CFTC seeks partial freeze lift in $1.3bn Ponzi scheme case
The United States Commodity Futures Trading Commission (CFTC) is seeking to lift the freeze on certain defendants’ accounts in a $1.3 billion Ponzi scheme case the regulator brought in 2009.
The case charged Paul Greenwood and Stephen Walsh, both residents of New York state, with operating a Ponzi scheme that misappropriated at least $553 million from commodity pool participants in connection with entities that they owned and controlled, such as Westridge Capital Management, Inc., WG Trading Investors, LP, and WGIA, LLC.
Earlier this week, the CFTC filed a motion with the New York Southern District Court. The document, seen by FX News Group, states that the CFTC seeks a modification of the current court Orders of Preliminary Injunction imposing an ongoing asset freeze, to lift the asset freeze as to certain specified financial accounts.
The Court is aware of the overall progress and status of the Receivership, which has filed detailed reports and updates with the Court about accounts, assets and funds held and controlled by the Receiver. Defendant Paul Greenwood has identified a number of financial accounts that either he or his spouse, Robin Greenwood, are listed as an owner or account holder. None of these accounts were ever considered by the Receiver as part of the Receivership estate, and the Receiver at no time attempted to assert controls over these accounts, or to seek to have the proceeds in the accounts liquidated and transferred to the Receivership estate.
Nevertheless, the financial institutions where these accounts are held have imposed a freeze on the accounts, and are not allowing the account holders to access the funds.
The Receiver has represented that there are already sufficient funds and assets in the Receivership estate to satisfy all remaining approved investor claims, and to satisfy any remaining Receivership expenses. Therefore, the CFTC and the SEC have concluded that it is not necessary for the respective Court orders imposing an asset freeze to apply to these accounts.
The agencies therefore are asking the Court to clarify that the asset freeze provisions in the Court’s Orders of Preliminary Injunction shall be lifted, and shall not apply, to a set of nine accounts. Let’s recall that, in August 2020, the court-appointed receiver completed a final distribution to victims of the $1.3 billion Ponzi scheme. Specifically, the distribution pertains to customers in a commodity pool operated by defendants Paul Greenwood and Stephen Walsh.
This final distribution brings the total amount of funds returned to investors to over $1 billion, constituting 100% of all approved investor claims. The order follows the entry of final judgments against Walsh and Greenwood on November 13, 2019, and November 19, 2019, respectively.