IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

 

 ) 

In the Matter of an Application to ) 

Enforce an Administrative Subpoena of the ) Misc. Action Number: 

 ) 

U.S. Commodity Futures Trading Commission ) 

525 West Monroe Street, Suite 1100 ) 

Chicago, Illinois 60661 ) 

 ) 

 Applicant, ) 

 v. ) 

 ) 

InfoFox, LLC ) 

20261 Acacia Street #200 ) 

Newport Beach, CA 92660 ) 

 ) 

 Respondent. ) 

 ) 

___________________________________________ ) 

MEMORANDUM IN SUPPORT OF APPLICATION FOR AN 

ORDER TO SHOW CAUSE AND AN ORDER REQUIRING 

COMPLIANCE WITH ADMINISTRATIVE SUBPOENAS 

I. INTRODUCTION 

 Applicant, the U.S. Commodity Futures Trading Commission (the “Commission” or 

“CFTC”) submits this Memorandum in Support of its Application for an Order to Show Cause 

and an Order Requiring Compliance with an Administrative Subpoena (“Application”) with 

regard to subpoena duces tecum issued to InfoFox, LLC (“Respondent”) on January 23, 2012 

pursuant to the Commission’s investigation entitled, “In the Matter of Certain Persons Engaged 

in Unlawful Retail Commodity Transactions.” 

 Respondent has failed to: 1) provide documents as required by the administrative 

subpoena duces tecum issued by the Commission and duly served upon it as part of an on-going 

investigation being conducted by the Commission; 2) provide a notarized affidavit that 

Case: 1:12-cv-04468 Document #: 3 Filed: 06/08/12 Page 1 of 8 PageID #:8
2 

 

authenticates the materials and certifies that the production is complete as required by the 

administrative subpoena duces tecum; and 3) produce a privilege log for documents withheld 

from production on the basis of privilege that comports with Federal Rule of Civil Procedure 

26(b)(5). The Commission requests, therefore, that the Court order Respondent to comply with 

the Commission’s January 23, 2012 subpoena duces tecum (“January 23 Subpoena”). 

II. JURISDICTION AND VENUE 

This Court has jurisdiction over an action to enforce a Commission subpoena pursuant to 

Section 6(c) of the Commodity Exchange Act (the “Act”), as amended, which states in pertinent 

part that: 

In case of contumacy by, or refusal to obey a subpoena issued to, any person, the 

Commission may invoke the aid of any court of the United States within the 

jurisdiction in which the investigation or proceeding is conducted, or where such 

person resides or transacts business, in requiring the attendance and testimony of 

witnesses and the production of books, papers, correspondence, memoranda, and 

other records. 

7 U.S.C. § 15 (2006). 

Because the attorneys and investigators working on the investigation are assigned to the 

Central Regional office of the Commission in Chicago, Illinois, the Commission’s documents 

relating to the investigation are stored in the Commission’s Chicago, Illinois office, and the 

subpoena was issued from, and is returnable to, Chicago, Illinois, venue is proper in the Northern 

District of Illinois. 

III. RESPONDENT 

Respondent InfoFox, LLC is a California Limited Liability Corporation with a principal 

place of business in Newport Beach, California. Respondent is not registered with the 

Commission. 

Case: 1:12-cv-04468 Document #: 3 Filed: 06/08/12 Page 2 of 8 PageID #:9
3 

 

IV. STATEMENT OF FACTS 

A. Commission’s Investigation 

The Commission is an independent federal regulatory agency created by Congress on 

October 23, 1974 to administer and enforce the Act, as amended, 7 U.S.C. § 1 et seq. On 

November 15, 2011 the Commission issued a formal order of investigation entitled “In the 

Matter of Certain Persons Engaged in Unlawful Retail Commodity Transactions,” (the “Order”) 

pursuant to Sections 6(c) and 8(a)(1) of the Act, as amended, 7 U.S.C. §§ 15 and 12(a)(1). The 

Order was issued for, among other things, the purpose of determining whether any person, firm, 

or entity, in connection with retail commodity transactions has engaged, is engaging, or is about 

to engage in any acts or practices in violation of Sections 4(a), 4b, and/or 6(c)(1) of the Act and 

the Commission’s Regulations (“Regulations”), 17 C.F.R. § 1.1 et seq. (2011). These provisions 

of the Act, among other things, prohibit fraud or the use of manipulative or deceptive devices in 

connection with retail commodity transactions. Pursuant to the Order, the Commission is 

investigating whether firms that are engaging in retail commodity transactions have violated or 

are violating the Act. The Order designates Division staff members to subpoena witnesses and 

compel their attendance, administer oaths and affirmations, take evidence, and require the 

production of any books, papers, correspondence, memoranda, records and other tangible things 

relevant or material to an investigation being conducted pursuant to Sections 6(c) and 8(a)(1) of 

the Act. See Declaration of Joseph A. Konizeski in Support of Application for an Order to Show 

Cause and an Order Requiring Compliance with Administrative Subpoena (“Konizeski Decl.”), ¶ 

¶ 2-3. 

