The U.S. Commodity Futures Trading Commission has ordered an Ontario man to pay more than US$279 million in restitution and a US$12 million civil penalty over allegations that he defrauded participants in four commodity pools that he managed.

The court also entered an order of default judgment against the commodity pool operator that hedge fund trader Paul Eustace controlled, the Philadelphia Alternative Asset Management Co., imposing permanent trading and registration bans, requiring payment of restitution of approximately US$276 million, subject to offset by prior disbursements and payments by Eustace, and imposing an US$8.8 million civil monetary penalty.

The CFTC alleged that from at least the spring of 2001 through June 2005, Eustace fraudulently operated four commodity pools. During this time, he incurred losses of approximately US$200 million trading commodity futures and options either in accounts held in the name of the funds or in his name, it said. The CFTC claimed that Eustace concealed those losses by issuing or causing to be issued, false account statements reflecting highly and consistently profitable trading results. He was also charged with fraudulent solicitation and registration violations.

“This concludes a successful effort by our Division of Enforcement to stop fraud in its tracks, return as much money as possible to defrauded investors, and to bring wrongdoers to justice,” stated CFTC acting chairman Walter Lukken.