Former commodities trader Vincent P. McCrudden, accused of threatening to kill financial regulators, pleaded guilty today.
McCrudden pleaded guilty to two counts of transmission of threats to injure, before opening arguments were scheduled to begin in his trial in federal court in Central Islip, New York. The charges carry a maximum sentence of 10 years in prison. His sentencing was scheduled for Dec. 5.
McCrudden, 50, who also ran his own hedge funds, was accused of threatening the lives of 47 current and former officials, including Securities and Exchange Commission Chairwoman Mary L. Schapiro and Commodity Futures Trading Commission Chairman Gary Gensler.
McCrudden has been held without bail since he was arrested Jan. 13 returning from Singapore. He was charged with threatening the regulators in profanity-filled e-mails and, after the CFTC sued him in December, Web postings. McCrudden had said he was being persecuted for fighting back against unfair regulatory actions that destroyed his career.
“On Dec. 10, 2010, I was notified that I was being civilly sued by the CFTC for $58 million,” McCrudden told U.S. District Judge Denis R. Hurley. “It upset me. I had started to post some things on the site that hadn’t been there before.”
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.
Prosecutors charged that, after the CFTC accused him in the lawsuit of illegally starting his Hybrid Fund II LP in 2008 without registering it, he posted an “execution” list on his company website.
“Go buy a gun, and let’s get to work in taking back our country from these criminals,” he wrote on the site, according to prosecutors. “I will be the first one to lead by example.”
In March, the CFTC said McCrudden never responded to its lawsuit and asked Hurley, who is presiding over both the CFTC suit and the criminal case, for a default judgment.
The government estimated that federal guidelines call for a sentencing range for McCrudden of 27 to 33 months in prison, Hurley said.
In court today, McCrudden said the execution list was meant to be “provocative.”
“I had no intent to injury or bodily harm anybody,” he said. He apologized to his victims and to his family.
“I apologize to Mr. Driscoll and his family for any apprehension that it may have caused them,” he said, referring to the Sept. 30 e-mail.
On July 16, the government filed a court document stating it discovered just the day before that in October McCrudden had created a “National Futures Association” Facebook group offering 250,000 euros ($351,175) to any group “with proof of killing” any on a list of people, including Driscoll and NFA Chief Executive Officer Dan Roth.
The posting was sent from a computer address that “was assigned to a hard-wired Internet line dedicated exclusively to the defendant’s room at the Treetops Hotel in Singapore,” Assistant U.S. Attorneys Christopher C. Caffarone and James McMahon wrote.
The Facebook posting played a role in McCrudden’s decision over the weekend to plead guilty, McCrudden’s lawyer, Bruce Barket, said after the hearing.
“I’m not sure there was any one factor,” Barket said. “Vince just realized it would be a better thing for him to admit what he did.”
The jury for his trial had been picked July 11.
“The government’s case against this defendant is in a state of collapse,” Barket wrote in a filing as recently as July 14 asking for the jury to be disbanded and the trial delayed. He said further investigation cast more doubt that McCrudden wrote the e-mail to Driscoll.
McCrudden pleaded guilty because “he could not bear the pain and suffering that his family was going through,” his sister Mary Eisenstein said after the hearing.
“This defendant crossed the line when he directly threatened to kill public officials who were working to keep our financial markets fair and open, and invited others to join him,” U.S. Attorney Lynch said in an e-mailed statement. “He thought he could hide in the shadows of the Internet and disseminate his threats and instructions. He was wrong.”
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. was accused of manipulating the copper market.
In 2003, a federal jury in Central Islip acquitted McCrudden of 15 counts of mail fraud.
The National Futures Association in 2005 denied his registration application because of the alleged overstatements that resulted in that earlier criminal case. The CFTC and a federal appeals court upheld that decision.
In October 2009, the Financial Industry Regulatory Authority Inc. ruled that McCrudden induced Hedge Fund Capital Partners LLC, a New York broker-dealer where he had worked, to file a form saying he left voluntarily when he was fired, which McCrudden denied. The National Adjudicatory Council, which hears appeals of Finra decisions, upheld that finding.
“I love my father and I support whatever he does 100 percent,” Briana McCrudden, 19, said outside the courtroom after the plea.
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).