UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

COMMODITY FUTURES TRADING 

COMMISSION, 

 PLAINTIFF, 

 v. 

JIONGSHENG ZHAO, 

 DEFENDANT. 

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CIVIL ACTION NO. 1:18-cv-00620 

Honorable John F. Kness 

CONSENT ORDER FOR PERMANENT INJUNCTION 

AND OTHER EQUITABLE RELIEF AGAINST DEFENDANT JIONGSHENG ZHAO 

I. INTRODUCTION 

 On January 28, 2018, Plaintiff Commodity Futures Trading Commission (“Commission” 

or “CFTC”) filed a Complaint (ECF No. 1) against Defendant Jiongsheng Zhao (“Zhao” or 

“Defendant”) seeking injunctive and other equitable relief, as well as the imposition of civil 

penalties, for violations of the Commodity Exchange Act (“Act”), 7 U.S.C. §§ 1–26 (2018), and 

the Commission’s Regulations (“Regulations”) promulgated thereunder, 17 C.F.R. pts. 1–190 

(2020). 

II. CONSENTS AND AGREEMENTS 

To effect settlement of all charges alleged in the Complaint against Zhao without a trial 

on the merits or any further judicial proceedings, Zhao: 

1. Consents to the entry of this Consent Order for Permanent Injunction and Other 

Equitable Relief Against Zhao (“Consent Order”); 

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2. Affirms that he has read and agreed to this Consent Order voluntarily, and that no 

promise, other than as specifically contained herein, or threat, has been made by the CFTC or 

any member, officer, agent, or representative thereof, or by any other person, to induce consent 

to this Consent Order; 

3. Acknowledges service of the summons and Complaint; 

4. Admits the jurisdiction of this Court over him and the subject matter of this action 

pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1 (2018); 

5. Admits the jurisdiction of the CFTC over the conduct and transactions at issue in 

this action pursuant to the Act; 

6. Admits that venue properly lies with this Court pursuant to 7 U.S.C. § 13a-1(e); 

7. Waives: 

(a) Any and all claims that he may possess under the Equal Access to Justice 

Act, 5 U.S.C. § 504 (2018) and 28 U.S.C. § 2412 (2018), and/or the rules 

promulgated by the Commission in conformity therewith, Part 148 of the 

Regulations, 17 C.F.R. pt. 148 (2020), relating to, or arising from, this 

action; 

(b) Any and all claims that he may possess under the Small Business 

Regulatory Enforcement Fairness Act of 1996, Pub. L. No. 104-121, tit. II, 

§§ 201–253, 110 Stat. 847, 857–74 (codified as amended at 28 U.S.C. 

§ 2412 and in scattered sections of 5 U.S.C. and 15 U.S.C.), relating to, or 

arising from, this action; 

(c) Any claim of Double Jeopardy based upon the institution of this action or 

the entry in this action of any order imposing a civil monetary penalty or 

any other relief, including this Consent Order; and 

(d) Any and all rights of appeal from this action; 

8. Consents to the continued jurisdiction of this Court over him for the purpose of 

implementing and enforcing the terms and conditions of this Consent Order and for any other 

purpose relevant to this action, even if Zhao now or in the future resides outside the jurisdiction 

of this Court; 

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9. Agrees that he will not oppose enforcement of this Consent Order on the ground, 

if any exists, that it fails to comply with Rule 65(d) of the Federal Rules of Civil Procedure and 

hereby waives any objection based thereon; 

10. Agrees that neither he nor any of his agents or employees under his authority or 

control shall take any action or make any public statement denying, directly or indirectly, any 

allegation in the Complaint or the Findings of Fact or Conclusions of Law in this Consent Order, 

or creating or tending to create the impression that the Complaint or this Consent Order is 

without a factual basis; provided, however, that nothing in this provision shall affect his: 

(a) testimonial obligations; or (b) right to take legal positions in other proceedings to which the 

CFTC is not a party. Zhao shall comply with this agreement, and shall undertake all steps 

necessary to ensure that all of his agents and/or employees under his authority or control 

understand and comply with this agreement; 

11. Admits to all of the findings made in this Consent Order and all of the allegations 

in the Complaint.

12. In United States v. Zhao, No. 18-cr-24 (N.D. Ill.), Zhao pleaded guilty to one 

count of spoofing in violation of Sections 4c(a)(5)(C) and 9(a)(2) of the Act, 7 U.S.C. 

§§ 6c(a)(5)(C), 13(a)(2) (2018), and in connection with that plea, admitted the facts set out in the 

Plea Agreement. See Plea Agreement, United States v. Zhao, No. 18-cr-24 (N.D. Ill. Dec. 26, 

2018), ECF No. 49. A copy of the Plea Agreement is attached as Exhibit A to this Order, and 

those same facts are admitted as if set forth in this Order; 

13. Agrees to provide immediate notice to this Court and the CFTC by certified mail, 

in the manner required by paragraph 61 of Part V of this Consent Order, of any bankruptcy 

proceeding filed by, on behalf of, or against him, whether inside or outside the United States; and 

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14. Agrees that no provision of this Consent Order shall in any way limit or impair 

the ability of any other person or entity to seek any legal or equitable remedy against Defendant 

in any other proceeding.

III. FINDINGS OF FACT AND CONCLUSIONS OF LAW 

 The Court, being fully advised in the premises, finds that there is good cause for the entry 

of this Consent Order and that there is no just reason for delay. The Court therefore directs the 

entry of the following Findings of Fact, Conclusions of Law, permanent injunction and equitable 

relief pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1 (2018), as set forth herein. 

THE PARTIES AGREE AND THE COURT HEREBY FINDS: 

A. Findings of Fact 

i. The Parties to this Consent Order 

15. Plaintiff Commodity Futures Trading Commission is an independent federal 

regulatory agency that is charged by Congress with administering and enforcing the Act and the 

Regulations. 

16. Zhao is a resident of New South Wales, Australia. During the times relevant to 

this action, Zhao was employed by Propex Derivatives Pty Ltd. (“Propex”), a proprietary trading 

firm. Zhao has never been registered with the CFTC in any capacity. 

ii. Futures Trading Background 

17. A futures contract is an agreement to purchase or sell a commodity for delivery or 

cash settlement in the future at a specified price. A futures contract traded on an exchange has 

standard, non-negotiable contract specifications. 

18. The E-mini S&P 500 Index futures contract (the “ES contract”) is traded on CME, 

a registered entity. There are four ES contract delivery months: March, June, September, and 

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December. The ES contract is cash settled so no delivery of the stocks that make up the 

underlying index takes place. 

19. The ES contract trades 24 hours per day from 5:00 PM Central Time on Sunday 

night to 4:00 PM Central Time on Friday afternoon, except for a 15-minute window each day 

when trading halts. The trading day for the ES contract is commonly regarded as consisting of 

two trading sessions: the daytime session and the overnight session. The daytime session 

corresponds with open-outcry trading at the CME and runs from 8:30 AM to 3:15 PM Central 

Time. The overnight session begins after the 15-minute trading halt and runs from 3:30 PM to 

8:29:59 AM Central Time the next day. The daytime session corresponds with, but does not 

perfectly overlap, the trading day for the stocks that make up the underlying index, which runs 

from 8:30 AM to 3:00 PM Central Time on the NYSE and NASDAQ exchanges. 

20. The value of the ES contract is the S&P 500 stock index multiplied by fifty 

dollars. The price of the ES contract is quoted in index points, and the minimum price change 

allowed during a trading session is one-quarter of an index point (0.25); thus, if a trader wished 

to place an order above the last traded ES contract price of 2648.25 points, that trader would 

have to place the order at 2648.50 points or higher. This minimum price change is commonly 

called a “tick.” 

21. An “order,” in the context of electronic exchange trading, is a request submitted 

to an exchange to buy (that is, “bid”) or sell (that is, “offer” or “ask”) a certain number of a 

specified futures contract. An order is for one or more contracts. Contracts may also be called 

“lots,” among other things. Orders are entered into the exchange’s order book. When there 

exists both a willing buyer and seller for a contract at a given price, a transaction occurs and is 

referred to as a “fill” (or a “trade” or “execution”). At any time before the order is fully filled, 

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the trader can “cancel” the order. When an order is canceled, the contracts that have not yet been 

bought or sold are pulled from the order book. 

22. Each trader can view the aggregate number of contracts and orders that all traders 

are actively bidding or offering at a given price level. Only the total numbers of orders and 

contracts at various price levels are visible, not the identities of the traders who placed the orders. 

The best-bid level, or first-bid level, is the highest price at which someone is willing to buy. The 

best-ask level, or first-ask level, is the lowest price at which someone is willing to sell. The bidask spread is the difference between those two prices. 

