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IN THE UNITED STATES DISTRICT COURT.! 

FOR THE SOUTHERN DISTRICT OJrr FLORIDr 

COMMODITY FUTURES TRADING 

COMMISSION, 

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~fiLED by D.C.' 

\ JUN 2 2 2010 i I 

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P1ain.tiff, I """'" "· tAeiM'l_"[ l I ·(".t~~t\ U.S .. f.\IST. ,.1. i l ~D. t)!" ;:t,."\, • w.~~. 

v. 

PHILIP MILTON, WILLIAM CENTER, 

GREGORY CENTER, and TRADE, LLC. 

Defendants, 

BD, LLC, CMJ Capital, LLC, Centet· 

Richmond: LLC, and TWTT: LLC. 

Relief Defendants. 

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) CIVIL ACTfON NO.: ) I I 

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COivfPLAI1'1T FOR INJrUNCTIVE AND 

OTHER EQUITABLE }~EIJ.EF AND FOR 

CIVIL PENA.LTIES TJI'rDER THE 

CO~MODI'fY EXCI-litNGE ACT~ AS 

AMENDED. 7U.S.C. ~§1-25 

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Plaintiff, Conunodity Futures Trading Con:u:nission C:CiJmmiss.ion'l or "CFTC"), by its 

atto1neys, alleges as follo,vs: 

I. SUIVIMARY I 

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1. Frmn May 2, 2007 through July 9, 2009 ("relevant period~}! defendants Philip . I 

MiJton ("Milton''), Wil1ian1 Center, Gregory Center, an.d Trade, LLC ('tTra~e') (collectively, 

"Defendants''), fraudulently solicited and accepted approximately $28 mill~on from nwnerous 

tn · d. · • 1 d · · · · · 1 d · · fi I d l.Vtaua ~an. ent1t1es to parttc1pate m a poo. to tro. e comrnoa 1ty utures 'fontracts a11 

securities. I 

2. Throughout the relevant period, in order to induce participal~on in the pool, Trade, 

through it~ agents and employees, including Milto.n, WUliam Omter, and 9regory Center, acted 

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as an utJregistered commodity pool operator ("CPO'~, and omitted materi~l facts, includiJJg tbat 

Defendants were misappropriating pool participant funds. Further, the Derndrutts made 

material misrepresentations, including misrepresenting that the pool was prfitable when it was 

not; misrepresenting how funds loaned to Trade would be used .. claiming Tey would be used for 

operating expenses \Vhen they were actually used to pay pool participants as profit; and 

misrepresenting and grossly inflating the total funds under management anll traded in the pool. 

3. Instead of trading pool pa1ticipant fllllds as p1:omised, Milto[ William Center, and 

Gregory Center used a porti.otJ. of the pool participant fw;ds to pay princip~ an.d purported profit 

returns to existing pool participants jn a 111anner typical of a P<mzi schem~ and to pay business 

e~:penses. Additionally, Defendants m..isappropriated pool participant fun,: s for their personal 

use, including paying personal expenses and salaries based 011 what they c.ecided they should be 

paid rather than using objective cxiteria. I 

4. To conceal Defendants" trading losses, Ponzi. scheme, and +sappropriation, 

Wilijam Center issued or caused to be issued false monthJy stater:nents anc·~or other reports. 

These documents falsely reflected both highly profitable re!UI!IS from tradrg commodity 

futures on behalf of the pool an.d that the pool was increash'g i11 value andj assets. 

5. Contrary to t~eir representa~io.ns, Milton, Will~am C~nter, rurd ~~gory Center 

actually traded only approximately $15 tmlhon of the $28 m1l hon Iil pool~arttc1pants' fullds 

provided to Defendants. Defendants deposited a large portion of the fund:f for the benefit oftbe 

following relief defendants: BD, LLC; CMJ Capital, LLC; Ce11ter Riclun,IJ.d, LLC; and TWIT, 

LLC (collectively, "Relief Defendants~} Trade and the Relief Defendant!t are linked to each 

other through their corporate officers and were used by the Derf:ndants as Lhicles for 

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misappropriating funds deposited "''i.th Trade. 

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6. Tlrrough their conduct, Defendants have engaged, are e11ga:~ed, or are about to 

engage in acts an.d practices in violation of the a.llti-fraud provisions of s~jctions 4b(a)(2) and 

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4Q(l) of the Commodity Exchange Act (the "Acf')) 7 U.S. C. ~i§ 6(b)(a)(2) a11d 6Q(l) (2006), 

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ru1d Section. 4l1(a)(J) of the Act, as mnended by the Food, Conservation~ ~~1d Energy Act of I 

2008, Pub. L. No. 110-246, Title XIII (the CFTC Reauthorization Act of:~008 ("CRA.,.)): § 

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13102, 122 Stat. 1651 (enacted Jtme 18, 2008}, to be codified at 7 U.S.C.I§ 6(b)(a)(l). Further, 

T1~ade acted as a CPO of the pool without being registered ,:vW.t the CoJml~issiOJl as such in 

violation of Section41n(l) of the Act, 7 U.S.C. § 6m(l) (20061. I 

7. At all times rekvant and in regard to all conduct aJJeged he~ein, :lvfilto~ \Villia.m 

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Ce11ter, and Gregory Center we:re age.nt'5 of Trade and acted \V.thin the SC<·~pe of their 

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employment. As such, Trade is liable for Milton's, William Center's, ana[ Gregory Center's 

conduct jn. violation of the Act pursuant to Sectiot12(a)(1 )(B) ·Jfthe Ac~ ·r U.S.C. § 2(a)(l)(B) 

(2006), and CoJnm.issjo.o Regulation 1.2, 17 C.F.R. § 1.2 (2009). 

