Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of charges against Daniel J. Bealko, General Motors Corporation’s (GM) former global commodity manager for lightweight metals, for knowingly engaging in unauthorized futures and options trading as part of his criminal scheme to defraud GM. Bealko, formerly of Clarkston, Mich., is currently in the custody of the Federal Bureau of Prisons.
According to the CFTC order, entered on September 20, 2010, between 1996 and 2003, Bealko was responsible for devising and implementing GM’s aluminum hedging strategies. Between June 2003 and December 7, 2003, Bealko used the commodity markets subject to the CFTC’s jurisdiction to defraud GM, the order finds. Specifically, Bealko, without GM’s knowledge or consent, caused negotiable warrants for GM-owned aluminum to be delivered and put on deposit with a brokerage account held in the name of a third party. The third party then gave Bealko power-of-attorney and full authority to manage and conduct transactions in the account. Bealko used the account to sell New York Mercantile Exchange (NYMEX) aluminum futures contracts and options on NYMEX aluminum futures contracts to personally profit in the amount of $6.5 million from GM’s sale of surplus aluminum, the order further finds.
Bealko was criminally charged for misconduct and, on November 5, 2009, pled guilty to one count of wire fraud and one count of income tax evasion in connection with his scheme to defraud GM. On March 17, 2010, Bealko was sentenced to 70 months in prison and ordered to make full restitution of the financial loss he caused GM. The total amount of criminal restitution owed by Bealko to GM is equal to his approximate ill-gotten gains of $6.5 million, according to the order.
The CFTC order imposes permanent trading and registration bans on Bealko and requires him to cease and desist from violating the anti-fraud provisions of the Commodity Exchange Act.
The CFTC appreciates the assistance the Federal Bureau of Investigation provided in this investigation.
The CFTC Division of Enforcement staff members responsible for this case are Mark D. Higgins, Kenneth McCracken, Vincent McGonagle and Stephen J. Obie.