CHICAGO — The U.S. Justice Department on Tuesday accused 10 men of taking part in illegal commodities trading schemes, including one in which wigs, makeup and phony credentials were used to gain access to the trading pits at one exchange.
U.S. Attorney Anton Valukas said the four unrelated cases resulted from an investigation begun more than 18 months ago "to monitor possible commodities fraud in the marketplace and elsewhere."
In the phony credentials case, federal authorities said, the men posing as traders cashed in on profitable trades but walked away from losing deals because they could not be traced.
Another case involved a broker who diverted trades made for his company into another account, while the other two involved people circumventing rules on how much money they had to have in their brokerage accounts to cover their trading, officials said.
Charges include wire fraud, conspiracy and various violations of federal commodities law in Chicago and New York.
The 10 men were not in custody, Valukas said, but none could be reached for comment. Three were not at home and phone numbers could not be obtained for the others.
According to Valukas, Thompson B. Sanders, 40, David Pelleu, 45, and Dan Kolton, 24, all of Chicago, and Daniel Dewey, 39, of Hendersonville, N.C., were charged in an elaborate scheme in which Dewey and Kolton allegedly wore wigs, makeup and other disguises to get into a restricted trading area at the Chicago Board of Trade.
"The indictment charges that Sanders and Pelleu created phony Board of Trade credentials and trading badges, as well as stealing them, to assist Dewey and Kolton to trade on the floor of the Board of Trade," Valukas said.
Dewey would place orders to buy or sell Treasury bond futures contracts and turn the trading cards over to Sanders, a floor broker, Valukas said.
If the trade was profitable, Sanders would turn in his trading cards and claim the profit, the prosecutor said. But if it lost money, he said, the defendants ignore the trade--which could not be traced back to them because of the phony identification.The charges facing the four carry maximum penalties of 30 years in prison and a $2.5-million fine.
In the second case, Jeffrey G. Donnelly, 28, of Chicago, was charged with defrauding his employer, CRT Services Inc., of more than $1 million by allocating trades on the Standard & Poors 500 index contract to non-company accounts that he split with other individuals, Valukas said.
Robert Hitch, 56, of Maryville, Tenn.; John Zell, 29, of Itasca, Ill., and Bruce Hartman, 23, of LaGrange, Ill., were charged with wire fraud in an alleged scheme to avoid a requirement that Hitch deposit funds into a "margin" account to cover losses.
In the fourth case, Robert Campbell, 30, of Chicago, and Steven Szumny, 31, of Wooddale, Ill., were charged with wire fraud and conspiracy.