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8. At all times relevant and in regard to all conduct aJleged he1;ein, lvlilton and 

\Vi.llirun Ce.nter \vere in control of Trade. They failed to act in good faith ~I' kno,vingly induced, 

directly or indirectly; the acts constituting Trade's violations. 01erefore, lrilton and William 

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Center are liable for Trade~s violations of the Act pursuant to ~;ection l3(t~) of the Act, 7 U.S. C. 

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§ 13c(b) (2006). 

9. Relief defendant BD, LLC is not charged with vjoJations of·~c Act. However, it 

received funds fi:om Defendants in \Vhich it had no legitimate interest or e.btitlement and \Vhich 

were derived fro111 Defendants' fraudulent acts. BD~ LLC~ therefore, 1nusr! rctun1 and repay 

these fi.m.ds. 

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10. Relief defendant CMJ Capital, LLC is not charg.:!d with vJation~ of the Act 

However, it received funds from Defendants in which it had nr1 legitimat1 interest ot entitlement 

and which "'~ere derived fron1 Defendants' fraudulent acts. Cl\·U Capital, LC, therefore, must 

return and repay these fwJds. 

11. Relief defendant Center. Richn1ond, LJ...C is not thal'ged with violations of the Act. 

However, it received fw1ds from Defendants in which it had n<, legitima.t jnterest or entitlement 

and which 'vere derived from Defendants' fraudulent acts. Ceoter Ri.ch1n lnd, LLC, therefore, 

must retun1 aud repay these funds. [ 

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12. Relief defendant TIVTT, LLC is not charged wii h violatiom~ of the Act. 

:However, it r.ecejved f·unds t1·om Defendants in which it had no legitimate interest or entitlement 

and which were derived from Defendants' fraudulent acts. TVlTT!' LLC~ ~herefore~ tnust retm11 

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and repay these funds. I 

13. Accordingly, pursuant to Section6c of the Act, 7 U.S. C. § Jl3a-1 (2006), the 

Commission brings this action to enjoin Defendants' unlawful acts and prrctices and to compel 

their compJiance with the Act. Tn addition, the Conunission s<:eks civil mpnetary penalties and 

other equitable relief, including restitutjon to pool p~rlicipants. disgorgem~nt of Defendants' i.llgotten gains, permanent registration and trading bans, and such other relielf as the Com;t may 

deetn necessary or appropriate. ! 

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14. Unless permanently restrained and enjoined by he Court, D~fenda.nts arc likely to 

continue to engage in the illegal acts and practices alleged in thjs Complaint~ os more fully 

described below. 

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II. JURISDICTION AND VE?iUE 

15. The Cou.rt bas judsdiction over this action ptn·st1a11t to Sectirn 6c of the Act, 

7 U.S.C. § 13a-l (2006), which authorizes the Commission to seek injunc-tive relief against any 

p~son whenever it sl~all appear to the ~ommiss~on ~at su~b p~rson has fga~e~, is engaging, 

or !S about to engage tn any act or practtce COnstJtutmg 9 VIO JatJOI.l of any rl"OVISJOn of the Act or 

any r.ule, regulation, or order there w1der. 

16. Venue properly lies with this Cotn1: pursuant to 3ectiott 6c(.l) of the Act, 

7 U.S.C. § 13a-l(e) (2006), in th.at Defendants ru:e found in, inhabit, or tratfsact business in this 

District, and the acts and practices in violation of the Act have .')ccun:ed, a.1le occurring~ or are 

about to occur within this DistTict, runong other places. 

Ill. PARTIES 

Plaintiff I 

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17. Plaintiff Commod.ity Futures Trading Commi.ssion is a f~eral independent 

regulatory agency that is charged by Congress with the administratio11 ancr enforcement of the 

Act, 7 U.S.C. §§ 1 et seq. (2006), a.nd tbe Regulations there und€r, 17 c.r.R. §§ 1.1 et seq. 

(2009). 

Defendants 

I 8. Defendant Trade LLC is registered as a Limited Liability ·fo~poration i11 Florida 

and operates out of Palm Beach Gardens, Florida. Trade LLC was never Jiegistered with the 

Commission as a CPO or in any other capacity. 

1.9. Defendant Philip Milton is an individual \vho r:~sides in Pslm Beach Gardens, 

FJorida. Milton is a Managing Me.mber of Trade, and~ along \vith other d· ... fendants~ controls the 

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day to day operations of the pool. Mr. 'tvU.lton has never registc~red. withtl,~e Commission as a 

CPO or in. any other capacity. 

20. Defendant William Center is an individual who resides iniRichl110l1d, Virginia. 

Wil1ia1n Center acted as a Managing Mentber of Trade and munages Trad~' s busi.n ess pla1u1ing 

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and cotrun.unicati.ollS. He has never registered with the Comm:ssjon as a r~PO or h:t au.y other 

capacity. 

21. Defendant Gregori Center is an h1dividual who resjdes inj McLea11, Vh·ginia. 

Gregory Center is a Managing Member of Trade and handled :ssues addr</ssing "products and 

services,'~ including regulatory issues. He has never rcgistereG with the Cpmmission as a CPO 

or in any other capacity. 

Relief Defendants 

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22. Relief Defendant BD, LLC is a Limited Liabili~;y Corporat·~on jncorporated in 

Florida. It has neve.r registered \vith the Co1nmission as a CPC• or in any <fthe.r capacity. 

