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- · 1~ T~~ United States District Court 

For The Southern District Of New York 

COMMODITY FUTURES TRADING 

COMMISSION, 

Plaintiff, 

vs. 

Stephen Walsh, Paul Greenwood, Westridge 

Capital Management, Inc., WG Trading Investors, 

LP, WGIA, LLC, 

Defendants, 

Westridge Capital Management Enhancement 

Funds Inc., WG Trading Company LP, WGI 

LLC, K&L Investments, and Janet Walsh, 

Relief Defendants. 

Civil Actio 

Complaint Fo 

Equitable Reli 

Penalties Unde 

Exchange Act 

I. SUMMARY 

I. From at least 1996 to the present (the "relevant period"), Stephen Walsh 

("Walsh") and Paul Greenwood ("Greenwood") orchestrated a scheme involving the 

misappropriation of at least $553 milJion from commodity pool participants. The National 

Futures Association ("NF A") uncovered this massive fraudulent scheme as a result of audits it 

recently conducted regarding Walsh and Greenwood. Victims of this fraud include state 

retirement pension plans as well as university foundations. 

2. During the relevant period, Walsh and Greenwood misappropriated 

approximately $553,000,000 for the purposes of paying personal expenses and hiding trading 

losses. The primary means by which they effectuated their fraud was through various entities, 

which they owned and controlled, Westridge Capital Management, Inc. ("Westridge"), WG 

Trading Investors, LP ("WG Trading Investors"), and WGIA, LLC ("WGIA"). The two pools 
operated by Walsh and Greenwood to perpetrate their fraud are WG Trading Company LP ("WG 

Trading Company") and Westridge Capital Management Enhancement Funds, Inc. ("WCME"). 

2. 1brough misrepresentations and omissions of material fact, Walsh, Greenwood, 

Westridge, WG Trading Investors, and WGIA (collectively, the "Defendants"), have engaged, 

are engaging, or are about to engage in acts or practices that violate the anti·fraud provisions of 

Sections 4b(a)(2) and 4Q(l)(A) &(B) of the Commodity Exchange Act (the "CEA" or "Act''), 

7 U.S.C. §§ 6b(a)(2) and 6Q(l)(A) & (B) (2006), and Section 4b(a)(l) of the Act as amended by 

the Food, Conservation, and Energy Act of2008, Pub. L. No. 110·246, Title XIII (the CFTC 

Reauthorization Act of 2008 ("CRA")), § 13102, 122 Stat. 1651 (effective June 18, 2008), to be 

codified at 7 U.S.C. § 6b(a)(1). 

3. Unless restrained and enjoined by this Court, the Defendants are likely to 

continue to engage in the acts and_ practices alleged in this Complaint and in similar acts and . . . 

practices, a5 more fully described below. 

4. Accordingly, pursuant to Section 6c of the Act, 7 U.S.C. § 13a·1 (2006), the 

Commission brings this action to enjoin such acts and practices, prevent the dissipation of assets, 

and compel compliance with the provisions of the Act. In addition, the Commission seeks civil 

monetary penalties, an accounting, restitution, disgorgement and such other equitable relief as 

the Court may deem necessary or appropriate under the circumstances. 

II. JURISDICTION AND VENUE 

5. This Court has jurisdiction over this action pursuant to Section 6c of the Act, 

7 U.S.C. § 13a·l (2006), which authorizes the Commission to seek injunctive and other relief 

against any person whenever it shall appear to the Commission that such person has engaged, is 

2 
engaging, or is about to engage in any act or practice constituting a violation of any provision of 

the Act or any rule, regulation or order thereunder. 

6.· Venue properly lies with this Court pursuant to Section 6c ofthe Act, 

7 U.S.C. § 13a-l(e) (2006), in that the Defendants transacted business in this District, and the 

acts and practices in violation of the Act have occurred, are occurring, or are about to occur 

within this District, among other places. 

III. THE PARTIES 

PLAINTIFF 

7. Plaintiff Commodity Futures Trading Commission ("CFTC" or 

"Commission") is an independent federal regulatory agency that is charged with responsibility · 

for administering and enforcing the provisions of the Act, 7 U.S.C. §§ I et seq. (2006), and the 

regulations promulgated thereunder, I7 C.F.R. §§ I et seq. (2008). 

DEFENDANTS 

8. Defendant Stephen Walsh is an individual residing in Sands Point, New York. 

Walsh is registered with the Commission as a commodity pool operator ("CPO") (NFA ID 

# 279714), and his registered address is WG Trading Co. LP, One Lafayette Place, 2"d Floor, 

Greenwich, CT 06830. Walsh is listed as a co-CPO with Greenwood for WG Trading Co. 

Walsh represents to prospective pool participants that he is a member of the University at 

Buffalo Foundation Board and serves on the investment committee, and that he served as cochairman ofthe New York Islanders Hockey Team and a member of the Board of Governors of 

the National Hockey League from 1991-1998. 

