IN THE UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF ILLINOIS 

COMMODITY FUTURES TRADING 

COMMISSION, 

Plaintiff, 

v. 

PHILLIP GALLES, TYCHE ASSET 

MANAGEMENT LLC, TYCHE MASTER 

FUND LTD, TYCHE ASSET TRADE LLC, 

TYCHE OFFSHORE FUND LTD., TYCHE 

ONSHORE FUND LP, TYCHE PML 

MASTER FUND LTD., TYCHE PML 

ONSHORE FUND L, TYCKE ONSHORE 

FUND GP LLC, and TYCHE ASSET 

TRADE LLC, 

Defendants. 

Hon. Elaine E. Bucklo 

Case No.: 1:23-cv-029770 

ORDER FOR FINAL JUDGMENT BY DEFAULT, PERMANENT INJUNCTION, CIVIL 

MONETARY PENALTIES, AND OTHER STATUTORY AND EQUITABLE RELIEF 

On May 11, 2023, the Commodity Futures Trading Commission (“CFTC” or 

“Commission” or “Plaintiff”) filed a Complaint charging Defendants Phillip Galles (“Galles”), 

Tyche Asset Management LLC, Tyche Master Fund Ltd, Tyche Asset Trade LLC, Tyche 

Offshore Fund Ltd., Tyche Onshore Fund LP, Tyche PML Master Fund Ltd, Tyche PML 

Onshore Fund LP, and Tyche Onshore Fund GP, LLC (collectively “Defendants,” and when the 

entity defendants are described separately, they are referred to as the “Tyche entity defendants” 

or “Tyche”) with violating Sections 4b(a)(2)(A)-(C), 4o(1)(A)-(B), 6(c)(1), and 9(a)(4) of the 

Commodity Exchange Act (“Act”), 7 U.S.C. §§ 6b(a)(2)(A)-(C), 6o(1)(A)-(B), 9(1), and 

13(a)(4), and Commission Regulations (“Regulations”) 180.1(a)(1)-(3) and 4.20(a)-(c), 

17 C.F.R. Pts. 180.1(a)(1)-(3) and 4.20(a)-(c) (2022). 

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On July 7, 2023, Defendants were properly served with the summons and Complaint 

pursuant to the Court’s Order granting Plaintiff’s Motion for an Order Allowing Service Upon 

Defendants by Alternative Means (Dkt. No. 9) by (1) sending the Summons and Complaint via 

ordinary mail, no signature required, to Galles at his residence; (2) sending the Summons and 

Complaint by email to Galles’ personal email account; and (3) leaving copies of the Summons 

and Complaint posted on or at the doorstep of the door to Galles’ residence. 

Defendants have failed to appear or answer the Complaint within the time permitted by 

Fed. R. Civ. P. 12(a)(1). The Commission filed a motion for entry of a clerk’s default against 

Defendants, and on October 5, 2023, the Court entered a default pursuant to Federal Rule of 

Civil Procedure 55(a) against Defendants. (Dkt. No. 16.) 

The Commission has moved this Court to grant final judgment by default against 

Defendants, including permanent injunctive relief, the imposition of a restitution obligation, and 

the imposition of a civil monetary penalty. 

The Court has carefully considered the Complaint, the allegations of which are wellpleaded and hereby taken as true, the Commission’s memorandum in support of its motion for 

default judgment, the affidavit of CFTC Investigator Joseph Patrick submitted in support of the 

motion, and the record in this case. The Court being advised in the premises, it is hereby: 

ORDERED that the Plaintiff’s Motion for Final Judgment by Default, Permanent 

Injunction, Civil Monetary Penalties, and Other Statutory and Equitable Relief against 

Defendants is GRANTED. Accordingly, the Court enters findings of fact, conclusions of law, 

and an Order of Final Judgment by Default for Permanent Injunction, Civil Monetary Penalties, 

and Other Statutory and Equitable Relief (“Order”) pursuant to Section 6c of the Act, 7 U.S.C. 

§ 13a-1, as set forth herein. 

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I. FINDINGS OF FACT 

A. The Parties 

1. Plaintiff Commodity Futures Trading Commission is an independent federal 

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

7 U.S.C. §§ 1–26, and the Regulations promulgated thereunder, 17 C.F.R. pts. 1–190 (2022). 

2. Defendant Phillip Galles resides in Chicago, Illinois and during the relevant 

period described by the Complaint of October 2019 to May 2023 (the “Relevant Period”), was a 

principal and owner of the Tyche entity defendants. Galles was registered with the National 

Futures Association (“NFA”), the self-regulatory organization for the U.S. derivatives industry, 

as an Associated Person (“AP”) of Tyche Asset Management LLC, a CFTC-registered 

Commodity Pool Operator (“CPO”). 