Defendants Gregory Center, William Center, and Milton. are registered as~D, LLC's M~aging 

Members. Milton is the Registered Agent. 1 

23. Relief Defendant CMJ Capital, LLC is a Limhed Linbili+ Corporation 

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incorporated in Florida It has never registered with the Comndssion as ajCPO or in any other 

capacity. Defendat1ts Gregory Center, William Center, and Mi.lton are M1naging Members of 

CMJ Capital, LLC. Lawrence Taube, fom1er attorney for Deft~ndants, i5 t~e Registered Agent. 

24. Relief Defendant Center Rich•nond, LLC is a. Limited Li~~biUty Corporation I 

incorporated in Florida. It has never registered \Vith the Conutlission as a r-po or in any other 

capacity. Defendants Gregory Center and Wil_liam Center are ·:vfana.ging ~(1embers of Center 

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Richmond, LLC. Milton ·was the Registered Agent until July 19, 2009, ~~1et1la,vrence Taube, I 

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former atton1ey for Defendants, was sttbstituted as the Registered Agent. J 

25. Relief Defendant T\VTI, LLC is a Limited Liability CofJ~oration incorporated 

in Florida. It has never registered \vith the Conunission as a CPO or in ar}y other capacity. 

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Defendautc; Gregory Center, Wi1l.ia1n CetJter, and Milton are 1\·fanaging Jv.{embers ofTWTT, I 

LLC. Milton was the Registered Age.l)t untiJ. April29, 2009, 'vhen LaVvT,Ince Taube, former 

att0111ey for Defendants, was substituted as the Registered Ag•.mt. 

IV. FACTS 

Formation of the Pool 

26. Section la(5) of the Act, 7 U.S.C. § la(5) (2006.1, de-fines a !"conunodity pool 

operator" as any person engaged in a business that is of the na1ure of an. ir~vestment tn1st, 

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syndicate, or similar form of enterprise and in co1u1ection ther,n:vith, has splici.ted, accepted or 

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received funds, securities or property from others for the purpt~sc oftradh~g i11 a11y conunodity 

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for future delivery on or subject to the 1ules of any contract mE1rket or deri!vatives transaction 

execution facility. 

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27. On May 2, 2007, Milton and Gregory Center formed Trade ~n Florida. Milton 

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f.md Gregory Center were na.n1ed Managing Members. \tVilliarn Ce11ter w1!s not named in the 

Articles of Incorporation but, by his own admission, acted as a. Managing ~embe.r. Trade \vas 

organized to comt11ercialize a futures and secttriti.es trading sy!:teJn design~d by Milton. 

28. Gregory Center~ \Villiam. Center, and Milton ga,,e trading ar·~·vice, traded futures 

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an.d/or traded securities through Trade. Defendants Trade, Or~:gory Ccntc~, WiJliam Center, and I 

Mi]ton also pooled various individuals' funds for the pUl-pose of trading Ct~m.modity futures, as I 

well as equities, with these pooled funds. 

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29. Milton traded commodity futures acco,unt~ in thr~ name of1tadc at Penson GHCO 

and Velocity Futures LLC. Both of these entities are Furures Commission JVIerchants 

("FCMs") registered with the CFTC. 

30. Fron1 approximately May 1.8, 2007 through July 9, 2009, Gtegory Center, 

William Center, and Milton traded on behalf of pool pmticipatlts. The p~ol participants 

included, but were not limited to, four investment clubs consi:;ting of at lrrast 2,000 individuals. 

Gregory Center, William Center, and Milton claimed that Trade would prJ the pool 

pat1icipants' funds and trade in cb~unodity futures or equities. Milton tr]ded the :ftttures 

accotmts. Gregory Center and William Center only traded eqHity accounr 

31. Throughout the relevant period, when Trade accepted rnoney from pool 

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participants for pw-poses of trading jn the pool, none of the Dc:fe11dants rekistered in any 

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capacity \vi.tlJ the Comn1ission. I 

Fraudulent SolicitaHops 1 

32. During the relevant period, William Center, Gregory Centerl and Milton directly 

and inditectly solicited approximately $28 milliolJ U:om pool participants,fprima1ily from the 

four investment clubs. The funds were solicited to invest in t11.e cornmodir pool to trade 

securities and commodity futures on pool participants' behalf. The $28 1tJHon also included 

ftUlds solicited as "seed'' money to capitalize Trade and to kee·ll the busin~fss operating u11til it 

was self sufficient. Th.e seed money totaled between $1.7 mi1Fon and $3 ~i1lion, and was 

memorialized with Promissory Notes that typically provided fi1r a rerum clf2% per month. 

33. Gregory Center, \Villia1n Cen.ter, and MjJton di.n~ctly solicitted Ca<>h Flo·w 

Fina11cial, LLC ("Cash Flow:'), an investment c.lub the CFTC bdieves cons sts of over 600 

me.mbers, through at lea.qt one direct maiJi11g dated February 1 R 2008. 

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34. Gregory Center directly solicited Cash Flo\v anci. its princ1p~l, A.J. Watson, on at 

least one occasion, through a letter dated Ivfarc.b 6, 2008. Gt·egory Center'r letter stated that he is 

Trade ,s general counsel a11d confinned that Trade operates in a legal and e~hical 1nanner. I 

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35. Gregory Center an.d William Center directly sol.:cited pool 1~a1ticipants tlrrough at 

least two seminars to New Life Club, LLC (''New Life"), an investment ~ub of J AOO members. 

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New Life also ultin1ately provided pool pat1icipant fltods .to Tt·ade for a c~mnJodity pool. 