23. Traders can view the aggregate resting contracts and orders up to the tenth-bid 

and tenth-ask levels. This combined bid and ask information is often referred to as the visible 

order book and represents the visible market depth. Traders often consider information in the 

order book when making trading decisions. 

24. An “aggressive” order is an order that crosses the bid-ask spread. On the buy side 

of the market, an aggressive buy order is placed at the best-ask price or higher so, put simply, it 

is an offer to buy at a price that another trader is currently willing to sell. On the sell side of the 

market, an aggressive sell order is placed at the best-bid price or lower so, put simply, it is an 

offer to sell at a price that another trader is currently willing to buy. Accordingly, aggressive 

orders are guaranteed to execute, at least partially, immediately after being placed. 

25. A “passive” order, on the other hand, does not give up the spread in price. On the 

buy side of the market, a passive buy order is placed at the best-bid price or lower so, put simply, 

it is an offer to buy at a price that is lower than the price that other traders are currently willing to 

sell. On the sell side of the market, a passive sell order is placed at the best-ask price or higher, 

so, put simply, it is an offer to sell at a price that is higher than the price that other traders are 

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currently willing to buy. Passive orders rest for at least some amount of time after being placed 

and are not guaranteed to execute. 

26. The ES contract is traded electronically on the CME Globex trading system 

(“Globex”). Globex employs a matching algorithm to match bids and offers for execution. The 

matching algorithm for the ES market is known as “FIFO,” which denotes first-in, first-out. 

Under the FIFO method, orders on the same side of the market (i.e., the buy side or sell side) and 

at the same price are filled based on time priority; thus, with a few exceptions not pertinent here, 

the order that was placed first trades first, irrespective of the order’s size. 

iii. Zhao’s Manipulative and Deceptive Scheme 

27. Zhao worked as a trader at Propex for nearly nine years. In that role, he traded 

futures contracts on U.S. and international exchanges. Zhao did not trade on behalf of any party 

other than Propex. He shared any profits generated from his trading with Propex. Zhao’s direct 

supervisor was Propex’s CEO. 

28. From at least July 2012 through at least March 2017 (the “Relevant Period”), and 

while employed by Propex, Zhao engaged in a manipulative and deceptive scheme (the 

“Scheme”) that consisted of the following general pattern: (1) placing one or more passive small 

orders (that is, fewer than fifty contracts) on one side of the market, which he intended to execute 

(“Genuine Orders”); (2) placing one or more passive large orders (that is, fifty contracts or more) 

on the opposite side of the market, within two minutes of placing the Genuine Order and while 

the Genuine Order is still pending, which he intended to cancel (“Spoof Orders”); (3) reaching at 

least a five-to-one total contract size imbalance between his Spoof Orders and Genuine Orders, 

respectively; and (4) canceling the Spoof Orders within two seconds after they were placed. 

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Each instance of this pattern comprises a single “Event.” Collectively, “Genuine Orders” and 

“Spoof Orders” are referred to as “Event Orders.” 

29. Zhao’s Scheme was designed to benefit financially from market participants’ 

reactions to his Spoof Orders. The following is a simplified explanation of how his Scheme was 

intended to work, using a hypothetical example of a Spoof Order on the buy side. A large Spoof 

Order to buy would result in an increase in demand in the order book (i.e., create or add to an 

order book imbalance in which orders to buy outweigh orders to sell). This increase would be 

visible to other market participants and may lead them to conclude that the price is likely to rise. 

This conclusion, in turn, would impact market participants’ decisions, including prompting some 

to attempt to purchase contracts before the predicted rise in price happens. In such a case, these 

participants would place aggressive orders to buy (i.e., at a higher price than the currently resting 

bids in the market), making execution of orders resting on the opposite side of the Spoof Order 

more likely. Finally, these bids would enable orders on the opposite side of the Spoof Order—

including Zhao’s Genuine Orders—to sell sooner, at a better price, or in larger quantities than 

they otherwise would. 

30. Zhao carried out his Scheme on the ES contract market traded on CME. For some 

or all of the Relevant Period, Zhao traded manually, by submitting orders, cancelations, and 

modifications using a computer mouse or keyboard. 

31. During the Relevant Period, as part of the ongoing Scheme, Zhao engaged in 

approximately 2,300 Events. As part of those Events, Zhao entered about 2,300 Genuine Orders 

and 3,100 Spoof Orders, with all of the Spoof Orders, according to the pattern described herein, 

quickly being canceled. 

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32. Zhao intended to cancel the Spoof Orders before execution, and often did so after 

his Genuine Orders were filled. The predictable sequence inherent in Zhao’s spoofing pattern, 

which he engaged in thousands of times, demonstrates that Zhao was not reacting to market 

changes when he canceled the Spoof Orders; rather, he was carrying out a predetermined 

strategy that was not dependent on market conditions. 

33. By engaging in the Scheme as described herein, Zhao entered Spoof Orders either 

to intentionally send a false signal to the market that he actually wanted to buy or sell the number 

of contracts specified in the Spoof Orders, or while recklessly disregarding the fact that entering 

his spoof orders would send such a false signal—a signal that injected false information about 

supply and demand into the market that could affect market activity. Zhao engaged in this 

Scheme to trick other market participants into executing against his Genuine Orders on the 

opposite side of the market—allowing them to fill sooner, at a better price, or in larger quantities 

than they otherwise would. Zhao knew or recklessly disregarded that the Spoof Orders would 

create the false appearance of market depth and result in misinformation, thereby luring market 

participants to trade based on Zhao’s spoofing. The risk that the Spoof Orders could mislead 

other market participants into believing there was genuine interest in purchasing or selling the 

specified number of contracts represented by Zhao’s Spoof Orders was so obvious that Zhao 

must have been aware of it. He knew that his Spoof Orders would appear in the order book and 

that traders often consider order-book information in making trading decisions; thus, Zhao was, 

at least, reckless with respect to the danger that his Spoof Orders would mislead other market 

participants. 

34. Although Zhao’s Spoof Orders were visible to the rest of the market, his identity 

as the originator of those orders was not. Only the total numbers of orders and contracts at 

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various price levels are visible, not the number of traders or identities of the traders who placed 

the orders. Accordingly, Zhao knew that other market participants could not see that the same 

trader had placed both the Spoof Orders and the Genuine Orders, which might have tipped off 

market participants that his Spoof Orders were not bona fide. 

35. Trading overnight was a key component of Zhao’s Scheme and indicative of his 

wrongful intent. Zhao carried out his Scheme more than 99% of the time during overnight 

sessions, when trading volume and volatility were substantially decreased. As a result of the 

reduced volume and volatility depth during overnight sessions, Zhao was able to use smaller 

Spoof Orders (with concomitant lower financial risk) to provoke the market reactions he desired. 

36. The near-perfect correlation between Zhao’s Scheme and his use of overnight 

sessions cannot be explained by his residing in Australia, where the overnight session largely 

occurs during daylight hours. Setting the Scheme aside, Zhao often traded during daytime 

sessions, which overlaps with nighttime in Australia. Indeed, nearly one-third of Zhao’s nonEvent orders (i.e., orders that were not part of the Scheme) were placed during daytime sessions; 

thus, Zhao’s focus on carrying out his Scheme almost exclusively during overnight sessions is 

indicative of his wrongful intent. 

37. Further, Zhao’s trading pattern shows he avoided placing large Spoof Orders 

when they were more likely to execute. Had Zhao actually wanted to trade the quantities in his 

Spoof Orders, he would have placed similar-size orders during daytime sessions, when trading 

volume was higher and the larger quantities were more likely to execute; however, he did not. 

As reflected in the table below, during the Relevant Period, Zhao placed only about 2% of his 

large orders (both Spoof and non-Spoof) during daytime sessions. By contrast, Zhao placed 

about 29% of his small orders during daytime sessions; thus, Zhao avoided placing large orders 

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when they had better chances of executing, but he did not similarly curtail his small orders. This 

further indicates that large order sizes were not an aspect of Zhao’s legitimate trading. Rather, 

they were part of a scheme to mislead market participants by falsely signaling increased supply 

or demand for the purpose of luring market participants to trade based on his spoofing. 

Orders by Time of Day During the Relevant Period 

Event and Non-Event Combined 

(values are approximate) 

Total Number of 

Orders 

% Placed in 

Daytime Sessions 

% Placed in 

Overnight Sessions 

Large orders 

(≥ 50 contracts) 3,790 2% 98% 

Small orders 

(<50 contracts) 62,700 29% 71% 

38. Zhao’s Scheme frequently worked as planned; that is, his Spoof Orders tricked 

other market participants into executing against his Genuine Orders. However, there were times 

that Zhao’s Genuine Orders continued to sit, unfilled, even after he placed and canceled his 

Spoof Orders; thus, not all of the Events resulted in executions of Zhao’s Genuine Orders. Still, 

Zhao’s Genuine Orders seldom terminated in cancelations, again demonstrating the differing 

intent behind his Spoof and Genuine Orders. Even though, by definition, 100% of Spoof Orders 

terminated with at least a partial cancelation, the same was true for only about 22% of the 

Genuine Orders. The difference is that Zhao wanted his Genuine Orders to execute. 