3. Defendant Tyche Asset Management LLC is a Delaware limited liability 

company organized in October 2019 that maintained offices at One North Wacker Drive and One 

South Dearborn Street in Chicago, Illinois. Tyche Asset Management LLC has been registered 

with the CFTC as a CPO since March 1, 2021. 

4. Tyche Master Fund Ltd is a company established in the Cayman Islands with its 

principal place of business in Chicago, Illinois. According to Defendants’ filings with NFA, 

Tyche Master Fund Ltd is a “Master fund (a pool in which its only participants are other pools 

operated by the same for or an affiliate).” Galles opened at least two trading accounts in the 

name of Tyche Master Fund Ltd at CFTC-registered Futures Commission Merchants (“FCMs”). 

5. Tyche Offshore Fund Ltd is a company established in the Cayman Islands with its 

principal place of business in Chicago, Illinois. According to a private placement memorandum 

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provided by Galles to a registered FCM, this entity “is a collective investment vehicle organized 

and managed by Tyche Asset Management, LLC.” 

6. Tyche Onshore Fund, LP is a Delaware limited partnership with its principal 

place of business in Chicago, Illinois. According to a private placement memorandum provided 

by Galles to a registered FCM, this entity is a “feeder fund” into Tyche Master Fund Ltd, with an 

investment objective of seeking “superior risk-adjusted rates of return with no significant 

correlation to any major market index” through the purchase and sale of “futures contracts, 

options on futures contracts, derivatives, securities, options on securities, foreign exchange 

contracts, and other financial instruments on domestic and international exchanges and markets.” 

The “investment manager” of the fund is Tyche Asset Management LLC. 

7. Tyche PML Master Fund Ltd is a company established in the Cayman Islands 

with its principal place of business in Chicago, Illinois. According to a private placement 

memorandum Tyche filed with NFA, this fund is a “master” fund commodity pool under the 

management of Galles and Tyche Asset Management LLC. 

8. Tyche PML Onshore Fund LP is a Delaware limited partnership with its principal 

place of business in Chicago, Illinois. According to a private placement memorandum Tyche 

filed with NFA, this fund is a “feeder” fund into Tyche PML Master Fund, Ltd, with Tyche 

Asset Management LLC functioning as the “Investment Manager” of both, and Tyche Onshore 

Fund GP LLC being the fund’s “General Partner.” 

9. Tyche Onshore Fund GP, LLC is a Delaware limited liability company with its 

principal place of business in Chicago, Illinois. It is the “general partner” of Tyche PML 

Onshore Fund LP. 

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10. Tyche Asset Trade LLC is a Delaware limited liability company with its primary 

place of business in Chicago, Illinois. In a private placement memorandum Galles provided to a 

CFTC-registered FCM, Tyche Asset Trade LLC was described as a “proprietary trading firm” 

affiliated with Tyche Asset Management LLC. Galles solicited several participants to execute an 

“investment agreement” with Tyche Asset Trade LLC, with Galles purportedly acting as the 

“investment manager.” 

11. During the Relevant Period, the Tyche entity defendants shared a single website: 

tycheam.com. Despite being incorporated or organized in various jurisdictions, the Tyche entity 

defendants’ business operations were all conducted from the same offices and through the same 

employees. Galles comingled funds received from participants in various Tyche entity bank and 

trading accounts for the various Tyche entities. There was no operational distinction between the 

entities in the overall Tyche business scheme. Galles controlled the operations of the Tyche 

entity defendants, including their financial activity in bank and trading accounts. 

B. Overview of the Tyche Scheme 

12. Galles received at least $6 million from approximately 50 individuals throughout 

the United States since October 2019 to invest with the Tyche entity defendants. Galles 

described Tyche to prospective participants as a “managed futures” fund that traded futures and 

options contracts on the Chicago Board of Trade and Chicago Mercantile Exchange. 

13. Galles claimed he was a billionaire hedge-fund magnate who oversaw Tyche’s 

sprawling trading operation, which he claimed had more than 100 employees based in offices in 

Chicago, Miami, London, and other locations. Galles further claimed to employ sophisticated 

technology and strategies that generated returns in excess of 200% in recent years trading 

commodity futures and options. All of these claims were false. 

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14. Galles told prospective participants of the depth of his experience and expertise 

trading commodities. He claimed to be the valedictorian of a prestigious U.S. university. He 

touted his past success as a manager of a hedge fund based in Bermuda, where he supposedly 

was responsible for managing a portfolio worth billions of dollars. He claimed to have sold a 

previous fund before launching Tyche in 2019 after awaiting the expiration of a non-compete 

agreement. All of these claims were false. 

15. Galles also used Tyche’s status as an entity registered with the CFTC to deceive 

participants into depositing funds with Tyche. 

