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Commodity Futures Trading Commission 

CEA CASES 

NAME: VINCENT W KOSUGA, SAM S. SIEGEL, AND NATIONAL PRODUCE DISTRIBUTORS, INC. 

DOCKET NUMBER: 73 

DATE: JUNE 18, 1956 

DOCUMENT TYPE: COMPLAINT 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re: Vincent W Kosuga, Sam S. Siegel, and National Produce Distributors, Inc., 

Respondents 

CEA Docket No. 73 

Complaint and Notice of Hearing Under Section 6 (b) of the Commodity Exchange 

Act 

There is reason to believe that the respondents, Vincent W. Kosuga, Sam S. 

Siegel, and National Produce Distributors, Inc., attempted to manipulate and did 

manipulate the price of a commodity in interstate commerce and for future 

delivery on or subject to the rules of a board of trade, in violation of the 

Commodity Exchange Act (7 U.S.C. 1952 ed. §§ 9, 13), as amended July 26, 1955 (7 

U.S.C. 1952 ed. Supp. III § 2), and in accordance with the provisions of section 

6 (b) of the said act (7 U.S.C. 1952 ed. § 9) this complaint and notice of 

hearing is issued stating the charges in that respect as follows: 

I. 

Respondent Vincent W. Kosuga, an individual whose address is Pine Island, New 

York, is now and was at all times material herein a grower and shipper of 

onions, and a trader in onion futures and cash onions. At all such times the 

said Vincent W. Kosuga was a member of the Chicago 

Mercantile Exchange and a registered floor broker under the Commodity Exchange 

Act. 

II 

Respondent National Produce Distributors, Inc., an Illinois corporation with 

offices and a place of business at Franklin Park, Illinois, is now and was at 

all times material herein engaged in the wholesale produce business. At all 

such times, respondent Sam S. Siegel, an individual, was the president, manager, 

and a principal shareholder of said corporation, traded in onion futures and 

cash onions in the name of the corporation, and directed, controlled, and was 

responsible for the corporate transactions hereinafter described. At all such 

times, respondent Sam S. Siegel was a member of the Chicago Mercantile Exchange. 

III 

At all times material herein, the Chicago Mercantile Exchange was a duly 

designated contract market under the Commodity Exchange Act. 

IV 

During October and November 1955, respondent Vincent W. Kosuga, acting for 

the purpose and with the intent of causing an increase in the price of November 

1955 onion futures and cash onions, purchased and 
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held large quantities of November 1$ 55 onion futures on the Chicago Mercantile 

Exchange, and established a long position in such future which, on October 17, 

1955, reached approximately 928 contracts or carlots, which was about 45 percent 

of the total open interest in such future. By reason of such transactions, 

large quantities of cash onions were shipped to Chicago during November 1955, 

and were delivered to and received by said respondent in satisfaction of his 

long futures position, with the result that on November 30, 1955, said 

respondent owned and held approximately 262 carlots of cash onions stored in 

warehouses in Chicago, or about 50 percent of the total stocks of onions in 

Chicago available for delivery in satisfaction of onion futures contracts on the 

Chicago Mercantile Exchange. By reason of such acts, respondent Vincent W. 

Kosuga attempted to manipulate the price of onion futures on the Chicago 

Mercantile Exchange and of cash onions, in wilful violation of sections 6 (b) 

and 9 of the Commodity Exchange Act, as amended (7 U.S.C. 1952 ed. §§ 9, 13; 7 

U.S.C. 1952 ed. Supp. III § 2). 

V 

During the latter part of November 1$ 55 and throughout December 1955, as a 

result of the transactions described in paragraph IV, respondent Vincent W. 

Kosuga owned and held large quantities of cash 

onions stored in warehouses in Chicago. During the same period, respondent 

National Produce Distributors, Inc., by reason of transactions theretofore made 

by respondent Sam S. Siegel, owned and held large quantities of cash onions 

stored in warehouses in Chicago and at various points outside of Chicago. 

During the latter part of November and early December 1955, respondents Vincent 

W. Kosuga and National Produce Distributors, Inc., owned and held a combined 

total of approximately 1000 carlots of cash onions in warehouses in Chicago and 

at various points outside of Chicago, which were or could be made available for 

delivery in satisfaction of onion futures contracts on the Chicago Mercantile 

Exchange, and the combined cash holdings of respondents in Chicago warehouses 

constituted about 98 percent of the total stocks of onions in Chicago available 

for such delivery. 

VI 

During November or December 1955, respondents informed a group of 

approximately 13 individuals engaged in the business of growing, shipping, and 

trading in onions, hereinafter called the grower-shippers, that unless the 

grower-shippers purchased, at a specified price, a major portion of the cash 

onions owned and held by respondents in Chicago, said respondents would sell 

onion futures and would deliver their cash onions on the Chicago Mercantile 

Exchange in satisfaction thereof, thereby causing a decline in the price of 

onions, but that if the grower-shippers 

purchased such onions, respondents would refrain from such deliveries, 

accumulate additional supplies of cash onions, and support the long side of the 

market. 

VII 

Beginning some time in November 1955, and continuing thereafter until some 

time in December 1955, respondents engaged in a conspiracy to increase or 

prevent a decrease in the prices of cash onions and onion futures, and to 

increase the spread between the prices of different onion futures, by means of 

an agreement and concert of action among themselves and between themselves and 

the aforesaid 13 grower-shippers, under which the respondents and the growershippers agreed substantially as follows: 
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(1) that the grower-shippers would purchase and take title to approximately 

285 carlots of cash onions owned and held by respondents in Chicago, at the 

price previously specified by respondents; and 

(2) that in consideration of such purchase, respondents would make no 

deliveries in satisfaction of futures contracts during the period December 1955 

- March 1956, of any part of the remaining cash onions which they owned and held 

in Chicago or elsewhere, but would accumulate additional supplies of cash onions 

and support the long side of the market. 