39. Zhao also took steps to protect his Spoof Orders from execution. For example, he 

canceled the Spoof Orders almost immediately after placing them; their median cancelation time 

was 737 milliseconds, as illustrated in the table below. By contrast, on those rarer occasions 

when Zhao canceled his Genuine Orders, the median cancelation time was 106 seconds. This 

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means that Zhao allowed his Genuine Orders to rest prior to cancelation for a much longer period 

than his Spoof Orders. The consistently fast cancelation times for Zhao’s Spoof Orders reflect 

his intent to cancel them from the outset. 

Cancelations of Event Orders 

(values are approximate) 

Median Time to Cancelation 

Spoof Orders 0.737 seconds

Genuine Orders 106 seconds

40. Zhao’s efforts to avoid execution of his Spoof Order were successful. This is 

reflected in vastly diverging rates in which Zhao’s Genuine and Spoof Orders were partially or 

fully filled (the “hit rate”). As reflected in the table below, Zhao placed approximately 2,300 

Genuine Orders during the Relevant Period. Of these, about 79% were hit. By contrast, less 

than 1% of the approximately 3,100 Spoof Orders were hit. Thus, Zhao’s Genuine Orders were 

about 180 times more likely to be hit. As a general matter, whether an order is hit is not 

dependent on its size; rather, orders at the same price level execute according to time priority 

under the FIFO matching algorithm. Here, the stark contrast in hit rates results from differences 

in the orders’ relative competitiveness, over which Zhao had control, and illustrates his success 

in avoiding execution of his Spoof Orders. 

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Orders Hit in Events 

(values are approximate) 

Total Orders in 

Events 

Number of Orders 

Hit 

Percentage of 

Orders Hit 

Genuine 

Orders 2,300 1,800 79% 

Spoof Orders 3,100 10 <1%

41. The use of large orders was a hallmark of Zhao’s Scheme; he rarely placed large 

orders otherwise. He placed about 3,800 large orders during the Relevant Period; 82% of those 

were placed pursuant to the Scheme as Spoof Orders. By contrast, Zhao placed about 62,700 

small orders during the Relevant Period. Only about 4% of these orders fell within the Scheme 

as Genuine Orders. Zhao’s limited use of large order sizes, nearly always as part of the Scheme 

and not as part of a legitimate trading strategy, is indicative of his illegal conduct. He primarily 

used large orders to send false signals of increased supply or demand to market participants. 

iv. Examples of Zhao’s Scheme 

42. Zhao’s Scheme is illustrated in the three Events described below. Detailed trade 

data associated with these Events is provided in Exhibit A to the Complaint, ECF No. 1 Ex. A. 

a. Event Example 1: April 15, 2013 

43. Zhao’s trading in the early morning of April 15, 2013, constitutes an Event 

pursuant to his Scheme. See Ex. A at 1–8 (displaying detailed trade data). At 1:11:16.287 AM 

Central Time (denoted in hours, minutes, seconds, and milliseconds), Zhao placed an order to 

sell one contract (the Genuine Order) at the best-ask level. See id. at 1, row 2. About ten 

seconds later, at 1:11:25.537 AM, Zhao placed an order to buy 151 contracts at the best-bid level 

(the first Spoof Order). See id. at 2, row 33. The first Spoof Order doubled the number of 

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contracts then resting at that level of the order book, but the order was not at risk of executing 

until the 151 contracts resting ahead of it executed or were withdrawn. Zhao’s first Spoof Order 

did not immediately induce execution of his Genuine Order, and he canceled it at 1:11:26.240 

AM (only 703 milliseconds after placing it). See id. at 2, row 47. A short time later, Zhao tried 

again. At 1:11:33.363 AM, he placed an order to buy 171 contracts at the best-bid level (the 

second Spoof Order), more than doubling the number of contracts resting at that level of the 

order book. See id. at 3, row 89. This time, Zhao’s Genuine Order executed at 1:11:33.366 AM, 

immediately after the second Spoof Order was placed. See id. at 4, row 103. He then canceled 

his second Spoof Order at 1:11:34.161 AM, within 798 milliseconds of placing it. See id. at 8, 

row 252. 

b. Event Example 2: March 5, 2014 

44. Zhao’s trading in the final hours of March 5, 2014, shows an Event that did not 

result in execution of the Genuine Order, contrary to Zhao’s plan. See Ex. A at 9–12. At 

2244:12.924 PM Central Time, Zhao placed an order to buy one contract (the Genuine Order) at 

the best-bid level. See id. at 9, row 2. Three seconds later, at 22:44:15.720 PM, Zhao placed an 

order to sell 201 contracts (the Spoof Order) at the best-ask level. See id. at 9, row 15. Zhao’s 

Spoof Order was nearly 2.5 times the size of the combined orders then resting at that price level 

of the order book, but it was not at risk of executing until the 82 contracts resting ahead of it 

executed or were withdrawn. Zhao’s Genuine Order did not immediately execute. Zhao 

canceled his Spoof Order at 22:44:16.394 PM, only 674 milliseconds after placing it. See id. at 

10, row 40. He let his Genuine Order rest longer, but canceled it as well at 22:44:40.533 PM, 

about half a minute after placing it. See id. at 12, row 97. 

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c. Event Example 3: March 21, 2016 

45. A third example occurred on March 21, 2016. See Ex. A at 13–18. At 

7:31:28.726 AM Central Time, Zhao placed an order to sell 11 contracts (the Genuine Order) at 

the best-ask level. See id. at 13, row 2. About five seconds later, at 7:31:33.645 AM, Zhao 

placed an order to buy 82 contracts (the Spoof Order) at the best-bid level. See id. at 13, row 

441. The Spoof Order was over half the size of the combined orders then resting at that price 

level, but it was not at risk of executing until the 153 contracts resting ahead of it executed or 

were withdrawn. Almost immediately, at 7:31:33.980 AM and 7:31:33.981 AM, Zhao’s 

Genuine Order executed through one trade of one and one trade of ten contracts. See id. at 13, 

rows 456 & 458. Zhao then canceled his Spoof Order at 7:31:34.389 AM, just 744 milliseconds 

after placing it. See id. at 18, row 617. 

B. Conclusions of Law 

i. Jurisdiction and Venue 

46. This Court possesses jurisdiction over this action pursuant to 28 U.S.C. § 1331 

(2018) (codifying federal question jurisdiction) and 28 U.S.C. § 1345 (2018) (providing that U.S. 

district courts have original jurisdiction over civil actions commenced by the United States or by 

any agency expressly authorized to sue by Act of Congress). Section 6c(a) of the Act, 7 U.S.C. 

§ 13a-1(a) (2018), provides that the CFTC may bring actions for injunctive relief or to enforce 

compliance with the Act or any rule, regulation, or order thereunder in the proper district court of 

the United States whenever it shall appear to the CFTC that any person has engaged, is 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. 

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47. Venue properly lies with this Court pursuant to 7 U.S.C. § 13a-1(e) (2018), 

because the acts and practices in violation of the Act occurred within this District. 

ii. Spoofing 

48. By the conduct described in paragraphs 1 through 45 above, Defendant engaged 

in trading, practices, or conduct on or subject to the rules of a registered entity that is, is of the 

character of, or is commonly known to the trade as, “spoofing” (bidding or offering with the 

intent to cancel the bid or offer before execution). 

49. In placing each Spoof Order, Defendant acted with the intent to cancel the bid or 

offer before execution in violation of Section 4c(a)(5) of the Act, 7 U.S.C. § 6c(a)(5) (2018). 

50. Unless restrained and enjoined by this Court, there is a reasonable likelihood that 

Defendant will continue to engage in the acts and practices alleged in the Complaint and in 

similar acts and practices in violation of the Act and Regulations. 

iii. Use of a Manipulative and Deceptive Device, Scheme, or Artifice 

51. By the conduct described in paragraphs 1 through 45 above, Defendant, in 

connection with a contract for future delivery on a registered entity, intentionally or recklessly: 

(1) used or employed, or attempted to use or employ, manipulative devices, schemes, or artifices 

to defraud; or (2) engaged, or attempted to engage, in acts, practices, or courses of business, 

which operated or would have operated as a fraud or deceit upon market participants. 

52. Defendant acted intentionally or recklessly. 

53. Through this conduct, Zhao violated Section 6(c)(1) of the Act, 7 U.S.C. § 9(1) 

(2018), and Regulation 180.1(a)(1) and (3), 17 C.F.R. § 180.1(a)(1), (3) (2020). 