16. Galles filed documents with NFA to register Tyche Asset Management LLC as a 

CPO. In filings with NFA, Galles represented that this entity would – in the future – be 

responsible for operating numerous commodity pools. In his applications and in all subsequent 

filings, Galles represented that the Tyche funds were not currently active, and he and Tyche were 

not actively soliciting participants. 

17. Galles bolstered his pitch to prospective participants by cultivating an image of 

personal wealth and sophistication. For example, in public posts to his “phillip_g724” and 

“tradeitup” Instagram accounts, Galles: 

a. boasted about his luxury car collection that supposedly included multiple 

Lamborghinis and Ferraris; 

b. bragged about his luxury homes in Miami, Chicago and Palm Beach; 

c. described his high-end watch collection alongside photos of Rolex and 

Longines watches; 

d. claimed to be hanging art by Picasso and Chagall in one of his homes; and 

e. touted the opening of Tyche offices in Chicago, Miami and London. 

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18. Galles’ claims about his personal and business success were false. In fact, since 

he first opened a bank account in the name of a Tyche entity in 2019, Galles used almost none of 

the funds he received from participants to place any trades. Instead, Galles used the money he 

received into Tyche bank accounts from the participants he solicited (or hired others to solicit for 

him) to fund his lavish lifestyle and to further promote his fabricated image of a hedge fund 

magnate. 

C. Galles’ Fabricated Tyche Operations, Trading Strategies, and Investment Returns 

19. Galles made a grandiose pitch to prospective participants. In a “Fire Side Chat” 

interview video posted to Youtube in January of 2021, Galles advertised his Tyche fund. During 

this public interview, Galles echoed false and misleading statements that he also made directly to 

prospective participants. Galles made false claims, including that: 

a. Tyche had “in the U.S. $275 million under management, and $1.7 billion off 

shore.” 

b. “Last year we had a stellar year, a 238% return.” 

c. “I’ve been in hedge fund industry since 2008. From 2011 to 2018 I was part 

owner of a company called Peregrine. We were based in Bermuda. We were a 

$3 billion hedge fund, and I’ve been averaging about 22% return every year 

since 2010. Last year’s 238% gain brings that average up to over 44%.” 

d. “I’ve got about 30 employees that work for us, and 15 of them are exGoldman employees.” 

e. “Everything is based off of algorithms and programmers.” 

f. “60% of our trades go through the S&P and NASDAQ. Another 40% are used 

in currencies and bonds, depending on how we see the market.” 

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g. “As of next summer we will be a $5 billion fund, and I just raised $3 billion 

from a New York Pension group.” 

h. “I can do up to $10 billion managed-wise. After that it gets a little too difficult 

[...] We’re small and nimble [...] I’m trying to stay under the $10 billion 

mark.” 

20. Galles used a similar pitch in promotional materials provided directly to 

participants. For example, Galles and Tyche falsely claimed in promotional materials that: 

a. Tyche is “Committed to delivering Prosperity and Fortune to our clients.” 

b. “Tyche was founded in late 2018 after analyzing years of model combinations 

on Long-Term, Intermediate-Term, Short-Term, High-Frequency & Options 

strategies coordinated to technically drive as one. This strategy has proven the 

possibility of generating annual returns of 25%+ each year.” 

c. “Tyche is a new venture whose genesis is the vision of founder Phillip Galles. 

Galles has 30 years of Stock Options, Futures, Foreign Exchange & Risk 

Arbitrage experience. Phillip started on the Floors of the CBOT and CBOE as 

a market maker for Stock Options, Bond Options, Futures, FX Options, and 

off the floor Risk Arbitrage from 1992-2007. In 2007 Phillip joined the hedge 

fund world starting at the Pelerine Fund as a FX Forward and FX Options 

trader. From 2012 to 2019 Phillip joined the Peregrine Fund and became a 

Senior Asset/Portfolio Manager-Partner and eventual owner of the fund 

capping off an average return of over 24% every year for that duration. During 

his time there he developed the use of his highly profitable “Swing Trade” 

technique which lasts from (1 to 4 day). He also used another profitable 

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technique called “Medium Term” (30, 60 & 240 minute) along with a short 

term “High Frequency” strategy. During those years Phillip started using a 

technically based trading concept working with a combination of Futures and 

Options. Phillip’s current model is based on many market momentum 

concepts while still using his own proprietary Short-Term methodology & 

Swing Trade concepts. Phillip has been a registered CME Member, CBOE & 

NFA member as well.” 

d. “Tyche’s current strategy is to filter in low-risk entry to gain access at exactly 

the precise moment to maximize potential gains. After entry, the model is 

designed to define risk with each additional position and evaluate levels in 

real time to establish an exit strategy as the market regresses to the mean. We 

closely monitor open positions to lower our risk, both upside and downside 

until objectives are achieved.” 