VIII 

Pursuant to and in furtherance of the agreement described in paragraph VII, 

and in order to effectuate the purposes thereof, respondents delivered cash 

onions to the grower-shippers, received and accepted approximately $ 168,000 in 

payment for such deliveries and for additional deliveries to be made 

subsequently, and temporarily supported the long side of the market by 

purchasing onion futures. By reason of the acts described in paragraphs VII and 

VIII, respondents Vincent W. Kosuga, Sam S. Siegel, and National Produce 

Distributors, Inc., attempted to manipulate the price of cash onions and onion 

futures on the Chicago Mercantile Exchange in wilful violation of sections 6 (b) 

and 9 of the Commodity Exchange Act, as amended (7 U.S.C. 1952 ed. §§ 9, 13; 7 

U.S.C. 1952 ed. Supp. III § 2). 

IX 

During November and December 1955, and until about March 7, 1956, respondents 

Vincent W. Kosuga and National Produce Distributors, Inc., traded actively and 

extensively for speculative purposes in March 1956 onion futures, and throughout 

this period each of the said respondents held a substantial short position in 

such future on the Chicago Mercantile Exchange. At the same time, each of the 

said respondents, respectively, had the sole beneficial interest in other short 

positions in March 1956 onion futures held in the names of commodity brokerage 

firms 

which had advanced funds to finance the carrying of cash onions by respondents. 

On December 15, 1955, the combined short March 1956 futures position of 

respondents in their own accounts and in the accounts carried by such commodity 

brokerage firms in which accounts respondents had the beneficial interest, was 

approximately 227 contracts or carlots, or about 14 percent of the total open 

interest in such future. 

X 

Beginning some time in December 1955 and continuing thereafter until some 

time in March 1956, respondents engaged in a conspiracy to depress the prices of 

March 1956 onion futures and cash onions in order to enable the respondents to 

cover their short positions in such future at lower prices. Said conspiracy 

consisted of an agreement and concert of action among respondents under which 

they agreed to sell large quantities of March 1956 onion futures on the Chicago 

Mercantile Exchange, establish and hold large short positions in such future, 

and stand ready to deliver onions on the said Exchange in satisfaction of such 

short positions. 

XI 

Pursuant to and in furtherance of the agreement described in paragraph X and 

in order to effectuate the purposes thereof, respondents 

sold and held open additional large quantities of March 1956 onion futures on 

the Chicago Mercantile Exchange and increased their short positions 

substantially, with the result that on February 6, 1956 the combined short 
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positions of respondents in March 1956 onion futures reached approximately 1148 

contracts or carlots and constituted about 42 percent of the total open interest 

in such future. Said respondents, for the same purpose and with the same 

intent, shipped cash onions out of Chicago, caused them to be culled, 

reassorted, and repacked, and then shipped such onions back to Chicago. The 

sales of March 1956 onion futures by the respondents, the shipment of onions 

back to Chicago as above described, and the availability for delivery on the 

Chicago Mercantile Exchange of such onions and of the additional large 

quantities of cash onions owned and held by respondents in Chicago and 

elsewhere, caused decreases in the prices of cash onions and of March 1956 onion 

futures on the said Exchange, and respondents thereupon covered a portion of 

their short positions in such future at such decreased prices. By reason of the 

acts described in paragraphs IX, X, and XI, respondents Vincent W. Kosuga, Sam 

S. Siegel, and National Produce Distributors, Inc., attempted to manipulate and 

did in fact manipulate the price of cash onions and of onion futures on the 

Chicago Mercantile Exchange in wilful violation of sections 6 (b) and 9 of the 

Commodity Exchange Act, as amended (7 U.S.C. 1952 ed. §§ 9, 13; 7 U.S.C. 1952 

ed. Supp. III § 2). 

Therefore, the said respondents, Vincent W. Kosuga, Sam S. Siegel, and 

National Produce Distributors, Inc., are hereby notified to be and appear at a 

hearing to be held at 10:00 a.m., central daylight saving time, on the 24th day 

of July, 1956, in Room 1200, Board of Trade Building, Chicago, Illinois, before 

a referee designated to conduct such hearing, and then and there show cause, if 

any there be, why an order should not be made suspending or revoking the 

registration of respondent Vincent W. Kosuga as a floor broker, and directing 

that all contract markets refuse all trading privileges to all the respondents 

for such period of time as may be determined. 

The respondents will have twenty (20) days after the receipt of this notice 

of hearing in which to file with the Hearing Clerk, United States Department of 

Agriculture, Washington 25, D. C., an answer with an original and six copies, 

fully and completely stating the nature of the defense and admitting or denying 

specifically and in detail each material and relevant allegation of this 

complaint, Allegations that are not answered will be deemed admitted for the 

purpose of this proceeding. 

It is ordered that this complaint and notice of hearing be served on the 

respondents by delivery of a true copy thereof by an employee of the Department 

of Agriculture, or by registered mail, at least twenty (20) days prior to the 

date set for hearings 

Done at Washington, D. C, this 

18 day of June, 1956. 

/s/ Earl L. Butz 

Earl L. Butz 

Assistant Secretary 

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