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54. Unless restrained and enjoined by this Court, there is a reasonable likelihood that 

Defendant will continue to engage in the acts and practices alleged in the Complaint and in 

similar acts and practices in violation of the Act and Regulations. 

IV. PERMANENT INJUNCTION 

IT IS HEREBY ORDERED THAT: 

55. Based upon and in connection with the foregoing conduct, pursuant to Section 6c 

of the Act, 7 U.S.C. § 13a-1 (2018), Defendant is permanently restrained, enjoined and 

prohibited from directly or indirectly: 

i. engaging in any trading, practice, or conduct on or subject to the rules of a 

registered entity that is, is of the character of, or is commonly known to 

the trade as, “spoofing” (bidding or offering with the intent to cancel the 

bid or offer before execution in violation of Section 4c(a)(5)(C) of the Act, 

7 U.S.C. § 6c(a)(5)(C) (2018); and 

ii. intentionally or recklessly: (1) using or employing, or attempting to use or 

employ, manipulative devices, schemes, or artifices to defraud; or (2) 

engaging or attempting to engage, in acts, practices, or courses of 

business, which operated or would have operated as a fraud or deceit upon 

market participants, in violation of Section 6(c)(1) of the Act, 7 U.S.C. 

§ 9(1) (2018). 

56. Defendant is also restrained, enjoined and prohibited, for a period of five years 

from the date of entry of this order, from directly or indirectly: 

i. Trading on or subject to the rules of any registered entity (as that term is 

defined in Section 1a(40) of the Act, 7 U.S.C. § 1a(40) (2018)); 

ii. Entering into any transactions involving “commodity interests” (as that 

term is defined in Regulation 1.3, 17 C.F.R. § 1.3 (2020), for his own 

personal account or for any account in which he a direct or indirect interest; 

iii. Having any commodity interests traded on his behalf; 

iv. Controlling or directing the trading for or on behalf of any other person or 

entity, whether by power of attorney or otherwise, in any account 

involving commodity interests; 

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18 

v. Soliciting, receiving or accepting any funds from any person for the 

purpose of purchasing or selling any commodity interests; 

vi. 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 4.14(a)(9), 17 C.F.R. § 4.14(a)(9) (2020); 

and/or 

vii. Acting as a principal (as that term is defined in Regulation 3.1(a), 

17 C.F.R. § 3.1(a) (2020)), agent or any other officer or employee of any 

person (as that term is defined in Section 1a(38) of the Act,7 U.S.C. 

§ 1a(38) (2018)), registered, exempted from registration or required to be 

registered with the Commission except as provided for in 17 C.F.R. 

§ 4.14(a)(9). 

V. RESTITUTION AND DISGORGEMENT 

A. Restitution 

57. Defendant’s violations of the Act and Regulations merit the award of restitution. 

This Court recognizes, however, that the Commission in a related action against Propex ordered 

that Propex pay restitution in the amount of four hundred sixty-four thousand, three hundred 

dollars ($464,300) in connection with the same conduct at issue in this action. In re Propex 

Derivatives Pty. Ltd., CFTC No. 20-12, 2020 WL 1157208, *3-4 (Jan. 21, 2020) (ordering that 

the restitution obligation ordered against Propex “will be offset by the amount of any restitution 

payment made pursuant to the” Deferred Prosecution Agreement entered into between Propex 

and the Department of Justice). On February 7, 2020, the Department of Justice notified the 

court, in the related criminal proceeding against Zhao, that Propex “wired the $464,300 victim 

compensation payment.” See Unopposed Mot. to Finalize Restitution at 2, United States v. 

Zhao, No. 18-cr-24 (N.D. Ill. Feb. 7, 2020), ECF No. 75. Accordingly, because any restitution 

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19 

merited in this action has been satisfied in full by Propex’s payment, restitution is not ordered in 

this action. 

B. Disgorgement 

58. Defendant shall pay disgorgement in the amount of twenty-one thousand dollars 

($21,000) (“Disgorgement Obligation”), representing the gains received in connection with such 

violations, within ten days of the date of the entry of this Consent Order. If the Disgorgement 

Obligation is not paid in full within ten days of the date of entry of this Consent Order, then postjudgment interest shall accrue on the Disgorgement Obligation beginning on the date of entry of 

this Consent Order and shall be determined by using the Treasury Bill rate prevailing on the date 

of entry of this Consent Order pursuant to 28 U.S.C. § 1961 (2018). 

59. Defendant shall pay his Disgorgement Obligation and any post-judgment interest 

by electronic funds transfer, U.S. postal money order, certified check, bank cashier’s check, or 

bank money order. If payment is to be made other than by electronic funds transfer, then the 

payment shall be made payable to the Commodity Futures Trading Commission and sent to the 

address below: 

MMAC/ESC/AMK326 

Commodity Futures Trading Commission 

Division of Enforcement 

6500 S. MacArthur Blvd. 

HQ Room 181 

Oklahoma City, OK 73169 

(405) 954-6569 office 

(405) 954-1620 fax 

9-AMC-AR-CFTC@faa.gov 

 

If payment by electronic funds transfer is chosen, Defendant shall contact Marie Thorne or her 

successor at the address above to receive payment instructions and shall fully comply with those 

instructions. Defendant shall accompany payment of the Disgorgement Obligation with a cover 

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20 

letter that identifies Defendant and the name and docket number of this proceeding. Defendant 

shall simultaneously transmit copies of the cover letter and the form of payment to the Chief 

Financial Officer, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st 

Street, NW, Washington, D.C. 20581. Defendant shall also transmit a copy of the cover letter 

and the form of payment to Charles Marvine, Deputy Director, Commodity Futures Trading 

Commission, 4900 Main Street, Suite 500, Kansas City, MO 64112.

C. Provision Related to Monetary Payments 

60. Partial Satisfaction: Acceptance by the CFTC of any partial payment of 

Defendant’s Disgorgement Obligation shall not be deemed a waiver of his obligation to make 

further payments pursuant to this Consent Order, or a waiver of the Commission/CFTC’s right to 

seek to compel payment of any remaining balance. 

D. Miscellaneous Provisions 

61. Notice: All notices required to be given by any provision in this Consent Order 

shall be sent certified mail, return receipt requested, as follows:

Notice to Commission: 

Charles Marvine 

2600 Grand Boulevard, Suite 210 

Kansas City, MO 64108

Notice to Defendant: 

 Jiongsheng Zhao 

 C/O Theodore T. Poulos 

 Cotsirilos, Tighe, Streicker, Poulos & Campbell, Ltd. 

 33 N. Dearborn, Suite 600 

 Chicago, IL 60602 

 

All such notices to the Commission shall reference the name and docket number of this action.

62. Change of Address/Phone: Until such time as Defendant satisfies in full his 

Disgorgement Obligation as set forth in this Consent Order, Defendant shall provide written 

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21 

notice to the Commission by certified mail of any change to his telephone number and mailing 

address within ten calendar days of the change. 

63. Entire Agreement and Amendments: This Consent Order incorporates all of 

the terms and conditions of the settlement among the parties hereto to date. Nothing shall serve 

to amend or modify this Consent Order in any respect whatsoever, unless: (a) reduced to 

writing; (b) signed by all parties hereto; and (c) approved by order of this Court. 

64. Invalidation: If any provision of this Consent Order or if the application of any 

provision or circumstance is held invalid, then the remainder of this Consent Order and the 

application of the provision to any other person or circumstance shall not be affected by the 

holding. 

65. Waiver: The failure of any party to this Consent Order at any time to require 

performance of any provision of this Consent Order shall in no manner affect the right of the 

party at a later time to enforce the same or any other provision of this Consent Order. No waiver 

in one or more instances of the breach of any provision contained in this Consent Order shall be 

deemed to be or construed as a further or continuing waiver of such breach or waiver of the 

breach of any other provision of this Consent Order. 

66. Continuing Jurisdiction of this Court: This Court shall retain jurisdiction of 

this action to ensure compliance with this Consent Order and for all other purposes related to this 

action, including any motion by Defendant to modify or for relief from the terms of this Consent 

Order. 

67. Injunctive and Equitable Relief Provisions: The injunctive and equitable relief 

provisions of this Consent Order shall be binding upon Defendant, upon any person under his 

authority or control, and upon any person who receives actual notice of this Consent Order, by 

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22 

personal service, e-mail, facsimile or otherwise insofar as he or she is acting in active concert or 

participation with Defendant. 

68. Counterparts and Facsimile Execution: This Consent Order may be executed

in two or more counterparts, all of which shall be considered one and the same agreement and 

shall become effective when one or more counterparts have been signed by each of the parties 

hereto and delivered (by facsimile, e-mail, or otherwise) to the other party, it being understood 

that all parties need not sign the same counterpart. Any counterpart or other signature to this 

Consent Order that is delivered by any means shall be deemed for all purposes as constituting 

good and valid execution and delivery by such party of this Consent Order. 