9. Defendant Paul Greenwood is an individual residing in North Salem, New York. 

Greenwood is registered with the Commission as a CPO (NF A ID # 27971 0), and his registered 

3 
business address is WG Trading Co. LP, One Lafayette Place, 2"d Floor, Greenwich, CT 06830. 

Greenwood is listed as a co-CPO with Walsh for WG Trading Company. 

10. Defendant Westridge Capital Management, Inc. ("Westridge") is a Delaware 

corporation with a principal place of business in Santa Barbara, CA. Westridge is registered 

with the Securities and Exchange Commission as a registered investment adviser and is the 

investment adviser for the Westridge Capital Management Enhancement Funds pool. 

Greenwood and Walsh are partners holding a controJJing interest in Westridge. 

II. Defendant WG Trading Investors, LP is a Delaware limited partnership with a 

principal place of business in Greenwich, CT. The managing general partners of WG Trading 

Investors are Greenwood and Walsh. 

12. Defendant WGIA, LLC ("WGIA'') is a Delaware limited liability company. 

Upon information and belief, WGIA is owned by Greenwood, Walsh and others. 

RELIEF DEFENDA~TS 

13. Relief Defendant WG Trading Co. LP is a commodity pool (NFA ID P4703) 

operated by Greenwood and Walsh as co-CPOs with a principal place of business in Greenwich, 

CT. WG Trading Co. is a registered broker-dealer under the Securities and Exchange Act of 

1934. The managing general partners ofWG Trading Co. are Greenwood and Walsh, and WG 

Trading Investors is a limited partner. 

14. Relief Defendant West ridge Capital Management Enhancement Funds, Inc. is 

a commodity pool with an address in Tortola, British Virgin Islands. Information obtained by 

the National Futures Association indicates that this pool has 16 participants, including university 

foundations and retirement and pension plans. 

4 
15. ReliefDefendant K & L Investments, LLC is a Connecticut limited liability 

company with a principal place of business in Greenwich, CT. Upon information and belief, the 

managing general partner ofK&L Investments is Paul Greenwood, and it is owned by Walsh and 

Greenwood. 

16. Relief Defendant WGI, LLC is a Connecticut limited liability company with a 

principal place of business in Oreenwich, CT. Upon information and belief, WGI, LLC is owned 

by Paul Greenwood and Stephen Walsh. 

17. Relief Defendant Janet B. Walsh is an individual residing in New York, New 

York. Ms. Walsh is the ex-wife of Defendant Steven Walsh. 

IV. FACTS 

A. Statutory Background 

18. A "commodity pool" is any investment trust, syndicate or similar form of 

enterprise engaged in the business of investing its pooled funds in trading commodity futures 

and/or commodity options. CFTC Regulation 4.1 O(d)(l ), 17 C.F.R. § 4.1 O(d)(l) (2008). 

19. A "CPO" is any person engaged in a business that is of the nature of an 

investment trust, syndicate, or similar form of enterprise, and who, in connection therewith, 

solicits, accepts or receives from others, funds, securities, or property, either directly or through 

capital contributions, the sale of stock or other forms of securities or otherwise, for the purpose 

of trading in any commodity for future delivery on or subject to the rules of any contract market. 

Section 1a(5) ofthe CEA, 7 U.S.C. § 1(a)(5) (2006). 

20. A "participant" is any person who has any direct financial interest in a commodity 

pool. CFTC Regulation 4.1 0( c), 17 C.F .R. § 4.1 0( c) (2008). 

5 
B. The NFA Audit 

21. On February 5, 2009, the NFA commenced audits of Walsh and Greenwood at their 

Greenwich location. Among other matters, NF A conducted the audits to clarify issues relating to 

a loan made by the Westridge Capital Management Enhancement Funds to WG Trading 

Investors.1 Specifically, the NF A had recently reviewed several promissory notes issued to the 

Westridge Capital Management Enhancement Funds from WG Trading Investors that were 

purportedly signed by a director of WG Trading Investors. These notes, including the most 

recent dated December 31, 2008, in the amount of approximately $325 million, appeared to be 

issued at the end of each calendar year and provided that interest on the note is to be paid in an 

amount that mirrors the rate of return (gross of fees) earned by a WG Trading Co. Although 

these notes were purportedly signed by a director of WG Trading Investors, that person denied 

executing the notc;s in a conversation with NF A staff on February 11, 2009. The NF A alse 

conducted the audit to understand the relationship between WG Trading Investors and WG 

Trading Co. Although Greenwood was present when the NFA arrived at the office, he left 

shortly thereafter after telling the NFA to refer its questions to the compliance officer. 