e. “Additionally, our Long-Term Model uses longer time frames seeking 

Undervalued and Overvalued market extremes. We use Call and Put Options 

to help with fluctuations before the extremes in the market are generated. This 

intertwines our short-term approach with our long-term positions. This 

combination aims to significantly lower the volatility and drawdowns for 

longer-term positions, while the short-term is actively managed using an 

intraday strategy. The long-term approach is directional and can be highly 

correlated together with the short-term.” 

f. “In summary: Our risk management techniques are designed to limit daily 

drawdowns to 5% of margin. When compounded over time, returns may 

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outperform the Dow Jones Industrial Average, Nasdaq Composite, and the 

S&P 500 with less downside volatility. Our non-correlated model-driven 

approach tempers the downside volatility while aiming to enhance returns 

during trending markets.” 

g. “Tyche is dedicated to ‘Prosperity and Fortune.’ We have a strategy that 

focuses on generating consistent income through our proven proprietary 

trading strategy.” 

h. “We’re continuously grateful for our success, but we are never fully satisfied. 

Outperformance is our expectation, and our definition of a meaningful LongTerm Investment is one that stretches far beyond a few weeks, months, or 

years.” 

21. Galles also gave prospective participants promotional materials in which he 

fabricated trading strategies supposedly employed by Tyche. For example, in a presentation 

provided to one participant, Galles described the purported trading strategies employed by 

Tyche. Galles described an “Automated Trading Model” with a “Repeatable Strategy.” He 

claimed that Tyche “continuously evaluates thousands of securities prices for multiple time 

frames simultaneously.” He went on to describe five “automated trading models looking across 

11 different time frames for Futures; S&P500, Nasdaq 100; Treasuries, Crude Oil, Gold and 

FX.” 

a. “Model 1: Directionally biased Market Making. The algorithms mimic an 

experienced market maker, but with a speed, accuracy no human trader could 

achieve, over a number of instruments simultaneously. 

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b. Model 2: Algorithmically determined ‘inflection points’ are filtered using 

order book dynamics/market microstructure analysis to profit from price 

movements in either direction around these areas. 

c. Model 3: Continuously evaluates thousands of securities prices across 

multiple time frames simultaneously, referred to as ‘local rotation analysis’ to 

determine the rotational direction in the market. 

d. Model 4: Complete ‘U’ Rotation. Primarily mean reverting. However, longer 

term model instances will not trade against a strong trend. Directionally biased 

market making (short term trading) based on 30 years of historical data. 

Repeat? 

e. Model 5: Standard Pattern Recognition algorithm with continual optimization 

based on years of historical data used to make trading decisions without curve 

fitting.” 

22. In fact, Galles and Tyche placed only a few trades in a futures trading account in 

the name of a Tyche entity, and those futures trades did not occur until January of 2023, well 

after Galles claimed to have been employing these purported models. 

23. Galles had participants sign agreements with various Tyche entities including 

Tyche Asset Management LLC and Tyche Asset Trade LLC. Galles and Tyche made misleading 

statements and misrepresentations in these participant agreements. For example, 

a. “The investment manager undertakes to maintain the funds entrusted to it 

separate from its own assets and away from the claims of creditors.” 

b. “The Manager performs investment advisory services for various clients and 

the investment funds (including the Pooled Funds) that it manages. 

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c. “The Manager . . . will ensure that all investments and recommendations made 

on behalf of the Account are suitable for the Client.” 

24. Galles and Tyche also provided prospective participants and participants with a 

fictional trading history for Tyche, and specific, false historic trading results. For example, 

Tyche promotional materials stated that Tyche had no losing months; that Tyche had a 190.18% 

rate of return for 2020; a 133.22% rate of return for 2021; and a year-to-date rate of return of 

84.51% for 2022 as of July 2022. In another presentation to a different participant, Galles and 

Tyche claimed that Tyche outperformed the S&P 500 by more than 300% in 2020. In fact, 

Tyche did not place any trades in any trading account during this time period. 

25. Tyche did not place any trades at all in 2020, 2021 or 2022. The only trades 

placed in a Tyche futures trading account occurred in January and February 2023. And those few 

futures trades were in an account that first received a deposit of $25,000 in September of 2022. 

Most of the funds in that trading account were withdrawn by Tyche in February 2023, after only 

a few trades. 

26. Galles’ and Tyche’s claims of massive profitable trading returns in promotional 

materials, in verbal statements, and in account statements provided to participants, are false. 

D. Galles Misappropriated Tyche Participant Funds 

27. Galles used the funds deposited by participants into Tyche’s bank accounts to pay 

his own personal expenses, to repay certain earlier participants, and to pay expenses designed to 

make Tyche appear to be a legitimate operation. 

28. In general, Galles directed the individuals he solicited to invest with Tyche to 

deposit their funds into a bank account in the name of Tyche Asset Management LLC. 

