Commodities panel needs stronger law

By BART CHILTON

WASHINGTON — Last month there was an international manhunt for R. Allen Stanford. It is alleged he stole billions of dollars from people and his financial escapades may leave many Americans and the small island nation of Antigua with significant economic problems.

The manhunt concluded in a town just outside Washington. When authorities located Stanford, there wasn’t a dramatic Hollywood-style arrest. In fact, there was no arrest whatsoever. He was “served with papers.” Why didn’t Dano get to book him?

Federal financial regulators like the Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC) lack the authority to arrest criminals and send them to jail. In order for criminal charges to be levied, the Department of Justice must agree to commit scarce resources and time to what are many times very complicated financial cases. That needs to change.

Within a 24-hour period in late February, the CFTC has brought civil cases — not criminal cases since it lacks that power — against individuals who allegedly have bilked pension funds, university endowments and regular Americans of well in excess of $1 billion. One case alone involved $1.3 billion, another $13 million, and another $1.4 million.

Examples like these exemplify the far-reaching extent of the cases that are prosecuted by the CFTC, and also the huge number of Americans that are affected by these activities.

The first case, jointly prosecuted with the SEC, is against Stephen Walsh and Paul Greenwood. The government claims these men, for well over a decade, perpetrated a massive scam targeting some university endowments and pension funds. They allegedly used the money to benefit themselves, buying rare books, toys, horses and houses.

‘Fund of funds’

In the second case, the CFTC sued Mark Bloom and his company, charging that they bilked customers, using a type of hedge fund called a “fund of funds,” out of $13 million. The government alleges his customers lost their shirts, but Bloom was able to buy a luxury apartment in Manhattan for $5.2 million and support a lavish lifestyle.

In the third case, the CFTC charges that Zurich Futures and Options of Hollywood, Fla., and its employee Michelle LaBruce, defrauded at least 60 customers of out of at least $1.45 million. Zurich and Bruce, the government claims, rented mail drop offices in Switzerland and Canada and then solicited customers to open trading accounts.

These cases are just a few of the types of activities that are being investigated and prosecuted every day at the CFTC. But again, it only prosecutes with civil authority, and can get fines, and sometimes registration revocations and trading bans. What would be great — for the financial system, for the economy and for American consumers — is if the CFTC and the SEC had the authority to go into court and ask for criminal penalties against those who are convicted.

That’s precisely what would happen if the legislation passed by the House Agriculture Committee on Feb. 12 were to become law. I hope that this issue will be addressed by the full Congress, and that legislation will be passed and signed into law that would give us authority to put crooks where they belong — behind bars.

X Bart Chilton is a Democratic commissioner on the Commodity Futures Trade Commission, Washington, D.C. Distributed by McClatchy-Tribune Information Services.