22. The compliance officer provided the NF A with a financial record for WG Trading 

Investors which reflected that, as of December 31, 2008, WG Trading Investors had 

approximately $812 million in assets. The financial records also indicated that WG Trading 

1 As noted above, Westridge Capital Management Enhancement Funds is an exempt commodity pool pursuant to 

Commission Regulation 4.7, 17 C.F.R. 4.7 (2008). As such, it was required to obtain annual audited financial 

statements prepared and certified by a nationally recognized public accounting finn. The notes to the December 3 I, 

2007 financial statements for this pool received by the NF A in early 2008 indicated that "the fund invests 

approximately 89% of its total assets in structured notes issued by WG Trading Investors Limited Partnership, a 

Delaware limited partnership, and a related party to Westridge Capital Management' Enhancement Funds Inc. by 

virtue of key management personnel in common. The notes bear interest at the rate of an index. The index is a 

hypothetical limited partnership interest in WG Trading Company Limited Partnership." An additional note in the 

certified statements referred to related party transactions and states "Notes Receivable- Unsecured note bearing 

interest at the rate of an index and repayable at any month end on 30 days notice. The index is hypothetical limited 

partnership interest in WG Trading Company L.P." 

6 
Investors was a pool participant and had approximately $93.8 million invested in the WG 

Trading Co. pool. This amount represents approximately 29% of the Westridge Capital 

Management Enhancement Funds' total Joan to WG Trading Investors. WG Trading Investors' 

financial records also reflected that it had unidentified accounts payable of approximately $194.5 

million. 

23. The NFA also reviewed the financial records for WG Trading Co. and noted that 

this listed pool had approximately $1.3 billion in assets. However, the pool's records reflect that 

of this $1.3 billion amount, approximately $531.5 million was in accounts receivable. Notably, 

these accounts receivable had never appeared in any annual report filed by the pool with the 

NFA.2 Although WG Trading Co.'s financial records list WG Trading Investors' pool interest as 

approximately $93.8 million, the records also reflect that WG Trading Co.'s largest account 

receivable is from WG Trading Investors in the amount of $194.5 million. This amount 

corresponds with the unidentified accounts payable entry on WG Trading Investor's financial 

records. The NF A subsequently made further inquiry of Greenwood as to the disposition and 

location ofWGTrading Investors' other assets in order to determine the location of the 

remainder (approximately $230 million) of the $324 million that the Westridge Capital 

Management Enhancement Funds loaned to WG Trading Investors. Those assets included 

$292.8 million in "note receivables" from Greenwood and $260.7 million "note receivables" 

from Walsh. The compliance officer represented that another $147 million of the assets are 

investments in two entities owned by Walsh and Greenwood. These notes are almost identical in 

2 As noted above, WG Trading Company is an exempt commodity pool, pursuant to Commission Regulation 4.7. 

17 C.F.R. 4. 7 (2008). As such, it had annual audited financial statements prepared and certified by a nationally 

recognized public accounting firm. The December 31, 2007 statements received by the NF A in early 2008 did not 

reflect any receivables from either pool participants or WG Trading Investors, LP. During the NF A's February 2009 

audit of Walsh and Greenwood, WG Trading Co.'s financial records as of December 31, 2008 did reflect an account 

receivable balance from WG Trading Investors of approximately $194.5 million, more than $100 million more than 

WG Trading Investor's interest in WG Trading Co. 

7 
their terms and indicate that the respective "sum is representative of the general partner's share of 

losses, withdrawals and payments." Additionally, the notes state that "The outstanding balance 

of this note is due and payable under 90 days written notice from WG Trading Investors." 

24. Further, the financial records indicate $8.2 miilion of the assets are "employee 

advances." Therefore, the vast majority ofWG Trading Investors' assets appear to be 

receivables from Greenwood and/or Walsh, investments in entities purported to be owned by 

Greenwood and/or Walsh and employee advances. _ 

25. The fact that more than $794 million of WG Trading Investors' assets were 

receivables from Walsh and Greenwood or entities that they purportedly owned greatly 

concerned the NFA. Therefore, the NFA determined to meet with Walsh and Greenwood to 

make inquiry and request documents regarding their financial wherewithal and ability to repay 

WG Trading Investors which in tutn would enable WG Trading Investors to pay its note holders, 

including the Westridge Capital Management Enhancement Fund. 

26. Additionally, the NFA had questions for Walsh and Greenwood regarding their 

CPO activities, Westridge Capital Management's activities, WG Trading Investors' activities, 

and WG Trading Co.'s activities. Walsh was not present in his Greenwich office at any time 

during NF A staff visits on February 5th, 6th, I Oth, II th and I2'h of 2009. The only two instances 

in which he made himself available to the NF A were a twenty minute telephone conversation 

covering preliminary matters on February 5th, the day that the NF A arrived at his office, and a 

brief telephone conversation on February 1Oth. During the conversation on February 5th, Walsh 

represented to the NF A that he and Greenwood were the only general partners of WG Trading 

Investors. The NFA made a number of additional attempts to contact Walsh as matters of 

concern arose during the audit. For example, on February 9th, the NF A attempted to contact him 

8 
at a North Hills, New York office used by Walsh. Although a secretary told NFA staffthat she 

would give Walsh the message that the NFA had called, Walsh did not respond. Further, NFA 

staff left a voicemail for Walsh that evening stating that it was urgent that he contact the NFA 

immediately in regard to the audit. Walsh's secretary called the NFA the next morning and told 

NF A that Walsh would be in a meeting all day and that he would be unavailable to the NF A. On 

February lOth, NFA auditors visited Walsh's North Hills office and found that he was not there. 