36. Milton and Williatn Center direct1y solicited pool patticipar)ts through conference 

calls, including a Decem.ber 10, 2008 call with A.J. Watson and Cash FloF members. 

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37. Milton directly solicited customers through a sp1:ech he gavf at a Ne\V Life I 

convention explaining ho\v his systen1 worked.. 

38. Gregor.y CelJ.tex directly solicited pote1ttial pool participantslby fielding and 

responding to their legal advisors' questions) and by explaining to potenti{tl pool pmiicipants 

how Trade~s business model comp]ied with federal regulation!;. 

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39. Gregory Center, William Center, and Milton. din~ctly solicitr~d pool participants 

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through an open house held lJ) or. around Mar.~h 2009, attendee! by approx~111ately 150 peopJe I 

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including New Life members, Cash Flo'v mem.bers, fa1niJy, and friends. 1 

40. Gregory Center indirectly solicited pool participnnts througl{ his work helpi11g 

A . .T. Watson draft promotional material for Cash Flow. 

41. Gregory Center, Williatn Center, an.d Milton indi rect1y solic~ted pool participants 

tht'ough their work helping Ne\v Life draft materia] to be posted on its 'vel~site. 

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42. At a minillltlJ)l, Defe.ndants made the following f.:tlse or mislfading 

representations h1 tl1eir solici1.a.tions: 

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a. Gr.egory Center, \Vi.Uia.1n Center, and 1\t!i(ton falsely claimed to be in 

compliance \Vith CFTC registration xequireJnents; 

b. Gregory Center, W.i1liam Center: and :VElton false]) represented that the 

pool was profitable whe11 it was n.ot; 

c. Wiliiam Center sent participants fraudulc:nt documCJrts supporting 

Defendants' claim that the pool was profitable whenr was not; and 

d. Milton sent money to tbe pool participants, identifyipg the 1noney as 

profits when in fact it was other pa.L1icipents' money, invested wiih Trade. 

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43. At a rrunimum, Defendants omitted the following material ffcts frotn their 

solicitations: 

a.. Gregory Center, \Villirun Center, aod Mi I ton fa.iled · o disclose the fact 

that they ·were using participants' funds for their per!

1

onal use, includb1g 

paying the1nselves a salary of up to $10,000 per 1norltJ, and usjng pool 

funds to pay expenses; 

b. Gregory Center, \Villiam Center, and Milton failed tr disclose the fact that 

the pool \-V'S.S losing Jnoney; 

c. Gregory Center, William Center, and Mihan faiJed tciJ disclose the fact that 

they were using pool participants' funds 1o )Jay princlpal and pmported 

-profit retums to existing pool participant~ i.n a manoelr typical of a Pollzi 

sch.erne. 

44. Trade, tlu-ough its agents and employees~ inc]uding GregoryjCenter, Wil1ian1 

Center, and Milton, acted as a CPO. As such, it o'ved a fiduciary duty to .dool particjpants. It 

wa.q obligated to disclose all material information to participants. Pool parhcipru.1ts ~ould have ' I 

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fotu1d it i.mpottant to learn that the pool was not profitable, that Trade wa:.,[ not in compJiance 

with the relevant federal regulatory agencies, that participant 1imds were t~ing misappropriated 

through the Relief: Defendants and through a participant payoff scheme t~pical of a Ponzi 

scheme, and that William Center circulated fraudulent documents falsely jhowing that the pool 

· was profitable. Consequently, Trade should have disclosed th!.s 1naterial Jjnformation. Failure to 

p(ovide this iofonuation is a material and fraudulent omission. I 

45. Contrary to their clailns of successful trading, profitable rethrns, and increasing 

funds under 1nanagen1et1t: Gregory Center, William Centet~, and Mi.lton 'v;:arl.re misappropriating 

large swns of the ftmds invested by pool particj pants. 

46, Despite taking in approximately $28 million in participant rlmds, Gregory Centel', 

William Center, and Milton placed only a fraction of the fw1d~ into ttadi+ accounts. 

47. Gregory Center, William Center, and Milton Iaww that theilr solicitations were 

untrue, or were reckless with regard to the truth.li.tluess of their solicitatior(' because they 

controlled the u·ading ·accoU11ts and sa.w the trading results during the rele, ant period. 

Therefore, they knew that their trading was unsuccessful. De£)ndants alsc kne'v or recklessly 

disregarded the fact that the).' ·were not registered \vith the Nati~>nal Future~l Association and thus 

were not in comp1iance \Vith CFTC registration requb:etnents as claimed. . -urther, while acting 

as controlling persons, IVlilton and Willian1 Ce.oter failed to act in good faj, ·h or kno\\lilJ.gly 

induced, directly or indirectly, the acts constituting Trade's vio la.tions. 

MisaJ!propriation 

48. Gregory Center, William Center, and Milton to!C prospectivr particil?a.11ts that 

they iute.nded to keep a. cotlllllission based on profits. Trade w:-r.s only pro1a.table hvo tno11ths of 

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the relevaJJt period. However, Gregory Center, Wil.liam Center, aud Milt•~n took a commission 

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in months other than the two profitable months. 

49. Gregory Centet~ \Villiatn Center, and Milton cor.npensated the1nseJves on a 

monthly basis without regard to whether Trade was profitable. Rather, G~egory Center, 

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\Villiam Center, and Mi1ton detennined ho\v m.uch they wanted to take asla draw, takin.g up to 

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$10,000 a month. Additionally, they used Trade funds to pay 1.heir cxpen~,~es. In total, Gregory 

Center, \Vj)Ham Center, and 11ilton paid thelnselves approxbnn.tely $9.6 rJ~illion in salary and 

expenses. Thus, instead of trading pool participants' funds as promised, c)regory Center, 

WilJiam. Center, and Milton used participant funds for salary and expense~!. 

