WEST PALM BEACH, Fla. - (Mealey's) A federal judge in
Florida on April 24 signed consent orders in which defendants agreed to pay
nearly $55 million to end a suit in which the U.S. Commodity Futures Trading
Commission (CFTC) alleged that they orchestrated a $28 million Ponzi scheme to
defraud investment clubs (Commodity Futures Trading Commission v. Philip
Milton, et al., No. 10-80738, S.D. Fla.).
U.S. Judge Daniel T.K. Hurley of the Southern District of
Florida signed the supplemental consent orders. The first supplemental
consent order requires Trade LLC managing member Philip Milton to pay $10.8
million in restitution and $7.7 million in fines. The second supplemental
consent order requires Trade LLC to pay $11.4 million in restitution and $25
million in fines.
The CFTC filed its complaint on June 22, 2010, against
Milton, Trade LLC and others. The CFTC said that from approximately May
2007 to July 2009, the defendants raised about $28 million from four investment
clubs to trade securities on the clubs' behalf using Milton's supposedly
proprietary software trading program. The CFTC said Milton
claimed to trade in commodities futures, while defendants William
Center and Gregory Center
traded equity accounts. Despite taking in approximately $28 million from
about 2,000 investors, the defendants placed only a fraction of the funds into
trading accounts and kept about $10 million, the CFTC said.
In June 2010, the District Court entered an ex parte
statutory restraining order against Milton, the Centers and Trade LLC, as well
as relief defendants BD LLC, CMJ Capital LLC, Center Richmond LLC and TWTT
LLC. On April 15, 2011, the District Court entered a consent order of
permanent injunction and civil monetary penalty against Milton. Wednesday's supplemental
consent order filed by the CFTC and Milton stipulated the amounts Milton will pay.
"By consenting to the entry of this Supplemental Consent
Order, [Milton] neither admits nor denies the allegations of the Complaint or
the Findings of Fact and Conclusions of Law in this Supplemental Consent Order,
except as to jurisdiction and venue, which he admits," the parties said in the
supplemental consent order filed by the CFTC and Milton. The parties made
a nearly identical statement in the second supplemental consent order.
The CFTC is represented by Danielle E. Karst, Jason A.
Mahoney, John W. Dunfee and Paul G. Hayeck of the CFTC in Washington, D.C.
Milton is represented by Lawrence U. Taube of
the Law Offices of Lawrence U. Taube in West
Palm Beach. Trade LLC is represented by Patrick
Joseph Rengstl of Levine Kellogg Lehman Schneider & Grossman in Miami.
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