His secretary represented that Walsh was in meetings in New York City and that he would not be 

available at any time on that day. Walsh did have a two minute phone call with the NFA later 

that day during which he acknowledged that he was aware that the NF A was making inquiries 

directed to him, but represented that he would not be available to deal with the inquiries for at 

least several more days. 

27. Greenwood Jlas only been sporadically available to the ~FA, either in 

person or via teleconference, but has not made himself available to meet with NF A staff since 

February 6th and NFA has had no contact from him at all since February 9th.· On that day, NFA 

staff engaged in a telephone conversation with Greenwood in which staff inquired as to the 

whereabouts of the funds from the Westridge Capital Management Enhancement Funds that 

were loaned to WG Trading Investors but not invested in the WG Trading Co. pool. Greenwood 

replied that he would have to get back to the NF A about that subject and ended the conversation. 

He sent a subsequent email to the NF A in which he said that he would be at the Greenwich office 

on February 1Oth. NFA auditors visited the office on February 1Oth and were told by an 

administrative assistant that Greenwood would be in meetings in New York City all day and that 

he would not be available to meet with the NF A. While at the office on February 1Oth, NF A staff 

observed that the administrative assistant repeatedly covered her mouth while 

9 
conversing on the telephone and was moving documents from the compliance. officer's office. 

C. The Greenwood and Walsh Investment Scheme 

28. Beginning in or about 1996, Walsh and Greenwood solicited and obtained funds 

from prospective and actual pool participants through Westridge, WG Trading Investors, and 

WGIA. Walsh and Greenwood registered with the CFTC as CPOs in or about 1997 and 

thereafter set.up and/or utilized various entities to facilitate their investment schemes, including 

two pools: Westridge Capital Management Enhancement Funds and WG Trading Co. As pool 

operators, Walsh and Greenwood owe a fiduciary duty to their pool participants. 

29. According to solicitation materials provided to actual and prospective pool 

participants, Westridge and WG Trading Co. "operate as one group with common ownership for 

the management of enhanced portfolios."· 

30. Westridge, WG Trading Investors, WG Trading Company, Westridge Capital 

Management Enhancement Fund, WGIA, Greenwood and Walsh have, from time to time, 

collectively referred to themselves as the "Westridge Group," and will sometimes be so 

collectively referred to herein. 

31. Walsh, Greenwood, Westridge and WG Trading Investors defrauded numerous 

victims through falsely depicting that all pool participants' funds would be employed in a single 

investment strategy. Specifically, the Defendants represented in their promotional and marketing 

materials that were distributed to prospective and actual pool participants the following: 

a. Walsh, Westridge, WG Investors and WG Trading Co., collectively represented in 

writing to at least one client or participant that "the only business of WG Trading 

is index arbitrage and that WG Trading does not employ any other investment 

strategies"; 

10 
b. Walsh, Greenwood, and Westridge provided marketing materials to at least one 

other prospective or actual pool participant stating that "[T]he process starts with 

a constant long position in index futures (S&P 500 Russell I 000, etc.) for the 

funds exposure chosen by the client. This position is rolled every 90 days, 

reinvesting excess performance to ensure that the portfolio is always I 00% 

invested. While cash is held for variation margin purposes, the equity exposure 

represents the client's total dollar investment"; 

c. Walsh, Greenwood, Westridge and WG Trading Co. provided marketing 

materials to at least one other participant that "we [WG Trading] are simply a 

broker dealer .... doing one strategy (index arbitrage) so there are no other 

accounts ... [ e ]veryone is a partner within WG Trading and not a separate 

account .... "; 

d. Westridge provided a published periodical "letter to the editor" authored by its 

president James L. Carder ("Carder") which contained the representation that 

~'[o]ur fixed-income strategy ... which ... has indeed produced excess returns of 

128 basis points since inception, has a constant long position in Treasury futures 

to match the duration of the desired index .... [and] the residual cash is enhanced 

through the same index arbitrage strategy"; and 

e. Walsh, Greenwood, Westridge and WG Trading Investors provided to yet another 

prospective pool participant with written answers to a questionnaire which 

represented that "Westridge Capital Management, Inc. and WG Trading Co. 

operate as one group with common ownership for the management of enhanced 

portfolios. WCM [Westridge] is the group's Registered Investment Advisor and 

1 ] 
is responsible for the long futures positions. WGTC[WG Trading Company] is a 

registered broker~dealer, whose only activity is enhanced cash management 

through the use of equity index arbitrage, which is the sole alpha~source for the 

enhanced index strategy." (Emphasis added.) The questionnaire answers 

provided by Walsh, Greenwood, Westridge and WG Trading Company to this 

prospective pool participant also included a pie chart describing the portfolio 

construction process for the investment product, which included three 

proportionally sized slices of the pie chart, two of which were in one color 

captioned "Westridge," labeled "5% collateralized the futures exposure," and 

"10% provides for variation margin," and the remaining 85% proportional slice of 

the pie.chart, which was in another, color labeled "WG Trading" with the 

description "85% invested in equity index arbitrage." See Exhibit A. Additional 

written answers provided by Walsh,- Greenwood, Westridge and WG Trading 

Company to other questions from this prospective pool participant in this 

questionnaire included the following statements: 