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29. For example, in February of 2021 a participant made an initial investment with 

Tyche, depositing $25,000 into a bank account in the name of Tyche Asset Management LLC. 

Those funds were not transferred to any trading account. Instead, in the days following the 

deposit of this participant’s funds, Galles used the funds to pay personal expenses including 

payments to Uber, Macy’s and Best Buy. 

30. On September 6, 2022, a second participant deposited $200,000 to a bank account 

in the name of Tyche Asset Management LLC. The following day, a third participant deposited 

$100,000 to that same Tyche bank account. Only a small portion of the funds received into this 

Tyche bank account during September 2022 were transferred to a trading account, and ultimately 

almost none of this money was used for trading activity. 

31. The customer funds deposited to Tyche’s bank account in September 2022 were 

instead used for other purposes, such as the repayment of portions of investments made by 

certain earlier participants, payments to Tyche employees or contractors, or for personal 

expenses. In September 2022, Galles transferred at least $55,000 to employees or contractors for 

Tyche, made payments of at least $40,000 to law firms, paid $18,790 in rent for his personal 

residence in a high-end apartment building in Chicago, spent more than $14,000 at a jeweler, 

paid $6,000 to Dynasty Luxury (a luxury car rental service in Miami), and paid $19,282.80 

towards a credit card. 

E. Galles Controlled the Tyche Entities 

32. Galles controlled the operations of the Tyche entity defendants. According to a 

Tyche private placement memorandum, Galles is “the founder and sole owner of the General 

Partner and Investment Manager and the trading principal of the [Tyche] Master Fund. [...] In 

November 2019, Mr. Galles began forming the Investment Manager and now serves as its Chief 

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Executive Officer, Chief Investment Officer, and Chief Compliance Officer.” Galles is 

identified in filings with the CFTC and NFA as the key point of contact and the executive 

responsible for various key functions for Tyche. 

33. Galles first applied to the CFTC to register Tyche Asset Management LLC as a 

CPO on March 25, 2020. The application states that it was “submitted by Phillip Galles.” Galles 

is listed as the only point of contact for Tyche Asset Management LLC in this and the other 

applications filed for Tyche Asset Management LLC to register with the CFTC as a CPO. Galles 

is identified as the point of contact for Tyche’s enforcement, NFA membership, accounting, 

arbitration, and compliance functions. 

34. Galles is also identified as the key point of contact at Tyche in filings with NFA. 

According to a Pool Quarterly report for CPOs submitted on behalf of Tyche for the quarter 

ending December 31, 2021, for example, Galles is identified as President, Chief Compliance 

Officer and the relevant point of contact for Tyche Asset Management LLC. 

35. Galles is also a signatory for and an authorized person for all of the Tyche 

entities’ bank and financial accounts. Galles signed account opening documents for Tyche Asset 

Management LLC in applications for accounts at several banks in Chicago. Galles identified 

himself as the “Managing Member” of Tyche Asset Management LLC on bank account opening 

documents. 

36. Galles signed corporate resolutions for Tyche entities. For example, Galles 

signed a December 2020 resolution as the “designated representative” of Tyche Asset 

Management LLC to authorize his access to and control over a TAM LLC bank account at 

Chicago-based bank. 

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37. In an application Galles submitted to an FCM to open a trading account in the 

name of a Tyche entity, Galles represented that he is the only person authorized to act on behalf 

of the Tyche Master Fund Ltd. 

F. Tyche Issued False or Misleading Account Statements to Participants 

38. During the Relevant Period, Defendants sent periodic account statements to 

participants that misrepresented the value of their respective interests in the Pool, and falsified 

returns. The statements reflected that Tyche participants’ funds were earning consistent profits 

with no losses. 

39. For example, a participant received a Tyche “Earnings Statement” for “Fourth 

Quarter 2022” that included the following claims: “For the Fourth Quarter of 2022, Tyche Asset 

Trade generated a Net Return of 25.47%.” This statement was false, as Tyche did not place any 

trades during the fourth quarter of 2022. 

40. The Quarterly statement provided to this participant also represented that Tyche’s 

“Proprietary Model-Driven Performance” outperformed the S&P 500 index in each month of the 

4th quarter of 2022. The statement claimed Tyche achieved a return of 11.7% in October 2022; 

a 7.58% return in November 2022; a 6.19% return in December 2022; and a year-to-date return 

of 137.39%. These figures were entirely fabricated, as Tyche had no trading activity at all in 

2022. 

41. In a quarterly account statement issued to this participant for the period ending 

March 31, 2023, Tyche valued the participant’s account at $354,578.53, and claimed a 25.92% 

rate of return for the account, with income during the first quarter of 2023 of $72,988.21. These 

figures were fabricated, and the statement issued to this participant was false. 

