The U.S. Commodity Futures Trading Commission (CFTC) announced today that it obtained a federal court order in California freezing the assets and prohibiting the destruction of documents of Orange County-based defendants Paul Abad and his company, Thirteen Thirty-Two, Inc. (1332).
The asset freeze order, entered on December 1, 2008, by the U.S. District Court for the Central District of California, stems from a CFTC complaint filed the same day charging Abad and 1332 with misappropriating customer funds and concealing trading losses in connection with operating a fraudulent commodity pool.
The CFTC complaint alleges that, from approximately February 2001 through early 2008, the defendants solicited at least $400,000 from the general public to trade commodity futures contracts through a commodity pool operated by 1332 and through individual managed accounts, which Abad managed. The complaint also asserts that the defendants sustained approximately $122,000 in trading losses, returned some funds to pool participants, and misappropriated approximately $230,000. Throughout the period, as alleged, defendants routinely sent false statements to pool participants and clients, reflecting profitable returns from defendants’ trading on their behalf.
During 2008, as pool participants and clients demanded that Abad return their funds, Abad purportedly blamed 1332’s introducing broker for causing delays and created fictitious emails from an employee of the introducing broker indicating a trading account balance of over $180,000 in an account in 1332’s name. In reality, as alleged, that particular account had a balance of $110, and 1332’s only other account with the introducing broker had a zero balance.
Additionally, the complaint charges defendants with failing to register as a commodity pool operator and an associated person, among other violations of the Commodity Exchange Act (CEA).
In its continuing litigation against Abad and 1332, the CFTC is seeking permanent injunctive relief, the return of funds to defrauded customers, the repayment of ill-gotten gains, and civil monetary penalties for each violation of the CEA.
Separately, the honorable Judge Guilford entered an order to show cause why a preliminary injunction should not be entered against defendants A hearing date on the order to show cause is scheduled for December 10, 2008.
The CFTC appreciates the assistance of the Orange County Sheriff’s Department and the California Department of Corporations in this matter.
The following CFTC Division of Enforcement staff members are responsible for this case: Glenn I. Chernigoff, Kara Mucha, Timothy M. Kirby, Luke B. Marsh, Gretchen L. Lowe, and Vincent A. McGonagle.