B. The Subpoena at Issue 

During the course of its investigation, the Division learned that Respondent provides lists 

of customer leads to certain retail commodity dealers. Id. ¶ 4. Information related to those 

Case: 1:12-cv-04468 Document #: 3 Filed: 06/08/12 Page 3 of 8 PageID #:10
4 

 

customer leads is relevant to the Division’s investigation because it will assist the Division in 

determining how these retail commodity dealers solicit customers. Id. 

The Division issued the January 23 Subpoena to Respondent requiring it to produce, on 

or before February 3, 2012, documents related to its relationship with a particular retail 

commodity dealer and its lead generation process. See id. ¶ 5. The Division lawfully served the 

January 23 Subpoena via U.S. Postal Service Certified Mail on Respondent at 20261 Acacia 

Street #200, Newport Beach, CA 92660. Id. As indicated by the numerous email messages from 

Respondent’s counsel, Respondent had actual notice of the January 23 Subpoena. See id. ¶¶ 6, 

8-9, 11-12. 

C. Respondent has Refused to Comply 

The Division has incurred time and expense in working to get a response from 

Respondent to the January 23 Subpoena. As detailed in the Konizeski Declaration, Respondent’s 

counsel repeatedly requested extensions of time and assured the Division that it would produce 

all responsive documents. Id. ¶¶ 6, 8-9, 11. The January 23 Subpoena has not been modified, 

altered or otherwise amended since it was issued. Id. ¶ 5. On April 16, 2012, however, 

Respondent’s counsel complained for the first time that the January 23 Subpoena is “inclusive of 

virtually the entire documentary operations” of Respondent. Id. ¶ 12. Respondent’s counsel also 

stated for the first time that Respondent will not produce the documents unless the Division 

provides it with additional information about the nature of the Commission’s investigation and 

an assurance that the Respondent is not a “Target” or “Person of Interest.” Id. 

To date, Respondent has failed to produce any documents in response to the subpoena. 

Id. ¶ 6-12. Particularly, Respondent has failed to produce documents as required by the 

subpoena, a notarized affidavit authenticating said documents, a privilege log for documents 

withheld from production, or any objection to the subpoena. 

Case: 1:12-cv-04468 Document #: 3 Filed: 06/08/12 Page 4 of 8 PageID #:11
5 

 

V. ARGUMENT 

The Commission’s authority to investigate whether there have been any violations of the 

Act and/or Regulations has been materially impeded by Respondent’s refusal to comply with the 

January 23 Subpoena. The Commission’s authority to conduct investigations and issue 

subpoenas is a broad “power of inquisition” approximating that of a grand jury, and that 

authority may be exercised “merely on suspicion that the law is being violated, or even just 

because [the Commission] wants assurance that it is not.” United States v. Morton Salt Co., 338 

U.S. 632, 642-43 (1950). An essential component of that power of investigation is the 

Commission’s subpoena power. See 7 U.S.C. §§ 12, 15. The Commission, through its 

Divisions, “must be given substantial leeway” to investigate the affairs of those named in the 

Order (among others) so that it may ascertain whether they have “complied with or run afoul of” 

the Act or Regulations. Collins v. CFTC, 737 F. Supp. 1467, 1485 (N.D. Ill. 1990). 

Respondent’s failure to comply with the subpoena served upon it materially impedes the 

Division’s ability to make that determination. 

Furthermore, “an administrative subpoena must be enforced if the information sought ‘is 

within the authority of the agency, the demand is not too indefinite and the information sought is 

reasonably relevant.’” RTC v. Walde, 18 F.3d 943, 946 (D.C. Cir. 1994) (quoting Morton Salt, 

338 U.S. at 652). See also RTC v. Frates, 61 F.3d 962-964, (D.C. Cir. 1995); In re Sealed Case 

(Administrative Subpoena), 42 F.3d 1412, 1415-16 (D.C. Cir. 1994); EEOC v. C&P Telephone 

Co., 813 F. Supp. 874, 875 (D.D.C. 1993). As discussed in detail below, the subpoena served 

upon Respondent complies fully with those criteria. 

