A U.S. Federal court judge has granted a preliminary injunction against an Illinois-based commodity pool operator, and its Canadian principals, the U.S. Commodity Futures Trading Commission announced Tuesday.

The order, entered by Judge Amy St. Eve, maintains the asset freeze that was against the defendants on February 19, when the CFTC charged them with misappropriating more than US$4.6 million of customer funds and destroying records, among other things. These allegations have not been proven.

The CFTC is seeking an order of permanent injunction against the defendants, monetary penalties, and other relief.

The regulator reports that the preliminary injunction order against Brookshire Raw Materials Management, LLC, a Barrington, Ill.-based commodity pool operator, and its principals John Marshall and Stephen Adams, Brookshire Raw Materials Group, Inc., Brookshire and Company, Ltd., and relief defendant Brookshire Raw Materials Group Trust, all of Toronto, prohibits them from violating the Commodity Exchange Act and CFTC regulations.

The CFTC alleges that, between September 2006 and December 2008, the defendants accepted millions of dollars from customers to invest in a commodity pool governed by a private placement memorandum. The regulator says that the PPM permitted limited withdrawals for fees and expenses, but it claims that they withdrew over US$5 million and wired the funds to bank accounts in Canada. It also claims that these withdrawals were not disclosed, and that false account statements were issued, overstating the value of the trust. “In December 2008, Marshall and Adams purportedly closed their offices, destroyed company data stored on computer servers, and failed to acknowledge redemption requests,” the CFTC alleges.

http://www.cftc.gov/newsroom/enforcementpressreleases/2009/pr5649-09.html