April 12, 2016

CFTC Orders New York Resident Nathan Schleifer and Galileo Trading to Pay Restitution and Penalties Totaling More than $1.6 Million for Commodity Futures Fraud

Schleifer Also Concealed Material Facts and Made False Statements to the NFA

Schleifer and Galileo Fraudulently Obtained at Least $2.8 Million from Individuals in the Scheme

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today settled charges against Nathan Schleifer of New York City, and his company, Galileo Trading, LLC (Galileo), for fraudulently soliciting customers to trade commodity futures and for repeatedly making numerous false statements and material misrepresentations to the National Futures Association (NFA) regarding their trading practices. From at least 1999 through 2014, Schleifer and Galileo fraudulently obtained at least $2.8 million from numerous individuals for the purported purpose of trading a pooled investment in commodity futures and managing customers’ futures trading accounts, the Order finds.

The CFTC Order requires Schleifer and Galileo jointly to pay restitution to defrauded customers of $1,150,618.28, a $420,000 civil monetary penalty, and $38,022 in disgorgement of ill-gotten gains. The Order further imposes permanent registration and trading bans on Respondents and requires them to cease and desist from further violations of the Commodity Exchange Act, as charged.

Pooled Investment Fraud Totaled at Least $960,000

The Order finds that from at least 1999 through 2014, Schleifer and Galileo fraudulently obtained at least $960,000 from numerous individuals (pool participants) for the purported purpose of trading a pooled investment in commodity futures on a designated contract market, by misrepresenting to pool participants that they had achieved past success trading futures, when they had never actually done so, and that they were achieving enormous profits trading on their behalf, when in fact their trading resulted in significant losses.

Specifically, in soliciting customers, Schleifer falsely claimed he was a highly skilled money manager and an experienced commodities trader, guaranteed minimum returns, and assured customers that their money would be safe, the Order finds.

Additionally, the Order finds that Schleifer and Galileo issued false account statements and tax forms showing purported profitable results. When at least one customer tried to withdraw funds, Schleifer claimed to have lost their money during the May 6, 2010 “flash crash”, but later admitted he had lied and had actually lost all the money trading years earlier. According to the Order, most of the pool participants’ funds were never returned.

Managed Funds Fraud Totaled over $1.8 Million

Schleifer, on behalf of Galileo, also solicited over $1.8 million from 11 individuals for Galileo to manage in at least 12 futures trading accounts by making similar material misrepresentations and omissions, the Order finds. For example, despite claiming to be a profitable trader, between 2008 and October 2014, Schleifer did not have a single profitable year trading futures in his or his clients’ accounts, according to the Order. And, the Order further finds that Schleifer knowingly and consistently provided false information about his past trading performance or omitted material facts about prior losses to his clients to gain their business.

False Statements to the NFA

The Order further finds that Schleifer made numerous false statements and misrepresentations to the National Futures Association (NFA) during routine NFA audits, including falsely stating that Galileo had no clients and did not trade on anyone’s behalf.

The CFTC thanks and acknowledges the assistance of the NFA and the New York County District Attorney’s Office.

The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

CFTC Division of Enforcement staff members responsible for this case are Dmitriy Vilenskiy, Luke Marsh, and Paul Hayeck.

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CFTC’s Fraud Advisories

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud.

Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online. 

Media Contact
Dennis Holden
202-418-5088
 

Last Updated: April 12, 2016