1. "Trading is all we do and our success has been due to the fact that we 

trade very well ... " 

ii. "The only alpha source for the product is ~nhanced cash using equity 

index arbitrage," 

iii. "The only strategy employed is index arbitrage which is defined as being 

long stocks and short futures in the same amount for a positive spread. By 

definition, this is a virtually riskless trade," 

12 
iv. "When the spread betv(een the futures and the index is trading above the 

borrowing cost, the index is bought and the futures are sold. This locks in 

a positive return until the expiration of the futures. If the spread narrows 

below the borrowing cost, the stocks are sold and the futures bought to ... . 

close out the position. There is no deviation from this discipline," 

(emphasis added); 

v. "The only source of alpha for the Enhanced S&P 500 index product is the 

enhanced cash portfolio managed by WGTC [WG Trading Co.]. There is 

only one strategy employed by WGTC [WG Trading Co.] and that is index 

arbitrage" (emphasis added). 

32. Defendants explicitly represented that the activity undertaken on behalf of pool 

participants would adhere to the investment strategy described above in paragraph 31. 

Specifically, Walsh, Greenwood, and Westridge entered into a written subscription agreement 

with at least one prospective pool participant which provided that "[a] Statement of investment 

policies and portfolio restrictions setting forth the investment objectives for the Account and 

guidelines for the implementation thereof is set forth in Exhibit A attached hereto and 

incorporated herein by reference. [T]he manager shall comply with the provisions of Exhibit A." 

Such Exhibit A stated that "the manager will deposit approximately 5% of the assets as [initial] 

margin for ... futures contracts, will invest approximately I 0% in short term cash equivalents ... 

and will invest the remaining 85% of the assets in WG Trading Company LP to have access to 

the index arbitrage strategy ofWG Trading." 

33. Defendants explicitly represented that the only permissible use of pool 

participants' funds was to fully invest them in the strategy described above in paragraph 31. For 

13 
example, Walsh, Greenwood and Westridge provided marketing materials to at least one pool 

client or participant which represented that "Cash per se is fully invested at all times in either the 

Westridge liquidity pool supporting the index exposure or the equity index arbitrage exposure. 

This is tightly controlled in order to ensure that ... the maximum possible is fuJly invested in the 

index arbitrage strategy ... [and] the 85% invested in equity index arbitrage which is 1 00% fully 

invested in stocks and futures." 

34. Based on the solicitations of Greenwood and Walsh, personally and through their 

corporate entities, some pool participants invested funds directly into WG Trading Company by 

subscribing to limited partnership agreements with WG Trading Co., while other pool 

participants invested funds into WG Trading Co. through an arrangement that involved the 

execution of promissory notes, with an explicit agreement and understanding between 

Greenwood, Walsh, WG Trading Co. and the pool participants that the funds invested via 

promissory note would be traded exclusively in the manner described and promised by 

Greenwood, Walsh, and WG Trading Co. Greenwood, Walsh, and the WG Trading Co. pool 

represented to the pool participants who entered into such promissory note arrangements that 

they would earn and share in the pool trading profits promised by Greenwood, Walsh and the 

WG Trading Co. pool in a manner and degree identical to the manner and degree that pool 

participants who were limited partner subscribers in the WG Trading Co. pool. 

35. Other pool participants invested funds in the WG Trading Co. pool either by 

subscribing to limited partnership agreements with Westridge or by entering into promissory 

note arrangements with Westridge or WGIA, with an explicit agreement and understanding that 

(a) the funds invested by the participants would be traded exclusively in the manner described 

above in paragraph 31 and (b) that the pool participants who invested funds with Greenwood, 

14 
Walsh, Westridge into the WG Trading Co. pool through the means of a promissory note 

arrangement would earn and share in the pool trading profits promised by Greenwood, Walsh, 

Westridge and the WG Trading Co. pool in a manner and degree identical to the manner and 

degree that limited partner subscribers in Westridge would receive. 

36. Greenwood, Walsh and Westridge represented to all prospective pool participants 

and pool participants, regardless of whether such pool participants invested with Defendants 

through the means of a limited partnership agreement or promissory notes, that the exclusive 

trading strategy and the exclusive means by which all pool funds would be invested by 

Defendants would be in the manner described above in paragraph 31. In particular, Westridge 

would retain $15 dollars out of every $1 00 invested to trade futures cont~acts on the S&P 500 

index, with $5 dollars of the aforesaid $15 dollars to be used to establish a futures trading 

position in S&P 500 futures, and the other $1 0 dollars of the aforesaid $15 dollars to be utilized 

to meet any margin ~ails that resulted from such futures trading. Westridge further represented 

to all prospective pool participants and pool participants, regardless of whether such pool 

participants invested with Defendants through the means of a limited partnership agreement or 

promissory note, that the participants' remaining funds (i.e. the remaining $85 dollars out of 

every $100 invested with Westridge) would be traded in the WG Trading Co. pool exclusively 

and solely according to the strategy described in paragraph 31. 

