Commodity Futures Trading Commission Archives - Stoll Berne | Attorneys | Class-Action, Securities, IP, Real Estate, Business Litigation

The Commodity Futures Trading Commission (“CFTC”) accused a Washington rancher, Cody Easterday and Easterday Ranches, Inc., of defrauding beef and pork producers by billing for cattle that never existed. Easterday had a contract with the producers to raise and fatten over 100,000 cattle per year. The lawsuit (Commodity Futures Trading Commission v. Cody Easterday, Easterday Ranches, Inc., Case No. 4:21-cv-5050, 2021 WL 1217660 (Mar. 31, 2021, E.D.Wash.)), filed in federal court in Washington, also alleges that Easterday submitted fake cattle inventory information to the Chicago Mercantile Exchange (“CME”) in hedge exemption applications. The hedge exemption applications sought permission to exceed speculative position limits at the CME.

The CFTC alleges that the defendants came up with the scheme to meet margin calls after incurring more than $200 million in losses trading cattle futures. The scheme involved preparing fake invoices charged to the beef and pork producers for the purchase and grow costs of more than 200,000 cattle that did not exist. The CFTC referred to these nonexistent cattle as “ghost cattle.” The fraud allegedly caused the producers to overpay Easterday by $233 million. Easterday allegedly confessed to the CME and United States Department of Justice. The CFTC is an independent federal regulator responsible for administering and enforcing the Commodity Exchange Act and related regulations. The lawsuit alleges that the defendants violated the Commodity Exchange Act, 7 U.S.C. §§ 1–26 (2018) and 17 C.F.R 1-190 (2020).

Metals.com and its parent company, TMTE, Inc., along with Chase Metals, LLC, Chase Metals, Inc., Barrick Capital, Inc., and its principals Lucas Asher (aka Lucas Thomas Erb, aka Luke Asher) and Simon Batashvili are alleged to have run a nationwide fraud that brought in more than $185 million in money from customers to buy fraudulently overpriced gold and silver bullion. The Commodity Futures Trading Commission (CFTC), along with 30 state regulators who are members of the North American Securities Administrators Association (NASAA), filed an enforcement action against these entities and individuals in federal court.

On September 22, 2020, a federal judge entered a restraining order freezing the defendants’ assets. The federal judge appointed a receiver to take control of Metals.com, Barrick, and a relief defendant named Tower Equity, LLC.

According to the CFTC, the enforcement action against Metals.com and the other defendants is the largest joint filing with state regulators in the history of the CFTC. The CFTC alleges that for at least the past three years, the defendants fraudulently solicited over $185 million in money from customers. More than $140 million was retirement savings. The defendants targeted elderly people, deceiving them and others into purchasing precious metals bullion at inflated prices that were unrelated to prices on the open market. The CFTC alleges that the overcharges were as high as 300 percent over the market price. An announcement from the CFTC about the lawsuit is available here.