69. Contempt: Defendant understands that the terms of the Consent Order are

enforceable through contempt proceedings, and that, in any such proceedings he may not 

challenge the validity of this Consent Order. 

70. Agreements and Undertakings: Defendant shall comply with all of the

undertakings and agreements set forth in this Consent Order. 

There being no just reason for delay, the Clerk of the Court is hereby ordered to enter this 

Consent Order for Permanent Injunction and Other Equitable Relief Against Defendant 

Jiongsheng Zhao forthwith and without further notice. 

IT IS SO ORDERED on this 4th day of June, 2021. 

_________________________________ 

Honorable John F. Kness 

UNITED STATES DISTRICT JUDGE 

Case: 1:18-cv-00620 Document #: 56 Filed: 06/04/21 Page 22 of 45 PageID #:201
/s/ Theodore T. Poulos

4/19/2021

-XQH

NICHOLAS 

SLOEY

Digitally signed by 

NICHOLAS SLOEY 

Date: 2021.06.02 

11:18:34 -05'00'

(> Case: 1:18-cv-00620 Document #: 56 Filed: 06/04/21 Page 23 of 45 PageID #:202

CONSENTED TO AND APPROVED BY: 

~ !f)L 

Approved as to f01m: 

Theodore T. Poulos 

Emily C.R. Vermylen 

Cotsirilos, Tighe, Streicker, Poulos & 

Campbell, Ltd. 

33 N. Dearborn, Suite 600 

Chicago, IL 60602 

(312) 263-0345 

tpoulos@cotsiriloslaw.com 

evermylen@cotsiriloslaw.com 

Attorneys for Defendant 

Dated ----------

,. 

23 

Nicholas Sloey 

Senior Trial Attorney 

Commodity Futures Trading Commission 

2600 Grand Boulevard, Su,!te 210 

Kansas City, MO 64108 

(816) 960-7728 

(816) 960-7750 (facsimile) 

nsloey@cftc.gov 

Attorney for I'Jaint{ff 

Date: ______ _ 
Exhibit A 

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UNITED STATES DISTRJCT COURT 

NORTHERN DISTRJCT OF ILLINOIS 

EASTERN DIVISION 

UNITED STATES OF AMERICA 

CASE NUMBER: 18 CR 24 

v. 

JIONGSHENG ("JIM") ZHAO 

PLEA AGREEMENT 

1. This Plea Agreement between the Fraud Section, Criminal Division, United States 

Depa1tment of Justice (the "government") and defendant JIONGSHENG ("JIM") ZHAO, and his 

attorney, Theodore T. Poulos, of Cotsirilos, Tighe, Streicker, Poulos & Campbell, Ltd., is made pursuant 

to Rule 11 of the Federal Rules of Criminal Procedure. The parties to this Plea Agreement have agreed 

upon the following: 

Charges iu Ibis Case 

2. The Information in this case charges the defendant with one count of spoofing, in 

violation of Title 7, United States Code, Sections 6c(a)(5)(C) and 13(a)(2). 

3. The defendant has read the charges against him contained in the Information, and those 

charges have been fully explained to him by his attorney. 

4. The defendant fully understands the nature and elements of the crimes with which he 

has been charged. 

Charge to Whjch Pefendant Is PJeadjng GyjJty 

5. By this Plea Agreement, the defendant agrees to enter a voluntary plea of guilty to 

Count One of the Information, which charges the defendant with one count of spoofing, in violation of 

Title 7, United States Code, Sections 6c(a)(5)(C) and 13(a)(2). 

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Factual Basis 

6. The defendant will plead guilty because he is in fact guilty of the charges contained in 

Count One of the Information. In pleading guilty, the defendant admits the facts alleged in Count One 

of the Information as well as the facts set forth in Paragraph 7 of this Plea Agreement (collectively, the 

"Facts"). The defendant further admits that the Facts establish his guilt beyond a reasonable doubt. 

7. At all relevant times, ZHAO was employed as a trader at Trading Firm A that was 

headqua1tered in Sydney, Australia. ZHAO resided and worked in Australia. When trading, ZHAO 

placed orders manually, meaning he physically clicked his computer mouse or hit keyboard keys to 

place each order, and physically clicked his mouse or hit keyboard keys to cancel an order. Among 

other things, ZHAO traded E-mini S&P 500 futures contracts on the Chicago Mercantile Exchange 

("CME"), which is a commodities exchange operated by the CME Group Inc., a commodities 

marketplace located in Chicago, Illinois, with its servers located in the Northern District of Illinois. At 

all relevant times, the CME was a registered entity, operating as a Designated Contract Market, and 

subject to regulation by the U.S. Commodity Futures Trading Commission. Market pa1ticipants trading 

on the CME were subject to its rules. 

Spoof Orders 

From approximately July 2012 and continuing through approximately March 2016 (the 

"Relevant Period"), ZHAO placed thousands of orders on the CME for E-mini S&P 500 futures 

contracts that, at the time ZHAO placed the orders, he intended to cancel before execution (the "Spoof 

Orders"). Typically, ZHAO engaged in this trading strategy when ZHAO already had an order for 

E-mini S&P 500 futures contracts pending in the market that ZHAO did want to execute, but was not 

being filled (the "Primary Order"). ZHAO would place the Spoof Orders on the opposite side of the 

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market from the Primary Order with the goal to induce other market participants to trade against 

ZHAO's Primary Order. At times, ZHAO's Spoof Orders did, in fact, cause other market pa11icipants 

to react and to trade at prices, quantities, and times that they likely otherwise would not have traded, 

but for ZHAO's Spoof Orders, and which resulted in ZHAO's Primary Order being filled. Frequently, 

once ZHAO's Spoof Orders served their purpose and his Prima1y Order was filled, ZHAO quickly 

cancelled the Spoof Orders. ZHAO' s trading strategy was intended to, and did, transmit materially false 

and misleading liquidity and price information and otherwise deceive other market participants about 

the existence of supply and demand for E-mini S&P 500 futures contracts. The Spoof Orders were 

designed to, and did, artificially move the price of E-mini S&P 5 00 futures contracts in a direction that 

was favorable to ZHAO, and to the detriment of other market participants. 

ZHAO placed the Spoof Orders in order to generate profits (or mitigate losses) for 

himself and Trading Firm A. ZHAO personally benefited from using Spoof Orders in numerous ways, 

including by way of continued employment and compensation from Trading Firm A, which 

compensation was based in pat1 on his trading profits. As pai1 of ZHAO's employment contract with 

Trading Firm A, during the Relevant Period, Trading Firm A kept a percentage of ZHAO's trading 

profits, ranging at various times from 20% to 50%. During the Relevant Period, when placing the Spoof 

Orders, ZHAO (i) was an employee of Trading Firm A, (ii) acted with the intent, at least in part, to 

benefit Trading Firm A, and (iii) acted within the scope of his authority and employment at Trading 

Firm A. ZHAO agrees that the United States has calculated that Spoof Orders ZHAO himself placed 

generated trading gains to himself and Trading Firm A of approximately $21,000 and caused market 

losses of approximately $464,000. ZHAO acted knowingly and willfully in submitting Spoof Orders. 

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The Spoof Orders constituted foreign and interstate wire communications because 

ZHAO electronically placed, and caused to be placed, the orders onto the CME from computers at his 

home or Trading Firm A's offices in Sydney, Australia. 

The Spoof Orders included, but were not limited to : 

Approx. Approx. 

Approx. Time Approx. Number of Approx. Total Period of 

Approx. Date (Central Time) Side Price Contracts Value of Time Spoof 

in Spoof Spoof Order Order Was 

Order Active 

June 30, 2013 09:37:18.600 PM Sell $1,595.50 151 $12,046,025.00 0.814 secs 

July 12, 2013 02:09:53.733 AM Buy $1,667.25 151 $12,587,737.50 0.719 secs 

July 12, 2013 02:10:06.251 AM Sell $1 ,667.50 151 $12,589,625.00 0.826 secs 

July 29, 2013 08:33 :59.830 PM Buy $1,685.25 201 $16,936,762.50 0.671 secs 

July 29, 2013 08:34:29.003 PM Sell $1,685.50 201 $16,939,275.00 0.689 secs 

August 26, 2013 09 :54:50.629 PM Sell $1,652.00 201 $16,602,600.00 0.752 secs 

August 26, 2013 09: 54:57.019 PM Sell $1,652.00 201 $16,602,600.00 0.799 secs 

August 27, 2013 11 :39:37.772 PM Buy $1 ,629.00 201 $16,371,450.00 0.687 secs 

August 27, 2013 11 :39:57.927 PM Sell $1,629.25 201 $16,373,962.50 0.705 secs 

March 12, 2014 10:52:22.441 PM Buy $1,873.25 201 $18,826,162.50 0.591 secs 

March 24, 2014 12:10:09.804 AM Buy $1,857.00 201 $18,662,850.00 0.579 secs 

March 24, 2014 12:11:01.303AM Sell $1,857.25 201 $18,665,362.50 0.623 secs 

March 26, 2014 11:55:53.892 PM Buy $1 ,845.25 201 $18,544,762.50 0.640 secs 

December 7, 2015 03:15:57.994 AM Sell $2,094.25 101 $10,575,962.50 0.663 secs 

December 7, 2015 03:16:03.202 AM Sell $2,094.25 151 $15,811,587.50 0.675 secs 

December 22, 2015 03:45:43.179 AM Buy $2,008.00 152 $15,250,800.00 0.880 secs 

December 22, 2015 06:45 :46.640 AM Buy $2,008.25 152 $15,262,700.00 0.705 secs 

January 15, 2016 06:08:59.223 AM Sell $1,885.00 152 $14,326,000.00 0.727 secs 

January 26, 2016 01 :08:59.811 AM Sell $1,862.75 152 $14,156,900.00 0.688 secs 

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Approx. Approx. 