37. In addition to the activity described above, Walsh, Greenwood, Westridge, WG 

Trading Investors, WGIA, the WG Trading Co. pool, and the Westridge Capital Management 

Enhancement pool, solicited, accepted or received from others, funds,. securities, or property, 

either directly or through capital contributions, the sale of stock or other forms of securities or 

15 
otherwise, for the purpose of trading in any commodity for future delivery on or subject to the 

rules of any contract market. 

38. A certain portion of the pool participants' funds solicited and received by the 

Defendants were invested or deposited with Relief Defendants WGI LLC and K&L Investments. 

A certain portion of the pool participants' funds solicited and received by the Defendants were 

transferred by wire transfer to Relief Defendant Janet Walsh and used to purchase real estate in 

her name. 

D. Misrepresentations and Omissions by Greenwood and Walsh 

39. Contrary to their representations regarding a strict, targeted investment strategy, 

Greenwood and Walsh did not use a larg~ portion of the participants' funds for investment in any 

strategy. Rather, pool participants' funds invested through Westridge or WGIA were often 

transferred to WG Trading Investors, another entity owned and contrplled by Walsh and 

Greenwood. Greenwood and Walsh misappropriated participants' funds by siphoning funds 

from the accounts ofWG Trading Investors. 

40. During the relevant period, Greenwood and Walsh misappropriated 

approximately $553 million of approximately $1.3 billion in pool participants' funds. In 

addition to using new pool participants' funds to cover up prior losses, on information and belief, 

Greenwood and Walsh used over $160 million for personal expenses, including: 

• rare books at auctions, 

• horses, 

• Steiffteddy bears for as much as $80,000 at various auctions, including but not 

limited to auctions conducted by Sotheby's, and 

• a residence for Walsh's ex-wife, Janet Walsh, in the amount of at least $3 

million. 

16 
41. Following the misappropriation of pool participants' funds through WG Trading 

Investors, Greenwood and Walsh manufactured paperwork in the form of promissory notes in 

order to present the appearance that pool participants funds had been loaned to them. 

42. Greenwood and Walsh failed to disclose to the pool participants that (a) they did 

not intend to and in fact did not invest participants' funds as they represented orally and in 

writing to participants, and (b) they were misappropriating participants' funds for personal use 

and to conceal trading losses 

V. VIOLATIONS OF THE COMMODITY EXCHANGE ACT 

COUNT I 

Violations of Section 4b of the Act and the Act as Amended by the CRA: Futures Fraud 

43. The allegations set forth in paragraphs 1 through 42 are re-alleged and 

incorporated herein. 

44. Sections-4b(a)(2)(i)-(iii) of the Act, 7 U.S.C. §§ 6b(a)(2)(i)-(iii) (2006), make it 

unlawful for any person to cheat or defraud or attempt to cheat or defraud; or willfully make or 

cause to be made to other persons false reports or statements, or willfully enter or cause to be 

entered for other persons false records; or willfully deceive or attempt to deceive by any means 

whatsoever other persons in or in connection with orders to make, or the making of, contracts of 

sale of commodities, for future delivery, made, or to be made, for or on behalf of such other 

persons where such contracts for future delivery were or may have been used for (a) hedging any 

transaction in interstate commerce in such commodity, or the produce or byproducts thereof, or 

(b) determining the price basis of any transaction in interstate commerce in such commodity, or 

(c) delivering any such commodity sold, shipped or received in interstate commerce for the 

fulfillment thereof. 

17 
45. Sections 4b(a)(l )(A)-(C) of the Act as amended by the CRA, to be codified at 7 

U.S.C. §§ 6b(a)(l )(A)-(C), make it unlawful for any p·erson, in or in connection with any order to 

make, or the making of, any contract of sale of any commodity in interstate commerce or for 

future delivery that is made, or to be made, on or subject to the rules of a designated contract 

market, for or on behalf of any other person- (A) to cheat or defraud or· attempt to cheat or 

defraud the other person; (B) willfully to make or cause to be made to the other person any false 

report or statement or willfully to enter or cause to be entered for the other person any false 

record; or (C) willfully to deceive or attempt to deceive the other person by any means 

whatsoever in regard to any order or contract or the disposition or execution of any order or 

contract, or in regard to any act of agency performed, with respect to any order or contract for the 

other person . 

. 46. . During the relevant period, Greenwood, Walsh and agents ofWestridge, WG . ' . 

Trading investors, and WGIA violated Sections 4b(a)(2)(i) and (iii) of the Act, 7 U.S.C. 

§§ 6b(a)(2)(i) and (iii) (2006), with respect to acts occurring before June 18, 2008, and violated 

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

§§ 6b(a)(l )(A) and (C), with respect to acts occurring on or after June 18, 2008, in that they 

cheated or defrauded or attempted to cheat or defraud and willfully deceived or attempted to 

deceive pool participants by: misrepresenting the pool's investment strategy when soliciting 

prospective participants, and failing to infonn prospective and actual participants that their funds 

would be misappropriated for the personal use of Greenwood and Walsh and to conceal trading 

losses. 

