Judge orders $31 million in restitution and penalties against Cincinnati man for trading fraud and ponzi scheme

The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Michael R. Barrett of the U.S. District Court for the Southern District of Ohio entered an Order for Final Judgment by Default against Defendant John R. Bullar, a resident of Cincinnati, Ohio, and a Consent Order against his company, Defendant Executive Management Advisors L.L.C. (EMA), imposing restitution on Bullar and EMA of over $6.2 million. In addition, the Orders require Bullar and EMA to pay civil monetary penalties totaling more than $24.8 million for their fraud, misappropriation, embezzlement, and operation of a Ponzi scheme, while illegally acting as Commodity Trading Advisors (CTAs) and Commodity Pool Operators (CPOs) without registering as such with the CFTC.  The Orders also impose permanent trading and registration bans on the Defendants and prohibit them from further violations of the Commodity Exchange Act, as charged.

The Orders arise out of a CFTC Complaint filed on September 23, 2014, which charged Bullar and EMA with embezzlement, fraudulent solicitation, misappropriation of customer funds, fraud by a CPO and CTA, commodity futures and options fraud, and failure to register as a CPO and CTA.

Embezzlement and Misappropriation

The Orders find that Bullar, from at least January 2008, and EMA, from at least March 2009 through September 2013, fraudulently solicited and accepted at least $8.3 million from at least 40 investors (EMA Pool Participants), who were told their funds would be pooled and traded in commodity futures and option contracts.  In fact, according to the Orders, most of the funds received from the EMA Pool Participants were not traded at all, and over $6.2 million of the EMA Pool Participants’ funds were embezzled or misappropriated by the Defendants and used by Bullar to pay his personal expenses, to pay money to him or to accounts he controlled, and to purchase property, vehicles, landscaping and other home improvements.  Additionally, some EMA Pool Participants’ funds were used by Defendants to pay for other EMA Pool Participants’ withdrawals of principal or fictitious profits, in the manner typical of a Ponzi scheme, the Orders find.

The Orders further find that to conceal their embezzlement and fraud the Defendants issued false account statements that showed fictitious profits and account balances and other false information.  Throughout the periods of their misconduct, Bullar and EMA failed to register with the CFTC as a CPO or CTA, as required, the Orders find.

Related Criminal Action

In a related criminal action brought by the U.S. Attorney’s Office for the Southern District of Ohio, Bullar pleaded guilty to one count of wire fraud and one count of money laundering and was sentenced on June 22, 2015 to 100 months (8 years and 4 months) in prison and ordered to pay criminal restitution totaling over $6 million.

For more information, see the official release here.


Read Also: