQUIRED OF PLAINTIFF
IT IS FURTHER ORDERED that pursuant to Section 6( c) of the Act,
7 U.S.C. § 13a-1, no bond need be posted by plaintiffCFTC, which is an agency of
the United States of America.
6
VI.
STAY
7
8
IT IS FURTHER ORDERED that except by leave of the Court the
9
defendant and all other persons and entities be and hereby are stayed from taking
10
11
12
13
any action to establish or enforce any claim, right or interest for, against, on behalf
of, or in the name of the defendant, including but not limited to, the following
actions:
14
15
A.
Commencing, prosecuting, litigating or enforcing any suit, except that
actions may be filed to toll any applicable statute of limitations;
B.
Accelerating the due date of any obligation or claimed obligation,
enforcing any lien upon, or taking or attempting to take possession of,
or retaining possession of, property of the defendant or any property
claimed by the defendant, or attempting to foreclose, forfeit, alter or
terminate any of the defendant's interests in property, whether such
acts are part of a judicial proceeding or otherwise;
c.
Using self-help or executing or issuing, or causing the execution or
issuance of any co~rt attachment, subpoena, replevin, execution or
other process for the purpose of impounding or taking possession of
or interfering with, .or creating or enforcing a lien upon any property,
wherever located, owned by or in the possession of the defendant; and
D.
Doing any act or thing to. interfere with the· exclusive jurisdiction of
this Court over the property and assets of the defendant. This
paragraph does not stay the commencement or continuation of an
action or proceeding by a governmental unit to enforce such
governmental unit's police or regulatory power.
16
17
18
19
20
21
22
23
24
25
26
27
28
12
VII. DIRECTIVES TO FINANCIAL INSTITUTIONS
1
2
IT IS FURTHER ORDERED, pending further Order of this Court, that
3
4
5
6
any bank, savings and loan, financial or brokerage institution, futures commission
merchant, business entity, or person that holds, controls, or maintains custody of
any account or asset owned, controlled, managed, or held by, on behalf of, or for
7
8
the benefit of the defendant, or has held, controlled, or maintained custody of any
9
account or asset owned, controlled, managed, or held by, on behalf of, or for the
10
11
12
benefit of the defendant at any time since July 1, 2008, shall:
A.
Provide counsel for the CFTC, within five (5) business days of
receiving a copy of this Order, a statement setting forth: (a) the
identification number of each and every such account or asset titled in
the name, individually or jointly, of the defendant, or owned,
controlled, managed, or held by, on behalf of, or for the benefit of the
defendant; (b) the balance of each such account, or a description of
the nature and value of such asset as of the close of business on the
day cin which this Order is served, and, if the account or other asset
has been closed or removed, the date closed or removed, the total
funds removed in order to close the account, and the name of the
person or entity to whom such account or other asset was remitted;
and (c) the identification of any safe deposit box that is either titled in
the name, individually or jointly, of the defendant or is otherwise
subject to access by the defendant; and
B.
Upon request by the· CFTC, promptly provide the CFTC with copies
of all records or other documentation pertaining to such account or
asset, including but not limited to, originals or copies of account
applications, account statements, signature cards, checks, drafts,.
deposit tickets, transfers to and from the accounts, all other debit and
credit instructions or slips, cunency transactions reports, 1099 forms,
and safe deposit box logs.
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
13
VIII. SERVICE OF THE ORDER
1
2
IT IS FURTHER ORDERED that copies of this Order may be served by
•,
3
4
5
any means, including by way of personal service, Federal Express, United Parcel
Service or other commercial overnight service, email or facsimile, upon any
10
11
12
13
14
Janulis and John Wilson, all employees of the plaintiff CFTC, are hereby specially
appointed to serve process, and/or effectuate service of process, including this
Order and all other papers in this cause.
IX.
15
16
SERVICE ON THE COMMISSION
IT IS FURTHER ORDERED that the defendant shall serve all pleadings,
17
18
correspondence, notices required by this Order, and other materials on the plaintiff
19
Commission by delivering a copy to Elizabeth N. Pendleton, Senior Trial Attorney
20
21
22
23
or William P. J anulis, Chief Trial Attorney, Division of Enforcement, Commodity
Futures Trading 9ommission, 525 W. Monroe, Suite 1100, Chicago, Illinois
60661.
24
25
26
X.
COURT MAINTAINS JURISDICTION
IT IS FURTHER ORDERED that this Preliminary Injunction shall remain
.
'
27
28
in full force and effect during the pendency of this case, or until further order of
14
this Court, upon application, notice and an opportunity to be heard, and that this
2
Court retains jurisdiction of this matter for all purposes related to this action.
3
XI.
4
5
FURTHER COURT HEARINGS
IT IS FURTHER ORDERED that this matter is set for a status hearing on
6
7
8
9
10
11
IT IS SO ORDERED, at Los Angeles California on the
10th day
of_ _ _ _ _, 2012 at ~--a.m./p.m.
3:30
May
12
13
14
UNITED STATES DISTRICT JUDGE
15
16
17
1s
CONSENTED TO AND APPROVED BY:
;>..~/ tl;7(..(!U·t::..•• .(::::h-~~;.-#l.(/rf?---...._..i.
,~ A?v" / /) .,......--/ · E~~r
'
19 Michael J. Leighton, Dlfendant
20
1."
2 1 , · /1 {_
U.S. Commodity Futures Trading
Commission
22
Eliza eth N. Pendleton (pro hac vice
admission pending)
Senior Trial Attorney
525 West Monroe Street, Suite 1100
Chicago, Illinois 60661
(3 12) 596-0629
ependleton@cflc.gov
c..,/ _______
23
24
25
26
Edward M. Robinson
Attorney for Defendant
21515 Hawthorne Blvd., Ste. 665
Ton·ance, CA 90503
(31 0) 316-9333
eroblaw@ao!. com
27
William P. JanuHs (pro hac vice
admission pending)
28
15
1
2
3
4
5
6
7
8
9
Chief Trial Attorney
525 West Monroe Street, Suite 1100
Chicago, Illinois 60661
(312) 596-0545
wjanulis@cftc.gov
Rosemary Hollinger (pro hac vice
admission pending)
Associate Director
525 West Monroe Street, Suite 1100
Chicago, Illinois 60661
(312) 596-0520
rhollinger@cftc.gov
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
16
]]>
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?