A. The Investigation Is Authorized by Section 8(a) of the Act, 7 U.S.C. §12(a) 

Pursuant to the Order, the Division is investigating whether certain persons have engaged 

or are engaging in any acts or practices in violation of Section 4(a) (illegal off-exchange futures 

Case: 1:12-cv-04468 Document #: 3 Filed: 06/08/12 Page 5 of 8 PageID #:12
6 

 

transactions); Section 4b (anti-fraud); and/or Section 6(c)(1) (manipulation and deceptive 

devices) of the Act. The authority to investigate whether violations have occurred is set forth 

clearly in Sections 6(c) and 8(a) of the Act, pursuant to which the Order was issued. In another 

Commission subpoena enforcement action, the district court held that: 

[t]he purpose of the investigation is authorized by the provision of Section 8(a) of 

the Act, 7 U.S.C. §12(a), in that the Commission is investigating possible 

violations of . . . the Act. The information sought is relevant to the broad 

purposes of the investigation . . . [a]nd the Act grants the Commission the 

authority to subpoena witnesses and to seek judicial enforcement of such 

subpoenas. 7 U.S.C. §15. 

CFTC v. Harker, 615 F. Supp. 420, 424 (D.D.C. 1985). The same applies here, and the Court 

should find that the Division’s investigation is authorized by Section 8(a) of the Act. 

B. The Commission’s Demand for Documents was not Indefinite 

There was nothing indefinite or ambiguous about the subpoena served upon Respondent. 

The subpoena duces tecum called for Respondent to produce documents that were clearly 

categorized and limited to its relationship with a particular retail commodity dealer and its lead 

generation process. Respondent has never raised an objection to the January 23 Subpoena on the 

grounds of it being indefinite or ambiguous, and its contention in the April 16, 2012 letter that 

the subpoena is “inclusive of virtually the entire documentary operations” of Respondent is 

plainly wrong. 

C. The Documents Sought are Relevant to the Investigation 

The production of documents by Respondent is relevant to the Division’s investigation of 

possible violations of the Act. The standard for determining relevancy of an administrative 

subpoena in an investigatory proceeding “is more relaxed than in an adjudicatory one .... The 

requested material, therefore, need only be relevant to the investigation-- the boundary of which 

may be defined quite generally.” RTC v. Walde, 18 F.3d at 947 (quoting FTC v. Invention 

Case: 1:12-cv-04468 Document #: 3 Filed: 06/08/12 Page 6 of 8 PageID #:13
7 

 

Submission Corp., 965 F.2d 1086, 1090 (D.C. Cir. 1992) (citations omitted)). A federal 

“agency’s own appraisal of relevancy must be accepted so long as it is not ‘obviously wrong.’” 

Invention Submission Corp., 965 F.2d at 1089, accord RTC v. Burke, 869 F. Supp. 15, 17 

(D.D.C. 1994); RTC v. Silveous, 812 F. Supp. 244, 245 (D.D.C. 1993). 

During the course of its investigation, the Division has learned that Respondent, which 

provides lists of customer leads to certain retail commodity dealers, is likely in possession of 

documents relevant to the investigation. Respondent has admitted that it does, indeed, possess 

documents responsive to the January 23 Subpoena. These documents will greatly assist the 

Commission in determining whether any violations of the Act and Regulations have occurred. 

Accordingly, the documents at issue are more than “reasonably relevant” to the Commission’s 

investigation. Linde Thompson Langworthy Kohn & Van Dyke, P.C. v. RTC, 5 F.3d 1508, 1516-

17 (D.C. Cir. 1993) (affirming enforcement of a subpoena duces tecum). 

Furthermore, there is not only no legal basis for Respondent’s recent demand for 

additional information regarding the Division’s investigation, but the Division is barred by 

Section 8 of the Act, 7 U.S.C. § 12, from releasing information about its investigation to 

Respondent. The documents requested in the January 23 Subpoena are relevant to the Division’s 

investigation and Respondent has failed to raise any legitimate objection to the subpoena. 

VI. CONCLUSION 

 For the foregoing reasons, this Court should issue an Order to show cause requiring 

Respondent to appear and demonstrate why an Order should not be entered compelling 

Respondent to produce documents, records, correspondence, and a notarized affidavit that 

authenticates the materials and certifies that the production is complete. Should no good cause 

Case: 1:12-cv-04468 Document #: 3 Filed: 06/08/12 Page 7 of 8 PageID #:14
8 

 

be shown, this Court should order Respondent to fully and completely comply in all respects 

with the Commission subpoena. 

Dated: June 8, 2012 Respectfully submitted, 

 /s/ Jennifer E. Smiley 

 Jennifer E. Smiley 

 Scott Williamson 

 Rosemary Hollinger 

 U.S. COMMODITY FUTURES 

 TRADING COMMISSION 

 Division of Enforcement 

 525 West Monroe Street, Suite 1100 

 Chicago, IL 60661 

 (312) 596-0530 (Smiley) 

 (312) 596-0714 (facsimile) 

 jsmiley@cftc.gov

Case: 1:12-cv-04468 Document #: 3 Filed: 06/08/12 Page 8 of 8 PageID #:15