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.
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