47. Walsh, Greenwood, and others were acting as agents ofWestridge, WG Trading 

Investors, and WGIA when they violated the Act and, therefore, Westridge, WG Trading 

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Investors, and WGIA as principals, are liable for violations by Walsh, Greenwood, and other 

agents of Sections 4b(a)(2)(i)-(iii) of the Act, 7 U.S.C. §§ 6b(a)(2)(i)-(iii) (2006), with respect to 

acts occurring before June 18, 2008, and for violations by Walsh, Greenwood, and others of 

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

§§ 6b(a)(l )(A)-(C), with respect to acts occurring on or after June 18, 2008, pursuant to Section 

2(a)(l)(B) of the Act, 7 U.S.C. § 2(a)(1)(B) (2006). 

48. Each material misrepresentation or omission, and each misappropriation made 

during the relevant time period, including but not limited to those specifically alleged herein, is 

alleged as a separate and distinct violation of Sections 4b(a)(2)(i)-(iii) of the Act, 

7 U.S.C. §§ 6b(a)(2)(i)-(iii) (2006), with respect to acts occurring before June 18, 2008, and a· 

violation of Sections 4b(a)(l)(A)-(C) of the Act as amended by the CRA, to be codified at 

7 U.S.C. §§ 6b(a)(1)(A)-(C), with respect to acts o.ccurring on or after June 18,2008, the 

effective date of the CRA. 

COUNT II 

Violations of Section 4o(l) of the Act: Fraud by CPOs 

49. The allegations set forth in paragraphs 1 through 42 are re-alleged and 

incorporated herein. 

50. During the relevant time period, Walsh and Greenwood acted as CPOs in that 

they engaged in a business that is of the nature of an investment trust, syndicate, or similar fonn 

of enterprise and in connection therewith, have solicited, accepted or received funds, securities or 

property from others for the purpose of trading in any commodity for future delivery on or 

subject to the rules of any contract market or derivatives transaction execution facility. 

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51. During the relevant period, Walsh and Greenwood violated Sections 4o( 1 )(A) & 

(B) of the Act, 7 U.S.C. §§ 6o(l) (2006), in that as CPOs, they directly or indirectly employed 

or are employing a device, scheme, or artifice to defraud commodity pool participants, or 

engaged or are engaging in transactions, practices or a course of business which operated as a 

fraud or deceit upon commodity pool participants by: misrepresenting the pool's investment 

strategy when soliciting prospective participants, and failing to inform participants and 

prospective participants that their funds would be misappropriated for the personal use of 

Greenwood and Walsh and to conceal trading losses. 

52. Such acts were affected by use ofthe mails and other means or instrumentalities 

of interstate commerce, directly or indirectly, to engage in the. business of a CPO. 

53. Each act of misrepresentation, material omission, and each misappropriation that 

occurred during tl)e relevant time period, including but not limited to those specifically alleged 

herein, is alleged as a separate and distinct violation of Sections 4o(l)(A) & (B) ofthe Act, 

7 U.S.C. §§ 6o(l)(A) & (B) (2006). 

COUNT III 

Disgorgement of Funds from the Relief Defendants 

54. The allegations set forth in paragraphs 1 through 42 are re-alleged and 

incorporated herein. 

55. Defendants have defrauded pool participants in connection with soliciting funds 

for the trading of commodity futures. 

56. The Relief Defendants, WGI LLC, K&L Investments, and Janet Walsh, received 

funds and/or property as a result of the Defendants' fraudulent conduct and have been unjustly 

enriched thereby. 

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57. The Relief Defendants, WGI LLC, K&L Investments, and Janet Walsh, have no 

legitimate entitlement to or interest in all of the funds and/or property received as a result of the 

Defendants' fraudulent conduct. 

58. The Relief Defendants, WGI LLC, K&L Investments, and Janet Walsh, should be 

required to disgorge funds and/or property up to the amount they received from Defendants' 

fraudulent conduct or the value of those funds that they ·may have subsequently transferred to 

third parties. 

VI. RELIEF REQUESTED 

WHEREFORE, the Commission respectfully requests that this Court, as authorized by 

Section 6c of the Act, 7 U.S.C. § 13a-1, and pursuant to its own equitable powers: 

A. Enter orders finding Greenwood, Walsh, Westridge, WG Trading Investors, and 

WGIA liable for violating Sections 4b(a)(2)(i)-(iii) of the Act, 7 U.'S.C. §§ 6b(a)(2)(i)-(iii) · 

(2006), with respect to acts occurring before June J 8, 2008, and for violating Sections 

4b(a)(1)(A)-(C) ofthe Act as amended by the CRA, to be codified at 7 U.S.C. §§ 6b(a)(J)(A)-

(C), with respect to acts occurring on or after June 18, 2008; 

B. Enter orders finding Greenwood and Walsh liable for violating Sections 4o(l )(A) 

· & (B) of the Act, 7 U.S.C. §§ 6o(1)(A) & (B) (2006); 