Approx. Time Approx. Number of Approx. Total Period of 

Approx. Date Side Contracts Value of Time Spoof (Central Time) Price in Spoof Spoof Order Order Was 

Order Active 

February 10, 2016 05:29:54.776 AM Sell $1,867.75 151 $14,101,512.50 0.720 secs 

March 2, 2016 04:30:49.701 AM Buy $1,973.25 162 $15,983,325.00 0.671 secs 

March 7, 2016 03:45:10.792 AM Sell $2,026.75 152 $15,403,300.00 0.778 secs 

The CME Investigation 

In approximately March 2016, the CME began an investigation into ZHAO's trading 

activity in connection with the E-mini S&P 500 futures contracts. As part of that investigation, ZHAO 

submitted to an interview with the CME, and provided written responses, to explain his trading activity. 

ZHAO knew that he was obligated to be truthful in his interview with, and written response to, the 

CME, and knew the CME was acting in fu1iherance of its official duties under Title 7, United States 

Code, Chapter l during its investigation. ZHAO responded to the CME (i) as an employee of Trading 

Firm A, (ii) acting with the intent, at least in pa1t, to benefit Trading Firm A, and (iii) acting within the 

scope of his authority and employment at Trading Firm A. 

As pa1t of its investigation, the CME identified three specific examples of ZHAO's 

trading activity that occurred on December 7 and 22, 2015, and March 7, 2016. In a written response 

submitted to the CME, ZHAO stated that all of the orders identified in the three examples were pati of 

either a "scalping" or spread trading strategy and were placed with the intention to execute. In truth 

and in fact, however, when providing this response to the CME, ZHAO well knew that, for certain large 

orders identified in each example, he had placed these large orders with the intent, at the time they were 

placed, to cancel them before execution. That is, these large orders were Spoof Orders. ZHAO's 

statement that he placed these large orders with the intention that they be filled was false and misleading, 

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and it was material to the CME's investigation into ZHAO's trading activity. ZHAO made this false 

statement knowingly and willfully, in order to falsify, conceal, and cover up his spoofing conduct. 

ZHAO retained counsel to represent him in connection with the CME investigation, and ZHAO 

knowingly used his counsel as a conduit to convey this same false and misleading information to the 

CME. 

8. The foregoing Facts are set forth solely to assist the Cou1t in determining whether a 

factual basis exists for the defendant's plea of guilty, and are not intended to be a complete or 

comprehensive statement of all the facts within the defendant's personal knowledge regarding the 

charged crime and related conduct. 

Maximum Statutory Penalties 

9. The defendant understands that the charge to which he is pleading guilty carries the 

following statutory penalty: 

a. A maximum sentence of ten years' imprisonment. The statutory maximum 

period of imprisonment for Count One (spoofing) is ten years. The defendant further understands 

that the Court also may impose a term of supervised release of not more than three years for this 

offense. 

b. A criminal fine of $1,000,000, or twice the gross gain or gross loss resulting 

from the offense, whichever is greater. 

c. The defendant further understands that, pursuant to Title 18, United States 

Code, Section 3663A, the Court must order restitution for persons directly and proximately harmed 

as a result of the defendant's violation of Count One (spoofing), in an amount determined by the 

Court. 

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d. In accord with Title 18, United States Code, Section 3013, the defendant must 

pay a mandatory special assessment of $100 ($100 on each count to which he has pleaded guilty), in 

addition to any other penalty, forfeiture, or restitution imposed. 

Sentencing Guidelines Calculations 

10. The defendant understands that in imposing sentence the Court will be guided by the 

United States Sentencing Guidelines. The defendant understands that the Sentencing Guidelines are 

advisory, not mandatory, but that the Court must calculate the applicable Sentencing Guidelines range, 

and to consider that range, possible departures under the Sentencing Guidelines, and other sentencing 

factors under 18 U.S.C. § 3553(a), which include: (i) the nature and circumstances of the offense and 

the history and characteristics of the defendant; (ii) the need for the sentence imposed to reflect the 

seriousness of the offense, promote respect for the law, and provide just punishment for the offense, 

afford adequate deterrence to criminal conduct, protect the public from further crimes of the defendant, 

and provide the defendant with needed educational or vocational training, medical care, or other 

correctional treatment in the most effective manner; (iii) the kinds of sentences available; (iv) the need 

to avoid unwarranted sentence disparities among defendants with similar records who have been found 

guilty of similar conduct; and (v) the need to provide restitution to any victim of the offense. 

11. For purposes of calculating the Sentencing Guidelines, the parties agree on the 

following points: 

a. Applicable Guidelines. The Sentencing Guidelines to be considered in this case 

are those in effect at the time of sentencing. The following statements regarding the calculation of the 

Sentencing Guidelines are based on the Guidelines Manual currently in effect, namely the November 1, 

2018 Guidelines Manual. 

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b. Offense Level Calculations. 

1. For Count One, the base offense level is 6, pursuant to Guideline 

§ 2Bl.l(a)(2). 

11. The parties agree that, pursuant to Guide[ ine § 2B 1.1 (b )(1 ), a loss 

assessment is appropriate. 

iii. Pursuant to Guideline§ 2Bl.l(b)(2)(A)(i), defendant's offense level is 

increased by 2 levels because the offense involved 10 or more victims. 

iv. Pursuant to Guideline §§ 2BLl(b)(10), defendant's offense level is 

increased by 2 levels because the offense involved sophisticated means. 

v. Defendant has clearly demonstrated a recognition and affirmative 

acceptance of personal responsibility for his criminal conduct. If the government does not receive 

additional evidence in conflict with this provision, and if defendant continues to accept responsibility 

for his actions within the meaning of Guideline§ 3El.l(a), including by furnishing the Fraud Section 

and the Probation Office with all requested financial information relevant to his ability to satisfy any 

fine, forfeiture, or restitution that may be imposed in this case, a two-level reduction in the offense 

level is appropriate. 

vi. In accord with Guideline § 3El.l (b ), defendant has timely notified the 

government of his intention to enter a plea of guilty, thereby permitting the government to avoid 

preparing for trial and permitting the Court to allocate its resources efficiently. Therefore, as provided 

by Guideline § 3E 1.1 (b ), if the Court determines the offense level to be 16 or greater prior to 

determining that defendant is entitled to a two- level reduction for acceptance of responsibility, the 

government will move for an additional one-level reduction in the offense level. 

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c. Criminal History Category. With regard to determining the defendant's 

criminal history points and criminal history category, based on the facts now known to the government, 

defendant's criminal history points equal zero and the defendant's criminal history category is I. 

d. Joint Sentencing Recommendation. The government and the defendant agree 

to jointly recommend that the defendant be sentenced to a period of one year and one day (12 months 

plus one day) imprisonment, with credit for time already served in United States and Australian facilities. 

e. Defendant and his attorney and the government acknowledge that the above 

guidelines calculations are preliminary in nature, and are non-binding predictions upon which neither 

party is entitled to rely. Defendant understands that further review of the facts or applicable legal 

principles may lead the government to conclude that different or additional guidelines provisions apply 

in this case. Defendant understands that the Probation Office will conduct its own investigation and that 

the Court ultimately determines the facts and law relevant to sentencing, and that the Comt's 

determinations govern the final guideline calculation. Accordingly, the validity of this Plea Agreement 

is not contingent upon the probation officer's or the Comt's concurrence with the above calculations, and 

defendant shall not have a right to withdraw his plea on the basis of the Court's rejection of these 

calculations. 

f. Both parties expressly acknowledge that this Plea Agreement is not governed by 

Fed. R. Crim. P. 1 l(c)(l)(B), and that errors in applying or interpreting any of the Sentencing Guidelines 

may be corrected by either pru.ty prior to sentencing. The pru.ties may c01Tect these errors either by 

stipulation or by a statement to the Probation Office or the Court, setting forth the disagreement regarding 

the applicable provisions of the guidelines. The validity of this Plea Agreement will not be affected by 

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such corrections, and the defendant shall not have a right to withdraw his plea, nor the government the 

right to vacate this Plea Agreement, on the basis of such corrections. 