50. Instead of trading pool participant funds as pro1n i.sed, Grcgo~y Center, William 

Center, and Milton used pool participant funds to repay principal and pay ~urported profitable 

returns to existing poolpruticipants in a rnan.ner typical of a Ponzi schen1et 

51. Gregory Center, \Villiam Center, and MUton knew that they~Vt·erc 

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111isapp1~oprjating participant f.11n.ds because they used the .funds for purpos,~s other tban trading. I 

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Further, \vbile acting as controlling persons, Milton and Williarn Center fafled to act in good 

faith or knowingly induced, direc~l~ or indirectly, the ~eta consl.itut~ng the ~iolations. 

52. Gregory Center, Wll.bruu Center, and Mdton usen rehef def'fdants BD, LLC~ 

CMJ Capital, LLC, Center Richmond, LLC, and TWTT, LLC tiS a mean.s •ffmisappropriating 

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pool participants' :funds. Approxhnately $6 mjllion was paid tc' the Reliefpefendants in the 

fonn of salaries, business expenses, and other frauduJeot expen!;es. 

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Issuance of False Account Statements I 

53. From the inception of the pool, William Center issued mon~hly account 

statements to participants. Those statements falsely indidted that the poJl participants were 

profiting and that the pool was increasing in size. 

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54. William Center knew that the monthly account ~:tatements terc untrue, or was 

reckless with regar.d to their truthfulness, because he,.al01Jg with Milton, '~o11troJled the trading 

accounts and saw the tradi11g results during the relevant period. Thcrefon~, he k.neV\r tha.t thejr I 

trading "vas unsuccessful. 

·v. VIOLATIONS OF TJIE ArC:T 

COUNT ONE 

)fraud in Connection with Futures Contracts 

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(Violations of Section 4b(a}(2) of the Act, 7 U.S.C. § 6b(n)(2) (2006), a•td Section 4b(a)(l) of 

the Act, as amended by the CRA, to be codified a·t 7 U.S.C. ~ 6b(a)(l)) 

Paragraphs 1 through 54 are re-allegcd a1.1d incorporated he.~ein. 

56. It is a violation of the Act and Act, as amended by the CRA~ for any person, in or 

in connection with any order to make, or the making of, any on--exchange f~tur<::s contract, for or 

on behaLf of any other person: (i) to cheat or defraud or a1te1npt to cheat or ~efraud such other 

person; (H) ,viJJfulJy to make or cause to be made to such other ;:>erson any ra1se repot1 or 

. I 

statement thereof: or willfully to enter or cause to be entered for such persor. any false record 

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thereo~~ or (Hi) \ViJJfully to deceive or attempt to deceive such orher person~y a1.1y means 

whatsoever in regard to any such order or contract or the dispos1tion. or exe~ution of any such 

order or con1ract, or in regard to any act or agency performed w(th respect 1~ such order or 

contract for such person. Section 4b(a)(2)(i), (ii)~ and (iii): 7 U.;).C. §§ 6b(.~)(2)(i)~ (ii), (iii) I 

(2006) (with respect to conduct before June 18, 2008); and Section 4b(a)(l~.j(A), (B) and (C) of 

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the Act, as amended by the CRA, to be codified at 7 U.S.C. §§ 6b(a)(l)(A'., {B), a11.d (C) (with 

respect to conduct on or after June 18, 2008). 

57. As aJ)eged above, during the relevant period, Mi !ton, Greg~ry Center, and 

Wi.lJiam Center lmowingly!! or with reckless disregard for the trnth, violaler1 Sections 4b(a)(2)(j) 

and (iii) Of the Act, 7 U.S. C.§§ 6b(a)(2)(i) and (iii) (2006), with respect Jacts occurring before 

June 18) 2008, and Sections 4b(a)(l )(A) and (C) of the Act, a~ mnended b} the CRA, to be 

codified at 7 U.S.C. §§ 6b(a)(l)(A) a11d (C), with respect to act~; occw'l'ing bn or after. June 18, 

2008, by, among other tbiJJ.gs, (I ) omitting ~aterial infOJmatioo, including ~c fact that they were 

misappropriating pool participant funds; (2) falsely representint. that they 1ferc gene1:ating profits 

frmn trading on behalf of the poo] and pool participants; (3) rnl~tappropriating pool participant 

funds by using such funds to pay principal and purported returns to other p•~ol participants; and 

(4) misappropriating pool participant funds to pay business expenses and f<lr personal use. 

I 

58. As alleged above, duting the relevant period, \Vi.llia.m Ccntc lmo\vingly, or with 

recldess disregard for the truth, violated Scction4b(a)(2)(H) oft!Te Act~ 7 U S.C. § 6b(a)(2)(ii), 

wit~ respect to acts occurring before June 18, 2008~ and Section 4b(a)(l)(B~ of the Act, as 

amended by tbe CRA, to be codifl.ed at 7 U.S.C. § 6b(a)(l)(B), ·.vith rcspecif[ to acts occurring on 

or afte~ June ~ ~, 2008, by issuing or causi~ to be is~ued false a<:count stat• ~~lt~ au·d· reports 

reflecting posltJ.ve returns for the pool and tncreases 1n the value. of poolpalrttctpants· Interests. 