C. Enter an order of permanent injunction prohibiting Defendants, and any other 

person or entity associated with them, from engaging in conduct violative of the Sections of the 

Act and Sections of the Commodity Exchange Act as amended by the CRA that they have been 

alleged to have violated; 

D. Enter an order of permanent injunction enjoining Defendants and aJI persons 

insofar as they are acting in the capacity of their agents, servants, employees, successors, assigns, 

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and attorneys, and all persons insofar as they are acting in active concert or participation with 

them who receive actual notice of such order by personal service or otherwise, from engaging, 

directly or indirectly, in any activity related to trading in any commodity, as that term is defined 

in Section la(4) of the Act, 7 U.S.C. §·Ia(4) ("commodity interest"), including but not limited to, 

the following: 

1. Trading on or subject to the rules of any registered entity, as that tenn is 

defined in Section la(29) ofthe Act, 7 U.S.C. § la(29); 

2. Engaging in, controlling or directing the trading for any commodity 

interest account for or on behalf of any other person or entity, whether by 

power of attorney or otherwise; 

3. Soliciting or accepting any funds from any person in connection with the 

purchase or sale of any commodity interest; 

4. Entering into any commodity interest transactions for his own personal 

account, for any account in which he has a direct or indirect interest and/or 

having any c_ommodity interests traded on his behalf; . . . 

· 5. Engaging in any business activities related to commodity interest trading; 

and 

6. Applying for registration or claiming exemption from registration with the 

Commission in any capacity, and engaging in any activity requiring such 

registration or exemption from registration with the Commission, except 

as provided for in Regulation 4J 4(a)(9), 17 C.F.R. § 4.14(a)(9) (2008), or 

acting as a principal, agent or any other officer or employee of any person 

registered, exempted from registration or required to be registered with the 

Commission, except as provided for in Regulation 4.14(a)(9), 17 C.F.R. § 

4.14(a)(9) (2008); 

E. Enter an order requiring Defendants to make restitution by making whole each 

and every pool participant whose funds were received or utilized by them in violation of the 

provisions of the Act as described herein, including pre-judgment interest; 

F. Enter an order directing the Defendants, Relief Defendants and any successors 

thereof, to rescind, pursuant to such procedures as the Court may order, all contracts and 

agreements, whether implied or express, entered into between them and any of the participants 

22 
whose funds were received by them as a result of the acts and practices which constituted 

violations of the Act and Regulations, as described herein; 

G. Enter an order requiring Defendants, the Relief Defendant, and any third party 

transferee and/or successors thereof, to disgorge to any officer appointed or directed by the 

Court, all benefits received including, but not limited to, salaries, commissions, loans, fees, 

revenues and trading profits derived, directly or indirectly, from acts or practices which 

constitute violations of the Act as described herein, including pre-judgment interest; 

H. Enter an order requiring Defendants to pay civil monetary penalties under the Act, 

to be assessed by the Court, in amounts of not more than the higher of(l) triple the monetary 

gain to Defendants for each violation of the Act and Regulations or 2) $120,000 for each 

violation of the Act on or before October 22, 2004, $130,000 for each violation of the Act from 

October 23, 2004 through October 22,2008, and $140,000 for each violation of the Act on or 

after October 23, 2008; 

I. Enter an order requiring Defendants, the Relief Defendants, and any third party 

transferee and/or successors thereof, to disgorge to any officer appointed or directed by the Court 

all benefits received including, but not limited to, salaries, commissions, loans, fees, revenues 

and trading profits derived, directly or indirectly, from acts or practices that constitute violations 

of the Act as described herein, including pre-judgment interest; 

J. Enter an order requiring Defendants to pay costs and fees as permitted by 

28 U.S.C. §§ 1920 and 2412(a)(2) (1994); and 

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K. Enter any order providing such other and further relief as this Court may deem 

necessary and appropriate under the circumstances. 

Date: February _, 2009 

RespectfulJy Submitted, 

Joseph Rosenberg 

Trial Attorney, Eastern Regiona "t'#!Hf:e 

I 40 Broadway, I 91h Floor 

New York, New York 10005 

(646) 746-9765 

(646) 746-9940 (facsimile) 

jrosenberg@cftc.gov 

DITY 

Paul G. Hayeck 

Associate Director, Division of Enforcement 

I I 55 21 51 Street, N.W. 

Washington D.C. 20581 

(202) 4 I 8-5312 

(202) 418-5523 (facsimile) 

phayeck@cftc.gov 

Peter M. Haas 

Chief Tria) Attorney, Division of Enforcement 

1155 21 51 Street, N.W. 

Washington D.C. 20581 

(202) 418-5377 

(202) 4 I 8-5523 (facsimile) 

phaas@cftc.gov 

JonMarc Buffa 

Trial AUorney, Division of Enforcement 

J 155 21 51 Street, N.W. 

Washington D.C. 20581 

(202) 418-5332 

(202) 418-5523 (facsimile) 

jbuffa@cftc.gov 

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