Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained more than $2.8 million in restitution and civil monetary penalties in a federal judgment order against defendants Patrick J. Dailey of Dana Point, Calif., and his company, Strongbow Investments GP, LLC (Strongbow), of Austin, Texas. The order requires the defendants jointly and severally to pay more than $1.95 million in restitution and an $850,000 civil monetary penalty. The order also permanently bans Strongbow and Dailey (for the benefit of others) from engaging in any commodity-related activity, including trading and registering with the CFTC.
The consent order, entered on December 8, 2010, by the Honorable Sam Sparks of the U.S. District Court for the Western District of Texas, stems from a CFTC complaint filed on June 30, 2009, charging Dailey and Strongbow with fraud and recordkeeping violations (see CFTC Press Release 5673-09, July 7, 2009).
The order finds that the defendants operated a multi-million dollar fraudulent commodity pool, violated recordkeeping and registration requirements and failed to operate the pool in accordance with CFTC regulations.
The order finds that, from at least July 2005, the defendants solicited at least $17 million from approximately 22 members of the general public for the purported purpose of investing in Strongbow and Strongbow Investments Fund II, a commodity pool operated by Strongbow. Instead of using all pool participant funds to trade commodity futures and options, the order finds that Dailey and Strongbow commingled millions of dollars of pool participant funds with funds held in bank and trading accounts in the names of Dailey, Strongbow and third parties. The order finds that, without disclosing to pool participants, Dailey frequently borrowed from pool participant assets for his own benefit, including as much as $1 million to pay off his personal home equity credit line.
During an unannounced audit by the National Futures Association commenced on June 1, 2009, the order finds that defendants had only limited documentation to support their operations and were unable to produce other statutorily required records.
The court also entered an order on December 8, 2010, dismissing relief defendants Suzi Dailey (aka Suzy Dailey and Suzie Dailey) and the Dailey Family Limited Partnership, both of Dana Point, Calif.
The CFTC thanks the National Futures Association for its assistance.
The CFTC Division of Enforcement staff members responsible for this case are Elizabeth Davis, Andrew Ridenour, Kenneth McCracken, Jessica Harris, Erica Bodin, Rick Glaser and Richard Wagner.