Cooperation 

12. The defendant agrees he will fully and truthfully cooperate in any matter in which he is 

called upon to cooperate by a representative of the Fraud Section. This cooperation shall include making 

himself physically available in Washington, D.C. or the Northern District of Illinois for, and providing 

complete and truthful information during, any investigation and pre-trial preparation and complete and 

truthful testimony in any criminal, civil, or administrative proceeding. The defendant agrees to the 

postponement of his sentencing until after the conclusion of his cooperation. The defendant fmther 

agrees to make himself available by telephone within seven (7) calendar days of any request by the 

Fraud Section. 

Agreements Relating to Sentencing 

13. The parties agree that, on January 29, 2018, the defendant was arrested by the Australian 

Federal Police and remanded into custody pending extradition to the United States. Pursuant to 18 

U.S.C. § 3585(b), the defendant shall be given credit for the time that the defendant has spent in custody 

toward the service of any term of imprisonment imposed for the offense that the defendant is pleading 

guilty to in Count One of the Information. The parties agree that upon entry of a guilty plea in open 

comt, the patties will jointly move the Court to order the Bureau of Prisons prior to sentencing to 

calculate the duration of time that the defendant has already served in custody. 

14. At the time of sentencing, the government shall make known to the sentencing judge 

the extent of the defendant's cooperation. If the government determines, in its sole discretion, that the 

defendant has provided full and truthful cooperation as required by this Plea Agreement, and has 

rendered substantial assistance, then the government shall move the Court, pursuant to Guideline 

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§ SKI.I, to depart downward from the low end of the applicable guideline range. The defendant 

understands that the decision to depart from the applicable guideline range rests solely with the Court. 

15. If the government does not move the Court, pursuant to -Guideline § 5Kl.1, to depatt 

from the applicable Guideline range, as set forth above, the preceding paragraph of this Plea Agreement 

will be inoperative, both patties shall be bound to request a sentence as set forth in Paragraph 13, and 

the Court shall impose a sentence taking into consideration the factors set forth in 18 U.S.C. § 3553(a) 

as well as the Sentencing Guidelines without any downward departure for cooperation pursuant to 

§ 5Kl .1. The defendant may not withdraw his plea of guilty because the government has failed to make 

a motion pursuant to Guideline § SKI .1. 

16. It is understood by the parties that the sentencing judge is neither a party to nor bound 

by this Plea Agreement and may impose a sentence up to the maximum penalties as set forth above. 

The defendant further acknowledges that if the Court does not accept the sentencing recommendation 

of the parties, the defendant will have no right to withdraw his guilty plea. 

1 7. The defendant agrees to pay the special assessment of $100 at the time of sentencing 

with a cashier's check or money order payable to the Clerk of the U.S. District Court. 

18. If the Comt should order restitution, the defendant agrees to the entry of a Restitution 

Order for the full amount of the victims' losses as determined by the Court. Pursuant to 18 U.S.C. 

§ 3663A(c)(2), the defendant agrees that an offense listed in 18 U.S.C. § 3663A(c)(l) gave rise to this 

Plea Agreement and as such, victims of the conduct described in the Information, Factual Basis, or any 

related or similar conduct shall be entitled to restitution. The parties further acknowledge, however, 

that pursuant to 18 U.S.C. § 3663A(c)(3), and based on information currently available to the 

government: (i) determining complex issues of fact relating to the amount of the victims' losses would 

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complicate or prolong the sentencing process to a degree that the need to provide restitution to any 

victim may be outweighed by the burden on the sentencing process; and (ii) the number of identifiable 

victims may be so large as to make restitution impracticable. To that end, the defendant agrees, pursuant 

to 18 U.S.C. § 3664(d)(5), that the court may defer the imposition of restitution, if any, until after the 

sentencing; however, defendant specifically waives the 90-day provision found at 18 U.S.C. 

§ 3664(d)(5). The defendant also consents to the government filing a motion with the Court seeking 

authorization to use alternative victim notification procedures pursuant to 18 U.S.C. § 3771(d)(2). 

Defendant further acknowledges that, pursuant to 18 U.S.C. § 3664(k), he is required to notify the Court 

and the Fraud Section of any material change in economic circumstances that might affect his ability to 

pay restitution. 

19. The defendant agrees to disgorge proceeds he earned from the criminal conduct which 

is the subject of this Plea Agreement. The government has calculated such proceeds to be approximately 

$21 ,000, and the defendant reserves the right to present evidence that reduces the appropriate amount 

of disgorgement. Any such evidence must be provided to the government no later than forty-five (45) 

days prior to sentencing. The defendant shall not be required t~ disgorge the proceeds of identical 

conduct for which he is ordered to disgorge proceeds in a parallel civil or regulatory proceeding before 

the U.S. Commodity Futures Trading Commission. 

Acknowledgments and Waivers Regarding Plea of Guilty 

Nature of Agreement 

20. This Plea Agreement is entirely voluntary and represents the entire agreement between 

the Fraud Section and the defendant regarding defendant's criminal liability in case 18 CR 24. 

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21. Except as set forth in this Plea Agreement, the Fraud Section agrees that it will not 

initiate further criminal charges against the defendant based on conduct set forth in the criminal 

information and this agreement. 

22. This Plea Agreement concerns criminal liability only. Except as expressly set forth in 

this Plea Agreement, nothing herein shall constitute a limitation, waiver, or release by the United States 

or any of its agencies of any administrative or judicial civil claim, demand, or cause of action it may 

have against the defendant or any other person or entity. The obligations of this Plea Agreement are 

limited to the Fraud Section and cannot bind any other federal, state, or local prosecuting, 

administrative, or regulatory authorities, except as expressly set forth in this Plea Agreement. 

Waiver of Rights 

23. The defendant understands that by pleading guilty he surrenders certain rights, 

including the following: 

a. Trial rights. The defendant has the right to persist in a plea of not guilty to 

the charges against him, and if he does, he would have the right to a public and speedy trial. 

i. The trial could be either a jury trial or a trial by the judge sitting without 

a jury. However, in order that the trial be conducted by the judge sitting without jury, the defendant, 

the government, and the judge all must agree that the trial be conducted by the judge without a jury. 

ii. If the trial is a jury trial, the jury would be composed of twelve citizens 

from the district, selected at random. The defendant and his attorney would participate in choosing 

the jury by requesting that the Court remove prospective jurors for cause where actual bias or other 

disqualification is shown, or by removing prospective jurors without cause by exercising peremptory 

challenges. 

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111. If the trial is a jury trial, the jury would be instructed that the defendant 

is presumed innocent, that the government has the burden of proving the defendant guilty beyond a 

reasonable doubt, and that the jury could not convict him unless, after hearing all the evidence, it was 

persuaded of his guilt beyond a reasonable doubt. The jury would have to agree unanimously before 

it could return a verdict of guilty or not guilty. 

1v. If the trial is held by the judge without a jury, the judge would find the 

facts and determine, after hearing all the evidence, whether or not the judge was persuaded that the 

government had established the defendant's guilt beyond a reasonable doubt. 

v. At a trial, whether by a jury or a judge, the government would be 

required to present its witnesses and other evidence against the defendant. The defendant would be 

able to confront those government witnesses and his attorney would be able to cross-examine them. 

v1. At a trial, the defendant could present witnesses and other evidence on 

his own behalf. If the witnesses for the defendant would not appear voluntarily, he could require 

their attendance through the subpoena power of the Court. A defendant is not required to present any 

evidence. 

vu. At a trial, the defendant would have a privilege against selfincrimination so that he could decline to testify, and no inference of guilt could be drawn from his 

refusal to testify. If the defendant desired to do so, he could testify on his own behalf. 

24. Waiver of appellate and collateral rights. The defendant further understands he is 

waiving all appellate issues that might have been available if he had exercised his right to trial. The 

defendant is aware that Title 28, United States Code; Section 1291, and Title 18, United States Code, 

Section 3742, afford a defendant the right to appeal his conviction and the sentence imposed. 