59. Milton, Gr.egor.y Center, and William Center were acting as ;lgcnts of Trade when 

they violated the Act as alleged in !ltis count, and, therefore, Trade, as theirlrincipal, is liable for 

their violations of Sections 4b( a}(2)(i)-(iii) of the Act, 7 U.S. C. :! § 6b( a)(2)1e-(iii) (2006), and 

Sections 4b(a)(l)(A)-(C) of the Act, as amended by the CRA, to be codifiec~ at 7 U.S.C. 

14 

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I 

§§ 6b(a)(1)(1\)-(C), pursuant to Section 2(a)(l)(B) of the Act,~· U.S.C. § ~(a)(l)(B) (2006), and 

Commission Regulation 1.2, 17 C.P.R. § 1.2 (2009). I . 

. 60.. Millo~ and Willi.~ Ce~ter were i~ control ~f~1-ade, d~rectt or indirectly, and. 

d1d not act 111 good fa1tb or k.nowmgly 1nduccd, dtrectly or u1.dtr~ctly, Trad.fs co11duct alleged m 

this Co.mplaint; therefore, pursuant to Section J.3(b) of the Act, 7 U.S.C. § ~ 3c(b) (2006)~ Milton 

and William Ce11ter are Ue.ble for Trade's vi olatiollS of Sectiom: 4b( a)(2)(i~-( iii) of the Act, 7 

U.S.C. §§ 6b(a)(2)(i)-(iii) (2006), and Sections 4b(a)(1)(A)-(C) of the Act,jas am.ended by the 

CRA, to be codified at 7 U.S.C. §§ 6b(a)(l)(A)-(C)~ pursuant tc. Section. 2(~)(1)(B) of the Act, 7 I 

U.S.C. §. 2(a)(l)(B) (2006). 

61. Each. m.isr~presentation or omission of material f9.ct, issuan~e of a false statet11e11t 

or report, and misappropriation, incJuding but not limited to those specifica~.ly aUeged herein, is 

a1leged as a separate and distinct violation of Sections 4h(a)(2)(i)-(iii) ofth~ Act, 7 U.S.C. 

I 

§§ 6b(a)(2)(i)-(iii) (2006), with respect to acts occurring before JU11e 18, 20j08, and Sections 

I 

4b(a)(l)(A)-(C) of the Act, as am.ended by the CRA, to be codified at 7 U.~r.c. §§ 6b(a)(l)(A)-

(C)~ with respect to acts occun·.ing on or after June 1 8, 2008. 

COUNTT\VO 

Fraud By Commodity Pool Oper~'ltor I 

(Violations of Section 4Q(l)(A) & (B) of the Act, 7 U.S. C.§ 6!!.(1)(/~) & (B) (2006)) I 

I 

62. Paragraphs 1 lbrough 61 are re-alleged and incornorated hert~in. 

• I 

63. During the relevant period, Trade, through its egcntc; and embloyecs, including I 

Mjlton, Gregory Center, and Willia1n Center, acted as a CPO for the pooJ b'~ soliciting, accepting 

or receiving funds from others and engaging in a business that i1: of the natJe of an investment 

15 

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trust, syndicate, or similar f01m of enterprise, for the purpose or trading in ~ommodities for 

I 

future delivery on or subject to the rules of a contract market. 

64. As alleged above, during the relevant period~ Tr:.Lde~ througl~ its agents and 

employees, including Milton, Gregory Ce.nter, and William Center, emplo)[ed a device, scheme 

or artifice to defraud prospective and existing pool participants, or engageJj in a transaction, 

practice or course of business that operated as a fraud or deceit upon prosp~ctive and existing 

pool participants in violation of Sections 4Q(l)(A) & (B) of the Act, 7 U.S.p. §§ 6Q(l )(A) & (B) 

(2006)) by (l) omjtti11g tnaterjal infonnation, including the fact that Defenc,,ants were 

misappropriating pool participant funds; (2) falsely 1:eprese1Jti.ng that Defer~dru1ts were generating 

profits from their trading on behalf of the pool and pool partidrants; (3) m~sappropriating poo1 • I 

participant funds by using such ft.tl)ds to pay principal and ptlJ1)0tied retttlTJ~ to other pool 

I 

participatJts; and (4) 1nisappropriating pool pru.i"icipant ft.u1ds to pay busine~s expenses and for I 

personal use. I 

! 

65. T.n addition, Tr.ade, through its agent William Ce•tter, en1plo:~ed a device, scheme 

or artifice to defraud prospective a11d existing pool particip311lS, or engagedl in a tra11saction, 

practice or course of business tha.t ope.rated as a fraud or deceit 11pon prosp-hc.tive a.nd existiog I 

I 

pool participants in vioJation of Sections 4Q(l)(A) & (B) of the Act~ 7 U.S.F· §§ 6Q(l )(A) & (B) 

I 

(2006), by issuing or causing to be issued false accow1t statetnents and repc~.rts reflecting positive 

I 

ret\.U11S for the pool and j11creases in the value of pool J>artici.patJ.ts! intere.s~.!. 

66. Milton, Gregory Center, and William Center \Vere acting as hgents of Trade 'vhen 

I 

they e11gaged in the violative conduct alleged in this cotu1t and, ther~fore, 1~ade, as their 

I 

principa1, is liable for their conduct in violation of Sections 4Q(j )(A) & (B)~ of the Act:: 7 U.S.C. 

