The CFTC obtained more than $4.6 million in disgorgement and civil monetary penalties in a court order settling CFTC charges filed on March 11, 2009, against defendants John M. Donnelly, Tower Analysis Inc., Nasco Tang Corp. and Nadia Capital Corp., all of Charlottesville, Va., and relief defendants Blue Logic Operating Partners LP, Nadia Capital Operating Partners LP and Deborah B. Donnelly.
The CFTC charged the defendants with operating a $10 million Ponzi scheme, misappropriating at least $1 million of investor funds and committing other types of fraud in soliciting individuals to invest in U.S. Treasury Note futures and S&P 500 futures. The CFTC complaint also alleged that John Donnelly may have unlawfully received another $1.7 million from pool funds. According to the complaint, John Donnelly concealed the fraud by paying off certain investors with other investor funds and by issuing false account statements to the investors, lulling them into believing that their principal was earning steep profits.
The consent order and judgment requires defendants and relief defendants, with the exception of Deborah Donnelly, to disgorge, jointly and severally, $3,768,792 of ill-gotten gains. The order also requires John and Deborah Donnelly to sell real property in Charlottesville and to disgorge the net proceeds of the sale. The disgorgement amount will be reduced by the amount of restitution that John Donnelly pays in a related criminal proceeding, U.S. v. John Mark Donnelly, No. 3:09-CR-00015 (W.D.Va.). The order further requires defendants to pay, jointly and severally, a civil monetary penalty of 888,323.29.