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Acknowledging this, the defendant knowingly waives the right to appeal his conviction, pre-trial rulings 

by the Court, and his right to challenge his sentence, and the manner in which the sentence was 

determined, including any term of imprisonment and fine within the maximums provided by law, and 

including any order of restitution and forfeiture, and (in any case in which the term of imprisonment 

and fine are within the maximums provided by statute) his attorney's alleged failure or refusal to file a 

notice of appeal, in any collateral attack or future challenge, including but not limited to a motion 

brought under Title 28, United States Code, Section 2255, in exchange for the conc~ssions made by the 

government in this Agreement. This includes a waiver of right to challenge the constitutionality, 

whether facially or as applied, of statutes to which the defendant is pleading guilty. The waiver in this 

paragraph does not apply to a claim of involuntariness, or ineffective assistance of counsel, which relates 

directly to this agreement or to its negotiation, nor does it prohibit the defendant from seeking a 

reduction of sentence based directly on a change in the law that is applicable to the defendant and that, 

prior to the filing of defendant's request for relief, has been expressly made retroactive by an Act of 

Congress, the Supreme Court, or the United States Sentencing Commission. 

25. The defendant hereby waives any and all objections, motions, and defenses based upon 

the Statute of Limitations or venue in the Northern District of Illinois. 

26. The defendant understands that by pleading guilty he is waiving all the rights set fotth 

in the prior paragraphs. The defendant's attorney has explained those rights to him, and the 

consequences of his waiver of those rights. 

Presentence Investigation Report/Post-Sentence Supervision 

27. The defendant understands that the Fraud Section, in its submission to the Probation 

Office as patt of the Pre-Sentence Repo1t and at sentencing, shall fully apprise the District Court and 

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the Probation Office of the nature, scope, and extent of the defendant's conduct regarding the charge 

against him, and related matters. The government will make known all matters in aggravation and 

mitigation relevant to sentencing, including the nature and extent of the defendant's cooperation. 

28. The defendant agrees to truthfully and completely execute a Financial Statement (with 

supporting documentation) prior to sentencing, to be provided to and shared among the Court, the 

Probation Office, and the Fraud Section, regarding all details of his financial circumstances, including 

his recent income tax returns as specified by the probation officer. The defendant understands that 

providing false or incomplete information, or refusing to provide this information, may be used as a 

basis for denial of a reduction for acceptance of responsibility pursuant to Guideline § 3El. l and 

enhancement of his sentence for obstruction of justice under Guideline§ 3Cl.1, and may be prosecuted 

as a violation of Title 18, United States Code, Section 1001 or as a contempt of the Court. 

29. For the purpose of monitoring the defendant's compliance with his obligations to pay 

a fine and restitution during any term of supervised release or probation to which the defendant is 

sentenced, the defendant futther consents to the disclosure of his tax returns (together with extensions, 

correspondence, and other tax information) and related tax filings and materials to the Probation Office 

and the Fraud Section filed subsequent to the defendant's sentencing, to and including the final year of 

any period of supervised release or probation to which the defendant is sentenced. 

Other Terms 

30. The defendant agrees to cooperate with the Fraud Section in collecting any unpaid fine 

and restitution for which the defendant is liable, including, upon request, providing financial statements 

under oath or affirmation and supporting records and submitting to interviews by the United States and 

the U.S. Probation Office regarding the defendant's capacity to satisfy any fines or restitution. 

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31. The defendant understands that any person convicted of a felony under Title 7, United 

States Code, Section 13 shall be suspended from registration under that chapter and shall be denied 

registration or re-registration for five years or such longer period as the CFTC may determine, and 

barred from using, or participating in any manner in, any market regulated by the CFTC for five years 

or such longer period as the CFTC shall determine, on such terms and conditions as the CFTC may 

prescribe, unless the CFTC determines otherwise. The defendant understands that nothing in this 

agreement alters the CFTC's statutory authority or discretion to effect any such suspension, denial, or 

bar against him, or otherwise binds the CFTC in any way. The defendant nevertheless affirms that 

defendant wants to plead guilty regardless of any collateral consequences that the defendant's plea may 

entail under Title 7, United States Code, Section 13, or other applicable laws relating to the CFTC's 

authority over the defendant. 

32. The defendant understands that, when convicted, a defendant who is not a United States 

citizen may be removed from the United States, denied citizenship, and denied admission to the United 

States in the future. Under federal law, a broad range of crimes are removable offenses, including the 

offense to which the defendant is pleading guilty. Because removal and other immigration 

consequences are the subjects of a separate proceeding, the defendant understands that no one, including 

the defendant's attorney or the Court, can predict to a certainty the effect of the defendant's conviction 

on the defendant's immigration status. The defendant nevertheless affirms that defendant wants to plead 

guilty regardless of any immigration consequences that the defendant's plea may entail, even if the 

consequence is the defendant's automatic removal from the United States. The parties agree that the 

United States will not oppose a request by the defendant to obtain his passport, leave the United States, 

and return to Australia, provided that, until the defendant is sentenced, any travel outside the United 

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States and Australia shall require the consent of the government. The United States also will not oppose 

a request by the defendant that he be permitted to serve in Australia any period of probation or 

supervised release that the Court imposes as part of the sentence in this case. 

Conclusion 

33. The defendant understands that this Plea Agreement will be filed with the Court, will 

become a matter of public record, and may be disclosed to any person. 

34. The defendant understands that his compliance with each part of this Plea Agreement 

extends throughout the period of his sentence, and failure to abide by any term of the Plea Agreement 

is a violation of the Plea Agreement. The defendant further understands that in the event he violates 

this Plea Agreement, the government, at its option, may move to vacate the Plea Agreement, rendering 

it null and void, and thereafter prosecute defendant not subject to any of the limits set forth in this Plea 

Agreement, or may move to resentence the defendant or require defendant's specific performance of 

this Plea Agreement. The defendant understands and agrees that in the event that the Court permits the 

defendant to withdraw from this Plea Agreement, or the defendant breaches any of its terms and the 

government elects to void the Plea Agreement and prosecute the defendant, any prosecutions that are 

not time-barred by the applicable statute of limitations on the date of the signing of this Plea Agreement 

may be commenced against the defendant in accordance with this paragraph, notwithstanding the 

expiration of the statute of limitations between the signing of this Plea Agreement and the 

commencement of such prosecutions. The defendant fmther understands that should he fail to appear 

at sentencing or any other proceeding in this matter without the consent of the government, the 

government will request that the Court sentence the defendant in absentia and deem the sentencing 

provisions in this Plea Agreement null and void. 

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3 5. The defendant further agrees and understands that, should the defendant violate any of 

the conditions of this Plea Agreement, or move to withdraw his plea of guilty: 

a. the "Factual Basis" set forth in this Plea Agreement shall be admissible as 

substantive evidence in any criminal or civil proceeding brought against the defendant; 

b. all (i) statements made by the defendant to the Fraud Section or other 

designated law enforcement agents, and (ii) testimony given by the defendant before a grand jury or 

other tribunal, whether prior to or subsequent to the signing of this Plea Agreement, and any leads 

from such statements or testimony, shall be admissible in evidence in any criminal or civil proceeding 

brought against the defendant; and 

c. the defendant shall assert no claim under the United States Constitution, the 

United States Sentencing Guidelines, any statute, Rule 410 of the Federal Rules of Evidence, Rule 

l l(f) of the Federal Rules of Criminal Procedure, or any other federal rule that the Factual Basis or 

any statements made by the defendant or any leads derived from such statements should be 

suppressed or are otherwise inadmissible. It is the intent of this Plea Agreement to waive all rights 

in the foregoing respects. 

36. Should the judge refuse to accept the defendant's plea of guilty, this Plea Agreement 

shall become null and void and neither party will be bound to it. 

37. The defendant and his attorney acknowledge that no threats, promises, or 

representations have been made, nor agreements reached, other than those set forth in this Plea 

Agreement, to cause the defendant to plead guilty. 

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38. The defendant acknowledges that he has read this Plea Agreement and carefully 

reviewed each provision with his attorney. The defendant further acknowledges that he understands 

and voluntarily accepts each and every term and condition of this Plea Agreement. 

AGREED THIS DATE: 

~ 

Defen ant 

Attorney for Defendant 

SANDRA MOSER 

Acting Chief, Fraud Section 

U.S. Department of Justice 

By: ____________ _ 

MATTHEW F. SULLIVAN 

Trial Attorney 

JUSTIN D. WEITZ 

Assistant Chief 

Approved by: 

BRIAN KIDD 

Acting Chief 

Securities & Financial Fraud Unit 

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38. The defendant acknowledges that he has read this Plea Agreement and carefully 

reviewed each provision with his attorney. The defendant further acknowledges that he understands 

and voluntarily accepts each and every term and condition of this Plea Agreement. 

AGREED Tms nATE: cOe C'. (l O!J I 0 

I 

ONG NG(' IM") ZHAO 

Defen ant 

~-zuc_ 

Attorney for Defendant 

SANDRA MOSER 

Acting Chief, Fraud Section 

U.S. Department of Justice 

By:------"&!!#@ -~~--~--- -- MATTHEW F. SULLIVAN 

Trial Attorney 

JUSTIN D. WEITZ 

Assistant Chief 

Acting 

Securities & Financial Fraud Unit 

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