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G. Galles Lied to Prolong His Scheme and Delay Return of Funds 

42. In late 2022, Galles’ scheme began to unravel as several participants sought to 

withdraw their funds. Galles did not have sufficient funds to meet these customer withdrawal 

requests. Galles attempted to delay the return of participant funds by lying about, among other 

things, the location of Tyche funds, and the process he needed to undertake to return investor 

funds. 

43. For example, on December 12, 2022, a participant submitted a request to Tyche to 

withdraw a portion of his invested funds. Galles did not immediately return any funds, but 

indicated that he would begin the process of returning this participant’s funds. 

44. As of February 6, 2023, Galles and Tyche had not returned the participant’s 

funds. On February 6, 2023, Galles told this participant that he was at the bank, claiming he was 

on the verge of correcting purported problems sending the participant’s funds by wire transfer. 

Galles wrote, “I think everything is cleared up. I’m just waiting for them to send me this last 

docusign. Then I should be good to go.” He added, “Trying to get this out before 4 PM. If not, 

you’ll get it tomorrow morning for sure I’m gonna be sending you 55,000 to cover the problems 

that we had in the last few weeks. I truly apologize that this got so fucked up.” 

45. The next day, February 7, 2023, Galles wrote: “Money will coming from Wintrust 

this morning. It will come in small amounts because they are limiting me to 100k a day and 25k 

per customer in transfers. You will see 25k this morning. I will be at BMO later this morning to 

get that solved so that we can wire from multiple accounts. Finally getting things out. So sorry 

for the delay.” 

46. When the wire did not immediately arrive, the participant followed up. Galles 

wrote: “You should see it. In the next half hour they had to ask more questions in the wire 

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department. So I called them. I literally just got off the phone with them about pushing us 

through right now.” 

47. Galles was unable to return the full amount of Participant C’s funds. On 

February 15, 2023, Participant C asked “when do I get rest of distribution?” Galles responds that 

he would have sent it, but his daughter had serious medical issues that needed to be addressed 

that impeded his ability to wire all of the requested funds. 

48. Galles continued to delay and make additional excuses for his inability to return 

the participant’s funds. On February 16, 2023, Galles wrote “I am headed back to Chicago later 

this afternoon. I have to go to Milwaukee to pick my car then head back home. The banks do not 

have us set up to make wires from my online account so I have to go in there and get things set 

up. I will text you tomorrow once everything is done” 

49. On February 18, still not having received his funds, the participant wrote to 

Galles: “I ended up putting my property taxes on my credit card. 3 properties. All together it’s 

$50k. Thought I would have money weeks ago. Credit cards are at 18% interest. I’m not worried 

about a wire fee. I just want to get these damn credit cards paid off. Please send money!!!!!!!!!!!! 

No one has replied toot [sic] my email. I want my entire balance back. Filled out the form. When 

do I get that???” 

50. On March 3, 2023 Galles wrote that his money “will go out Monday because 

[another participant] wanted all of her money now so I had to put everybody else on Monday. 

I’m still here trying get them to raise the limit so I can go above $500,000. She said that 

everybody else needed to wait because she’s been on hold the longest.” 

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51. On March 24, 2023, Galles sent an image of a purported pending balance of a 

checking account at BMO Harris for $20,200,000. Galles claimed he was waiting for the 

pending funds to clear to the account in order to send funds. 

52. On March 27, 2023, Galles claimed “I talk to the head of compliance and the law 

department and I wasn’t aware that they put a 48 hour hold because it was transferred to a new 

account which they are holding tomorrow 10% of the total transfer which I already knew of and 

then I’ll be able to transfer Wednesday morning Everything out. Friggen finally!!! Yay I feel 

relieved” 

53. On March 29, 2023 Galles continued to make excuses to delay returning funds: 

“Ran into a major personal problem which put in the emergency room. I will be out in a little bit. 

A pill opened up in my throat by accident and closed my throat for 2 full minutes. I thought that 

it was an onion and tried to get it back up. It didn’t go so well.” 

54. Galles employed similar delay tactics, and made similar excuses as to his inability 

to return funds, in communications with other Tyche pool participants who attempted to 

withdraw funds during the fall of 2022 and spring of 2023. 

H. Galles and Tyche Asset Management LLC Lied in Filings with NFA, and in 

Response to Questions from NFA Examiners 

55. Galles’ and Tyche Asset Management’s misrepresentations to NFA began with 

the applications filed to register Tyche as a CPO, and continued through false statements to NFA 

staff in April of 2023 after NFA initiated an examination of the Tyche entities following 

complaints by customers about potential fraud by Galles and Tyche. 

56. Galles filed, or caused to be filed, various reports with NFA in order to maintain 

the registration of Tyche Asset Management LLC as a CPO. 