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I 

I 

I 

§§ 6.Q(l)(A) & (B) (2006), pursuant to Section 2(a)(l )(B) of the. Act, 7 U.sj.c. § 2(a)(l)(B) 

(2006), and Coffilnission Regulation 1.2, 17 C.F .R. § 1.2 (2009 ). I 

I 

67. !vlilton and WU.Jiam Center were in control ofT·a.de, directl~ or indirectly, nnd 

did not act jn. good faith or knowingly induced~ directly or indirectly, Tradt~'s conduct alleged in I 

this Complaint; therefore, pursuant to Section 13(b) ofthc Act~ 7 U.S.C. § j13c(b) (2006), Milton 

I 

and \Villi am Cen..te.r are liable for Trade's violations of Section:l 4Q(l)(A) Cf. (B) of the Act, 7 

U.S.C. §§ 6Q(l)(A) & (B) (2006), pursuant to Section 2(a)(l)(E1) of the Ac~, 7 U.S.C. 

§ 2(a)(l )(B) (2006). 

I 

68. Each misrep.tesentation or omission of material fact, issuan'·~e of a false statement I 

or report, and rr.dsappropriation, including but not li.m.jted to th<,se specific~luy alJeged berejn, is I 

alleged as a separate and distinct violation of Sections 4Q(l)(A) & (B) oftl~.e Act, 7 U.S.C. 

§§ 6Q(l)(A) & (B) (2006). 

COUNT TIIREE 

I 

EaiJurc to Register ~q a Commodity Pool Operato~· I 

(Violation of Section 4m(1) of the Act, 7 r.s.c. § 6m{l)) . I 

I 

69. Paragraphs 1 through 68 arc rc-aJleged and incorporated he1jein. 

70. Section4nl(l) of the Act, 7 U.S. C. § 61n(l) (2006), provide:~ that it is u.n.law:ful for I 

any CPO, tUJless registered under the Act: to 1nake u~e of the m~ils or any J~eans or 

\ 

instrumentality of interstate commerce in connection with his business as a~ CPO. 

71. As alleged, during the relevant period, Trade, thJough it~ agbn.ts and employees~ I 

including Milton, Gregory Center, and William Center, acted at: a CPO witiJi.n the m.ean.ing of 

I 

Section la(5) of the Act= 7 U.S.C. § la(5) (2006), and used the Jna.ils or inst.rUJncntalities of 

17 

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l 

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· • • · h. • b · c·po 1 ·1 J.t. · t interstate conunerce 111 or 111 c.oJulectton w1t 1ts usm.ess as a . . w ll. e .afl 1ng to reg1s eras 

such~ in violatiot.t of: Sec1.ion 4rn(l) of the Act: 7 U.S. C. § 6m(l) (2006). I 

72. Milton and William Center were in control of Trade, direct1)y or indirectly~ and I 

I 

did not act ht good faith or knowingly induced, directly or indirectly, Tradt~'s cotJduct alleged in 

this Complaint; therefore, pursuant to Section 1.3(b) of the Act, 7 U.S.C. § il3c(b) (2006), M_ilton 

and William Center are liable for Trade:s violations of Section ·~m(l) oftbk Act, 7 U.S.C. I 

I 

§ 6m(l) (20?6), pursuant to s~ction2(a)(l)(B) of the Act, 7 U.::;.c. § 2(a)q1 )(B) (2006). 

COUNTFOU.R I 

I 

Disgorg~ni"citt of Funds ti·om Reli•~f Defend a~ 

73. Paragraphs 1 through 72 are 1~e-alleged and incorporated heJrein. 

Defendants have defi·auded pool pru.ticipants ancl misappror:!riated pool funds. . I 74. 

75. 

I 

Relief defendants BD, LLC; CM.T Capital, LLC; Center RiqJ.mond, LLC; and 

TWTT, LLC received ll.tnds as a resuJt of the Defendants' fraudulent cond~rct and 

misappropriation, and have bcenl.li\iustly enriched thereby. 

76. ReliefDefeodants have no legitimate entitlemem to or inter~sl in the funds 

received as a result of the Defet1dants~ fraudulent conduct and/c•r 1nisappro~riation. 

77. Reli.e:f Defendants should be required to disgorg<: fw1ds up t~ the runow1t they I 

I 

received fr01n Defendants~ fraudule11t conduct and misappropriation!> or thej value of those ii.uJds 

tba.t they ma.y have subsequently transferred to third parties. 

VI. RELIEF I 

\VHEREFORE~ the Commissjon. respectfully requests that the Cou~, as autborized by 

Sectiot16c ofthe Act, 7 G.S.C. § 13a-1 (2006), and pursuant to its own cq~itable powers, enter: 

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I 

(a) an order findh1g tbat all Defendants violated Sections 4b(a)(2)(p and(iii) of the Act, 7 

I 

U.S. C.§§ 6b(a)(2)(i) and(iii) (2006), and Sections 4b(a)(l)(A) and(C) oft~e Act, as ameJ1ded by 

I 

the CRA, to be codified at 7 U.S. C. §§ 6b(a)(l)(A) and(C); I 

I 

(b) a:n order. findiJJg that Trade, Milton, and Wjlliam C·~ntcr violatc.~d Sections 4Q(l)(A) & I 

(B) and 4m(l) of the Act, 7 U.S.C. §§ 6Q(l)(A) & (B) and 6tn(i.) (2006); I 

(b) atJ order finding that Tr.ade and \ViJJiam Center vio:=.ated Sectio~14b(a)(2)(ii) of the 

I 

Act, 7 U.S.C. § 6b(a)(2)(ii) (2006)! and Section 4b(a)(l)(B) of the Act, as .~tnended by the CRA, 

to be codi.fi.ed at 7 U.S. C. § 6b(a)(l)(B); 

(c) an order of permanent i1~junction prohjbiting Defendants, aod ~hy other person or 

entity associated with tbem~ including any successor thereof, fr.mn engagi11~ ilt conduct v1olative 

oftl1e sections of the Act that the Defendants have been alJegec: to bave vi~>lated; 

(d) an order of pennanent injunction prohibiting Defendants fr01n tngaging, directly or 

indirectly, in: 

JUN 22 2010 16:31 

1. trading on or suqjcct to the rules of: ally registered er~tity (as tbat ten:n is . 

