International fraudulent scheme controller fined for more than $2 million
The Commodity Futures Trading Commission (CFTC) announced that the Honorable Joan B. Gottschall of the U.S. District Court for the Northern District of Illinois entered a Final Judgment and Order against Grace Elizabeth Reisinger of Grand Island, Nebraska and her company ROF Consulting, LLC (ROF) for operating a fraudulent commodity pool scheme.
The Order, entered on October 4, 2017, requires Reisinger to pay restitution of $497,893.88 to defrauded pool participants and to disgorge $153,355.04. The Order requires ROF to disgorge $344,108.30. The Order also imposes a total of $1,105,917.02 in civil monetary penalties against Reisinger and ROF and permanently bars Reisinger from registering with the CFTC, and from trading in any commodity interest. Furthermore, the Order enters an award of prejudgment interest and holds Reisinger liable for ROF’s violations of the Commodity Exchange Act and liable for the disgorgement and civil monetary penalty amounts as the controlling person of ROF.
The CFTC cautions that Orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
The Order follows a jury trial and verdict returned on September 13, 2016 against Reisinger on all charges, including futures fraud, options fraud, Commodity Pool Operator (CPO) fraud and registration violations (see CFTC Press Release 7444-16, September 14, 2016). In June 2011, the CFTC charged Reisinger and ROF with operating a fraudulent commodity pool that solicited approximately $4 million from pool participants from at least February 28, 2005 to October 26, 2009 (see CFTC Complaint and Press Release 6065-11, June 30, 2011). Pool participants included a church located in Tofoa, Tonga, as well as investors in the United States and Australia. ROF failed to answer the CFTC’s Complaint, and in September 2015, the Court entered a default judgment against ROF and permanently enjoined it from engaging in any activity related to commodity trading.
Memorandum Opinion and Order Entered Earlier
Earlier, on September 19, 2017, the Court entered a Memorandum Opinion and Order, which denies Reisinger’s motion for a new trial, and finds that the evidence at trial supported the jury’s determination that Reisinger made fraudulent misrepresentations and omissions to actual and prospective pool participants, including that she was exempt from the CFTC’s registration requirement, that the pool only solicited and accepted funds from participants who met the definition of a Qualified Eligible Person, and that the minimum required investment in the pool was $5 million.
The Memorandum Opinion finds that the evidence at trial supported the jury’s verdict that Reisinger operated a commodity pool without registering or filing a valid exemption from CFTC registration, failed to provide pool participants with required monthly account statements and annual reports, and failed to amend an invalid exemption from registration.
The CFTC thanks the Australian Securities and Investment Commission (ASIC), National Futures Association, and U.S. Attorney’s Office for the Western District of North Carolina (Charlotte office) for their assistance.
CFTC Division of Enforcement staff members responsible for this case are Timothy J. Mulreany, Elizabeth N. Pendleton, Danielle Karst, George H. Malas, Hillary Van Tassel, and Paul G. Hayeck.