Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that on July 5, 2011, Judge Virginia M. Kendall of the U.S. District Court for the Northern District of Illinois entered a supplemental consent order imposing a $2.1 million civil monetary penalty on Joseph A. Dawson of Fox Lake, Ill. The CFTC charged Dawson and his company, Dawson Trading LLC (Dawson Trading) of McHenry, Ill., with fraudulent solicitation and misappropriation of customer funds in a commodity pool scheme (see CFTC Press Release 5860-10, July 26, 2010).
Previously, on April 26, 2011, the court entered a consent order of permanent injunction against Dawson finding that he violated the anti-fraud provisions of the Commodity Exchange Act (CEA), as charged. The consent order found that, between at least February 2005 and December 2009, Dawson and his company misappropriated approximately $2.1 million of Dawson Trading participant funds. The order found that Dawson used the misappropriated funds for personal purchases and expenses, including a down payment on a personal residence, mortgage payments, an in-ground swimming pool, landscaping, furniture, restaurant bills, movie tickets, and car payments. The order permanently barred Dawson from any commodity-related activity, including trading and registering or seeking exemption from CFTC registration, and from violating the CEA’s anti-fraud provisions. The order left the issues of any restitution and a civil monetary penalty to be resolved later.
On July 11, 2011, Judge Kendall entered a default judgment and permanent injunction order against Dawson Trading, finding that the company violated the same CEA anti-fraud provisions as Dawson, was liable for Dawson’s violations as his principal, failed to register as a commodity pool operator as required by CFTC regulations, and unlawfully permitted Dawson to act as its agent without being lawfully registered as an associated person of the company. The order requires Dawson Trading to pay a $2.1 million civil monetary penalty and permanently prohibits it from engaging in any commodity-related activity, including trading and registering with the CFTC.
In a related criminal proceeding in March 2011, Dawson was sentenced to 54 months imprisonment and required to pay $3.3 million in restitution to pool participants (U.S. v. Dawson, 09-cr-1037-1 (N.D. Ill.)).
The CFTC thanks the U.S. Attorney’s Office for the Northern District of Illinois, the Federal Bureau of Investigation, and the Securities and Exchange Commission for their assistance.
CFTC Division of Enforcement staff responsible for this action are Stephanie Reinhart, William Janulis, Ken Hampton, Scott Williamson, Rosemary Hollinger, and Richard Wagner.