Case: 1:17-cv-03262 Document #: 44 Filed: 09/11/18 Page 1 of 18 ... - CFTC

Case: 1:17-cv-03262 Document #: 44 Filed: 09/11/18 Page 1 of 18 PageID #:701

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

U.S. COMMODITY FUTURES TRADING COMMISSION

Plaintiff, vs. WILLIAM H. POWDBRLY IV

Defendant.

)

) )

) Civil No. 17-cv-03262

)

) Honorable Mamo E. Aspen ) Magistrate Judge Maria Valdez

) ) )

CONSENT ORDER OP PERMANENT INJVNCl'ION AND OTHER EQUITABLE RELIEF AGAINST DEFENDANT WILLIAM B. POWDERLY IV

I. INTRODUCl'ION

On May l 1 2017, Plaintiff Commodity Futures Trading Commission (the "Commission"

or "CFTC") filed a Complaint against Defendant William H. Powderly IV("Powderly" or

':OC,fendant") seeking injwictive and other equitable relief, BS well BS the imposition of civil

? penalties, for violations ofthe Commodity Bxohange Act ("Actj, 7 U.S.C. ?? 1-26 (2012), and

the Commission's Regulations ("Regu)ationsj promulgated thereunder, 17 C.F.R. pts. 1-190

(2018). (Doc. 1). In particular, the Commission's Complaint alleges that from at least January

2016 r

through

October

2016

("relevant

period"),

Powderly

fraudulently

solicited

customers

and

? prospective customer for Powderly to trade commodity futures on their behalf, accepted

approximately Sl,278,000 from seven customers, subsequently concealed that he had incurred in

excess ofS1 million in trading losses while he reported profits, and retumed $207,800 to

';ustomers before his scheme collapsed, in violation ofSections 4b(a)(l)(A)-(C) and 6(c)(l) of

the Act, 7 U.S.C. ?? 6b(a)(l)(A)-(C), 9(1) (2012) and Commission Regulation ("Regulation")

180.l(a), 17 C.F.R. ? 180.l(a) (2018). (Doc. I).

Case: 1:17-cv-03262 Document #: 44 Filed: 09/11/18 Page 2 of 18 PageID #:702

D. CONSENTS AND AGREEMENTS To effect partial settlement ofthe matters alleged in the Complaint against Ddendant Powderly, without a trial on the merits or any further judicial proceedings. Defendant Powderly:

'

1. Consents to the entry ofthis Consent Order ofPermanent Jujunction and Other Relief Against William H. Powderly IV ("Consent Order");

2. Aftinns that he has read and agreed to this Consent Order voluntarily, and that no

.promise, other than as specifically contained herein, or threat, has been made by the Commission

or any member, officer, agent or representative thereof, or by any other person, to induce consent to this Consent Order;

3. Acknowledges service ofthe summons and Complaint; 4. Admits the jwisdiction ofthis Court over him and the subject matter ofthis action under 28 U.S.C. ? 1331 (federal question) and 28 U.S.C. ? 1345 (federal agency authorized to sue as plaintiff), as Section 6c ofthe Act, as amended, 7 U.S.C. ? 13a-1 (2012) autbori7.es district , courts to enforce compliance with the Commodity Exchange Act and related regulations; S. Admits the jurisdiction ofthe Commission over the conduct and transactions at issue? in this action pursuant to the Act; 6. Admits that venue properly lies with this Court pursuant to Section 6c(e) ofthe Act, 7 U.S.C. ? 13a-l(e) (2012); 7. Waives:

(a) any and all claims that he may possess under the Equal Access to Justice Act, 5 U.S.C. ? S04 (2012) and 28 U.S.C. ? 2412 (2012), and/or the rules promulgated by the Commission in confonnity therewith, Part 148 ofthe Regulations, 17 C.F.R. pt. 148 (2018), relating to, or arising &om. this acdon;

2

Case: 1:17-cv-03262 Document #: 44 Filed: 09/11/18 Page 3 of 18 PageID #:703

(b) any and all claims that he may possess under the Small Business Regulatory Enforcement Fairness Act of 1996 ("SBREPA"), Pub. L No. 104-121, tit II,?? 201-2S3, 110 Stat. 847, 857-74 (codified and amended at 28 U.S.C. ? 2412 and in scattered sections of S U.S.C. and JS U.S.C.), relating to, or arising from, this action;

(c) any claim of Double Jeopardy based upon the institution ofthis action or the entry in this action ofany order imposing a civil monetary penalty or any other relie~ including this Consent Order; and