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57. As a part of its regulatory duties, NFA requires that member firms including 

CPOs such as Tyche Asset Management LLC complete and file an Annual Questionnaire. The 

questionnaire provides NFA with information on a member’s activities and operations, serves as 

a continuous source of data for NFA’s risk monitoring systems, and is frequently the first 

resource that NFA staff reviews when engaging with or performing work related to a Member. 

58. Tyche Asset Management LLC, acting through its employees or agents including 

Galles, filed an Annual Questionnaire with NFA on July 13, 2022 for the annual period ending 

May 31, 2022. On the questionnaire, the primary contact for Tyche Asset Management LLC was 

Phillip Galles, and Galles was also identified as the Chief Executive Officer of the firm. 

59. The first substantive question on the Annual Questionnaire form asks, “Does the 

firm currently have customers and/or pools that engage in activity relating to commodity 

interests?” Tyche Asset Management LLC answered “No.” The second question on the form 

asks, “Does the firm currently solicit customers to trade commodity interests? Tyche Asset 

Management LLC answered “No.” Tyche Asset Management LLC also represented in this form 

that while it had three commodity pools, it had “not yet accepted investor funds into the pools.” 

These statements to NFA were false. The Tyche entities had been soliciting and accepting funds 

from customers to trade commodity interests since at least 2019. 

60. NFA also requires CPOs to file quarterly reports. Tyche Asset Management LLC 

filed at least seven quarterly reports with NFA between June 2021 and December 2022. In each 

of those quarterly reports, Tyche Asset Management LLC stated that it had no assets under 

management and no assets or liabilities. These statements were false, as the Tyche entities had 

accepted funds from participants for the purpose of trading commodity interests, and had 

substantial liabilities to its participants. 

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61. In April 2023, in furtherance of its official duties under the Act, NFA staff 

initiated an examination of the Tyche entities. In connection with that examination, NFA 

representatives spoke with Phillip Galles. 

62. On April 3, 2023, Galles told NFA representatives that the Tyche entities did not 

have any customers. Galles told NFA representatives that Tyche did engage in trading, but only 

“proprietary” trading through an affiliated entity. These statements are false and misleading 

because Galles and the Tyche entities had been soliciting customers and accepting customer 

deposits since at least 2019 for the purposes of trading commodity interests in a commodity pool. 

63. On April 3, 2023 Galles also told NFA representatives that Tyche was engaged in 

futures trading through a proprietary account at UBS. This statement is false, as the Tyche 

entities do not have any account at UBS. 

I. Losses Suffered by Defendants’ Victims, and Gains to Defendants 

64. Defendants’ victims deposited funds into bank accounts in the names of the 

Defendants, all controlled by Galles. 

65. During the Relevant Period, Defendants’ victims deposited $6,262,673 into 

Defendants’ bank accounts for the purpose of investing in a commodity pool. $935,500 of the 

pool participant deposits were repaid, leaving an unpaid balance of $5,327,173 still owed to pool 

participants. 

66. Defendants gained an amount equal to the losses suffered by their victims: 

$5,327,173 

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II. CONCLUSIONS OF LAW 

A. Jurisdiction and Venue 

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

7 U.S.C. § 13a-1, which provides that whenever it shall appear to the Commission 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 promulgated thereunder, the 

Commission may bring an action in the proper district court of the United States against such 

person to enjoin such act or practice, or to enforce compliance with the Act, or any rule, 

regulation or order thereunder. 

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

Defendants resided or transacted business in this jurisdiction and the acts and practices in 

violation of the Act and Regulations occurred within this District, among other places. 

B. Defendants’ Registrations and Regulatory Status with CFTC and NFA 

69. Galles and the Tyche entities operated a “Commodity Pool” as defined by the Act. 

Section 1a(10) of the Act, 7 U.S.C. § 1a(10), defines a “commodity pool” as any investment 

trust, syndicate, or similar form of enterprise operated for the purpose of trading in commodity 

interests, including any commodity for future delivery, security futures product, swap, or 

commodity option. 

70. Tyche Asset Management LLC is a “Commodity Pool Operator” as defined by 

the Act. 7 U.S.C. § 1a(11)(A)(i), in relevant part, defines a CPO as any person engaged in a 

business that is of the nature of a commodity pool, 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 

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forms of securities, or otherwise, for the purpose of trading in commodity interests, including 

commodities for future delivery, security futures products, and swaps. 

71. The individuals who Galles solicited to invest with Tyche are “participants” in the 

pool within the meaning of Regulation 4.10(c), 17 C.F.R. § 4.10(c) (2022), which defines a 

“participant” as any person who “has any direct financial interest in a pool (e.g., a limited 

partner).” 

72. Galles is an AP of Tyche as defined in Section 4k of the Act, 7 U.S.C. § 6k, and 

Regulation 1.3, 17 C.F.R. § 1.3 (2022). Those provisions, with certain qualifications, define an 

AP as a natural person associated with any CPO as a partner, officer, employee, consultant, or 

agent (or any person occupying a similar status or performing similar functions), in any capacity 

that involves: (i) the solicitation of funds, securities, or property for a participation in a 

commodity pool; or (ii) the supervision of any person or persons so engaged. 

