LOS ANGELES—A South Bay man was charged today in a commodities fraud scheme in which several dozen investors lost as much as $2.5 million, announced United States Attorney André Birotte, Jr., whose office is prosecuting the case.
Michael J. Leighton, who also used the name Michael Santora, 53, a commodities trader and former mortgage broker based in Torrance, California, was charged with one count of commodities fraud in a criminal information filed this morning in United States District Court.
In conjunction with the criminal charges, prosecutors filed a plea agreement in which Leighton admits that he made a series of material misrepresentations to victim-investors, which included his friends and former colleagues who lived in Southern California.
According to court documents, for roughly the past three years, Leighton told a series of lies and failed to disclose information to those seeking to invest in a commodities pool. Specifically, Leighton told investors that their funds would be invested in futures linked to the Standard & Poor’s 500 Stock Index that trade on the Chicago Mercantile Exchange, which is regulated by the U.S. Commodity Futures Trading Commission. Leighton also falsely told investors that only half of their funds would be at risk at any one time and that they would receive a certain rate of return.
In fact, Leighton invested more than half of the investors’ funds in the futures and used some of their funds to pay for his living expenses. The investors did not receive the promised rates of return because the investments were not successful. In order to conceal his fraud, Leighton created false spreadsheets and account statements falsely showing that the commodities pool was earning certain returns.
The charge of commodities fraud carries a statutory maximum penalty of 25 years in federal prison.
Leighton has agreed to appear in federal court for an arraignment on June 4.
This investigation was conducted by the Federal Bureau of Investigation. The U.S. Commodity Futures Trading Commission (CFTC), Division of Enforcement, provided substantial assistance in the investigation.
Yesterday, the CFTC filed an enforcement action in United States District Court for the Central District of California charging Leighton with solicitation fraud and issuing false statements in connection with operating a commodity trading pool.