CFTC secures final judgment against Stephen Walsh in $1.3bn investment scam case

The United States Commodity Futures Trading Commission (CFTC) has secured a final judgment against Stephen Walsh, a defendant in a $1.3 billion investment scam case. On November 13, 2019, Judge George B. Daniels of the New York Southern District Court granted the CFTC’s request.

The Permanent Injunction previously entered by the Court on August 20, 2014, will constitute the final judgment against Walsh. A forfeiture money judgment was entered against Walsh in a parallel criminal proceeding in the amount of $50,743,779, constituting the total proceeds he personally received as a result of the felony violation to which he pled guilty. The CFTC has withdrawn its claims for any further relief.

Back in 2009, the regulator accused Stephen Walsh and Paul Greenwood of fraudulently soliciting approximately $1.3 billion from individuals and entities through Westridge Capital Management, WG Trading Investors, LP, and other entities.

The CFTC’s complaint alleged that the defendants solicited funds from commodity pool participants. The defendants defrauded victims by falsely depicting that all pool participants’ funds would be employed in a single investment strategy that consisted of index arbitrage. However, pool participants’ funds were transferred to another entity from which Walsh and Greenwood siphoned funds.

According to the complaint, to cover-up their misappropriation of pool participants’ funds, Greenwood and Walsh manufactured promissory notes to present the appearance that pool participants’ funds had been loaned to them.

Walsh and Greenwood allegedly misappropriated approximately $553 million in pool participants’ funds. More than $160 million was used for Walsh and Greenwood’s personal expenses, including purchasing rare books, horses, Steiff teddy bears for as much as $80,000, and a $3 million residence for Walsh’s ex-wife.