CFTC v. Gordon A. Driver et al., Case No. SA 09-CV-0578-ODW (RZx) (C.D. Cal.). Yesterday the CFTC announced a final judgment and permanent injunction order against Gordon A. Driver, Axcess Automation LLC (“Axcess Automation”), and Axcess Fund Management LLC (“Axcess Fund”). Previously the CFTC obtained summary judgment on its claims that defendants defrauded over 100 participants of over $14 million.
The Court’s summary judgment order found that from February 2006 to May 2009, Driver fraudulently solicited $14,319,905 from participants by falsely informing participants that Driver had a successful software program for trading E-mini S&P 500 futures that had profitable returns of one to five percent per week, in seven or eight out of ten trades, and minimized risk. However, in reality Driver’s trading was unprofitable and he only traded $3.7 million of the $14.3 million in pool funds he received, of which he lost 94 percent of those funds. The defendants never disclosed the losses to the pool participants, but rather sent false statements depicting profits. Defendants also misappropriated $10 million to pay personal and business expenses, such as payment of $9.7 million to pool participants as purported profits; however the “profits” were actually money invested by other participants. Driver spent an additional $1.6 million of pool funds gambling in Las Vegas casinos, for rent, food, travel, entertainment, car payments, and more.
The final judgment order imposes permanent trading and registration bans against the defendants and requires them jointly and severally to pay restitution of over $9.5 million to defrauded pool participants and $31.8 million in civil monetary penalties. The defendants are permanently prohibited from further violations of anti-fraud provisions of the Commodity Exchange Act and CFTC regulations.