I 

defi.o.ed in Section la(29) of the Act, 7 U.S.C. § .la(29) (20Cj6)); 

2. entering into any transactions involving futures) opti~:ms, commodity 

options (as that tennis defined in Comrnjssion Regulation 3~.l(b)(l)~ 17 C.P.R. 

§ 32.1 (b)(l)) (''com.modity options3'), and/or fordgn currenc~y (as described in 

Section 2(c)(2)(B) and 2(c)(2)(C)(i) of the Act, f.s amended (by the CRA, to be 

codified in 7 U.S. C. §§ 2(c)(2)(B) and 2(c)(2)(C)(i)) ("forexi coJ1tracts") for their 

own personal account or for any account in which they have/ a direct or indirect 

jnterest; 

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3. having any futures, options, commodity optio11s, ant~ or forex. contracts 

traded on their behalf; I 

4. con1xo1Ji.ng or directing the tradlng for or on behalf <~f any other person or I 

entity, whether by power of attorney or othe1wh:e, in aJ..1Y acjcount involving 

futures, options, c01nmodity options, and/or. forex contracts~. 

5. solici.ting, receiving or accepting any funds from an;f person for the 

I 

purpose of purchasing or selling any futw·es, op1 ions, com.rr{odity options, a1Jd/or 

I 

forex contracts; 

I 

6. applying for registration or clahning exeruption fron~ registration with the 

CFTC in any capacity, and engaging in any activity requirin!g such registration or 

I 

exemption from registration with the CFTC excE.:pt as provi(;~ed for in Com.tnission 

Regulation4.14(a)(9), 17 C.P.R.§ 4.14(a)(9) (2009); and : 

I 

7. acting as a pti.nci.pal (as that tennis defined in Co~ission Regulation I 

I 

3.l(a), 17 C.F.R. § 3.l(a)(2009)), agent or any 01 her officer pr em.ployee of any 

person registered, exempted from registr.ation or required to~e register.ed with the • I 

CFTC except as provided for in Conm1ission Regulation 4.l~(a)(9): 17 C.P.R. 

§ 4.l4(a)(9) (2009); I 

I 

(e) an order directi11g Defe1~dants and RcliefDefen.dant!:, a~ well aslany other perso11 or I 

entity associated with them, including any successor thereof. to disgorge, Plfsumtt to such 

I 

procedure as the Court may order, all benefits received from the acts or prat~tices \vhich 

I 

constitute violations of the Act, as described l1erein~ and interestth.ereoffi·ol~ the date of such 

violations; 

20 

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(f) an order directing Defendants, as well as !lilY other person or e~tity associated with 

the1n, including EIJ).y successor thereof, to tl'lake full restitution= pursuant to/such procedure as the 

Court may order, to evezy pool participant whose fi.md~ were f(:ceived byt~1em as a result of acts 

I 

and practices which constitute violations of the Act, as dcscribE!d herei11, ru;~d interest thereon 

I 

from the date of such violations; 

I 

(g) An order directing Defendants, a11.d any success<)rs thereof, ~o rescind, pursuant to 

such procedures as the Court may order, all contracts and agreements, Whelher implied or 

express, entered into between them and any of the pool part:icip.mts whose ~ds were received 

by them as a result of the acts and practices that constituted violations of th~ Act and Act, as 

amended by the CRA, described herein. 

(h) an order requiring Defe11dants to pay civil n1onetru.1' penalties upder the Act~ to be ,. ; 

assessed by the Court, in atnounts of not more than the higher •)f (1) triplelthe n1onetary gain to I 

Defendants for each violation of the Act or (2) $130,000 .for each vioJ.atiOil of the Act 011 or I 

between October 23, 2004 through October 22, 2008, and $14(J~000 for ear~h violation of the Act 

on or after October 23, 2008; and 

(i) an order for such other and further remedial ancillary relief as th~ Court 1n.ay deern 

appropriate. 

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.Tune '2?. ~)... , 2010 

Respectfully submitLed, 

JUN 22 2010 16:32 

FEDEX OFFICE 1075 

I 

I 

I 

PLA4\INUFF UNr:ED STi\.TJps coMMODITY 

FUTURES TRAD lNG COl\11~\JISSION 

By: SI.Jason MahOJleV 

.T as on Mahoney 

Trial Attorney 

.fmahong,y(OJcftc. go.E 

DC Bar No. 48927 6 

.T oh.n W. DunfccChiefTrial Att01nc~y 

jdu11fee(ii),cftc. gov 

DC Bar No. 461.549 

Paul Hayeck 

Associate Director 

J2h_qyec"-1iVcflc.gov 1 

Massachuselts Bar No. 55481:~ 

I 

Division of Enforc"m1ent I 

Commodity Futures Trading ciommission 

1155 2J st Street N.\V. , 

Washington, D.C. :~0581 I 

Phone (202) 418-5r >00 

Facsjmile (202) 41 .. ·~-5523 

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PAGE 22 

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