(d) any and all rights ofappeal from this Consent Order; 8. Consents to the continued jurisdiction ofthis Court over him for the purpose of implementing and carrying out the terms and conditions ofall orders and decrees, including

orders setting the appropriate amowt ofcivil monetary penalty, that may be entered herein, to

entertain any suitable application or motion for additional reliefwithin the jmisdiclion ofthe Court, to assure compliance with this Consent Order and for any other purpose relevant to this action, even ifDefendant Powderly resides outside the jurisdiction ofthis Court;

9. Agrees that he will not oppose enforcement ofthis Consent Order by alleging that it falls to comply with Rule 6S(d) ofthe Federal Rules ofCivil Procedure and waives any objection based thereon;

10. Agrees that neither he nor any ofhis agents or employees under his authority or c'ontrol shall take any acdon or make any public statement denying, directly or indirectly, any allegation in the Complaint or the Findings of Fact or Conclusions ofLaw in this Consent Order, or creating or tending to. cn:ate the impression that the Complaint and/or this Consent Order is ? without a factual basis; provided, however, that nothing in this provision shall affect his

I

(a) testimonial obligations, or (b) right to take legal positions in other proceedings to which the

3

Case: 1:17-cv-03262 Document #: 44 Filed: 09/11/18 Page 4 of 18 PageID #:704

Commission is not a party. Powderly shall comply with this agreement, and shall undertake all steps necessary to ensure that all oflus agents or employees wider bis authority or control understand and comply with this agreement;

11. Consents to the entry ofthis Consent Order without admitting or denying the , allegations ofthe Complaint or any findings or conclusions in this Consent Order, except as to

jurisdiction and venue, which he admits; 12. Consents to the use ofthe findings and conclusions in this Consent Order in this

proceeding and in any other proceeding brought by the Commission or to which the Commission is a party or claimant, and agrees that they shall be taken as true and correct and be given preclusive effect, without further proof;

13. Powderly does not consent, however, to the use ofthis Consent Order, or the findings and conclusions herein, as the sole basis for any other proceeding brought by the Commission or to which the Commission is a party, other than a: statutory disqualification proceeding; proceeding in bankruptcy, or receivership; or proceeding to enforce the tenns ofthis eonsent Order;

14. Agrees to provide immediate notice to this Court and the Commission by certified mail, in the manner required by paragraph S4 ofPart VI ofthis Consent Order, ofany ? bankruptcy proceeding?ftted by, on behalfof, or against him, whether inside or outside ofthe tJnited States;

IS. Agrees that no provision ofthis Consent Order shall in any way limit or impair the ability ofany other person or entity to seek any legal or equitable remedy against Powderly

in any other proceeding;

4

Case: 1:17-cv-03262 Document #: 44 Filed: 09/11/18 Page 5 of 18 PageID #:705

16. Consents to pay restitution, plus post-judgment interest, in the amount ofone f!1illion sixty-nine thousand three hundred dollars ($1,069,300); and

17. The issue ofnecessary reliefpursuant to Section 6c ofthe Act, 7 U.S.C. ? lla1(2012), regarding an appropriate civil monetary penalty to be assessed against Defendant is still umesolved and is hereby reserved for further determination by this Court.

IIL FINDINGS OF FACT AND CONCLUSIONS 01' LAW 18. The Court, being fully advised in the premises, fmds that there is good cause for the entry ofthis Consent Order and that there is no just reason for delay. The Court therefore directs the entry ofthe following Findings ofFact, Conclusions ofLaw, permanent injunction,

9:11d equitable reliefpmsuant to Section 6c ofthe Act, 7 U.S.C. ? _13a-1 (2012), as set forth

herein. THE PARTIES AGREE AND THE COURT HEREBY FINDS:

? A. Findings of Fact The Parties to tbiB Consent Order 19. Plaintiff U.S. Commodity Futures Trading Commission is an independent federal

regulatory agency that is charged by Congress with administering and enforcing the Act and the , Regulations.

20. Defendant William H. Powderly IV is 63 years old and resides in New Hope, Pennsylvania. Powderly bas never been registered with the Commission in any capacity.

Powderly Fnadulendy Solieited Commodity Cutomen 21. From at least January 2016 through October 2016 (the "relevant periodj, ~owderly solicited and accepted at least S1 ,278,000 from at least seven customers for purposes oftrading commodity fimues on their behalfin an account in Powderly's and his wife's name

s

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