CFTC Offered to Settle Suit for $175,000, Jailed Commodities Trader Says
An ex-commodities trader who pleaded guilty to threatening to kill financial regulators, including Commodity Futures Trading Commission Chairman Gary Gensler, said the CFTC offered to settle a civil case against him for a $175,000 fine and a lifetime ban from the industry.
Vincent P. McCrudden, awaiting sentencing in a Queens, New York, jail, told U.S. District Judge Denis R. Hurley in Central Islip, New York, about the offer in a letter made public Jan. 9. Settlement negotiations on Dec. 12 were unsuccessful, according to an order by U.S. Magistrate Judge A. Kathleen Tomlinson, who, according to McCrudden “endorsed” the CFTC’s offer.
McCrudden, 50, pleaded guilty to two counts of transmission of threats to injure before opening arguments were scheduled to begin in his trial on July 18. The charges carry a maximum sentence of 10 years in prison. According to the government, he posted an “execution” list on his company website after the CFTC accused him in the December 2010 lawsuit of illegally starting his Hybrid Fund II LP in 2008 without registering it.
‘Manpower and Money’
“It’s a shame the CFTC is allowed to pursue, and commit valuable resources and millions of taxpayer dollars on a small business person like me,” McCrudden wrote in his letter, dated Jan. 5. “Manpower and money that could have been better utilized in pursuit of real regulation and enforcement like the current situation of MF Global and the alleged misappropriation of segregated customer funds in the astonishing amount of greater than US $1 billion.”
The trustee overseeing the liquidation of MF Global Inc. has said the failed brokerage formerly run by ex-New Jersey Governor Jon Corzine had a shortfall in segregated customer accounts in the U.S. of $1.2 billion or more.
Dennis Holden, a CFTC spokesman, declined to comment on the settlement negotiations.
Hurley is presiding over both the CFTC suit and the criminal case.
McCrudden, who also ran his own hedge funds, was accused of threatening the lives of 47 current and former officials, including Gensler and Securities and Exchange Commission Chairwoman Mary L. Schapiro.
McCrudden has been held without bail since he was arrested in January 2011 returning from Singapore. He was charged with threatening the regulators in profanity-filled e-mails and, after the CFTC sued him, Web postings. McCrudden had said he was being persecuted for fighting back against unfair regulatory actions that destroyed his career.
E-Mails Sent
McCrudden wrote in a Sept. 30 e-mail to Daniel A. Driscoll, chief operating officer of the National Futures Association, that he had hired people to kill him.
“It wasn’t ever a question of ‘if’ I was going to kill you, it was just a question of when,” McCrudden wrote, according to prosecutors in the office of U.S. Attorney Loretta E. Lynch in Brooklyn, New York.
The e-mail was sent in CFTC Chairman Gensler’s name. Its language and origin in Singapore pointed to McCrudden, the government said. McCrudden moved from Long Beach, New York, to the Southeast Asian country in September because his fiancée had gotten a position there. He previously denied sending the e-mail.
McCrudden’s legal and regulatory entanglements began in 2000 when he was criminally charged with masking shortfalls in statements to his hedge-fund investors. The government alleged he included in his results money he expected to get from a lawsuit after Sumitomo Corp. (8053) was accused of manipulating the copper market.
In 2003, a federal jury in Central Islip, Long Island, acquitted McCrudden of 15 counts of mail fraud.
The criminal case is U.S. v. McCrudden, 11-cr-61, and the civil case is U.S. Commodity Futures Trading Commission v. McCrudden, 10-cv-5567, U.S. District Court, Eastern District of New York (Central Islip).
To contact the reporter on this story: Thom Weidlich in Brooklyn, New York, federal court at tweidlich@bloomberg.net.
To contact the editor responsible for this report: Michael Hytha at mhytha@bloomberg.net.
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