C. Fraud in Violation of 7 U.S.C. § 6b(a)(1)(A)-(C): Misrepresentations and Omissions, 

False Account Statements, and Misappropriation of Participant Funds 

73. In Count 1 of the Complaint, Plaintiff alleges fraud by all Defendants in violation 

of Section 4b(1)(A)-(C) of the Act, 7 U.S.C. § 6b(1)(A)-(C), which makes it unlawful for any 

person, 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; and/or 

c. willfully to deceive or attempt to deceive the other person by any means. 

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74. Defendant Phillip Galles, and the Tyche entity defendants acting together as a 

common enterprise, in or in connection with commodities for future delivery made, or to be 

made, on or subject to the rules of a designated contract market, 

a. knowingly cheated or defrauded, or attempted to cheat or defraud Tyche pool 

participants by, among other things, making material misrepresentations and 

omissions regarding Defendants’ experience and expertise, trading 

performance, trading track record, the value of their interest in the Pool, and 

by misappropriating their funds; 

b. willfully made or caused to be made false reports or statements to Tyche 

commodity pool participants; and 

c. willfully deceived or attempted to deceive pool participants by, among other 

things, making material misrepresentations and omissions regarding 

Defendants’ experience and expertise, trading performance, trading track 

record, the value of their interest in the Pool, and by misappropriating their 

funds. 

75. By reason of the foregoing, Defendants violated 7 U.S.C. § 6b(a)(1)(A)-(C). 

76. The foregoing acts, omissions, and failures of Galles described above in the 

Findings of Fact occurred within the scope of Galles’ employment or office with Tyche. 

Therefore, Tyche is liable for his acts, omissions, and failures in violation of 7 U.S.C. 

§ 6b(a)(1)(A)-(C), pursuant to Section 2(a)(1)(B) of the Act, 7 U.S.C. §2(a)(1)(B), and 

Regulation 1.2, 17 C.F.R. § 1.2 (2022). 

77. Defendant Galles controlled Tyche directly or indirectly, and did not act in good 

faith or knowingly induced, directly or indirectly, Tyche’s fraudulent conduct. Therefore, under 

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Section 13(b) of the Act, 7 U.S.C. § 13c(b), Galles is liable for Tyche’s violations of 7 U.S.C. 

§ 6b(a)(1)(A)-(C). 

D. Fraud by a Commodity Pool Operator and its Associated Person in Violation of 

7 U.S.C. § 6o(1), by Galles and Tyche Asset Management LLC 

78. In Count 2 of the Complaint, Plaintiff alleges fraud by Galles and Tyche Asset 

Management LLC in violation of Section 4o(1) of the Act, 7 U.S.C. § 6o(1), which prohibits any 

CPO, or AP of a CPO, from using the mails or any means or instrumentality of interstate 

commerce, directly or indirectly, to: 

a. employ any device, scheme or artifice to defraud any client or participant or 

prospective client or participant; or 

b. engage in any transaction, practice or course of business which operates as a 

fraud or deceit upon any client or participant or prospective participant.

79. During the Relevant Period, Tyche Asset Management LLC, a registered CPO, 

defrauded and deceived participants of the Tyche commodity pool by using the mails and other 

means of interstate commerce in violation of 7 U.S.C. § 6o(1) by, among other things: 

a. misappropriating participant funds; 

b. fraudulently soliciting participants and prospective participants by making 

material misrepresentations and omitting material facts regarding Defendants’ 

experience and expertise, trading profits, trading performance track record, 

and the value of participants’ interest in the commodity pool; and 

c. causing false account statements to be issued to participants in the commodity 

pool. 

80. Galles, while acting as an Associated Person of Tyche Asset Management LLC, a 

Commodity Pool Operator, willfully defrauded and deceived participants of the Tyche 

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commodity pool by using the mails and other means of interstate commerce in violation of 

7 U.S.C. § 6o(1) by, among other things: 

a. misappropriating participant funds; 

b. fraudulently soliciting participants and prospective participants by making 

material misrepresentations and omitting material facts regarding Defendants’ 

experience and expertise, trading profits, trading performance track record, 

and the value of participants’ interest in the Tyche commodity pool; and 

c. causing false account statements to be issued to participants in the Tyche 

commodity pool. 

81. The foregoing acts, omissions, and failures of Galles occurred within the scope of 

Galles’ employment or office with Tyche. Therefore, Tyche is liable for his acts, omissions, and 

failures in violation of 7 U.S.C. § 6o(1), pursuant to 7 U.S.C. § 2(a)(1)(B) and 17 C.F.R. § 1.2. 

82. Defendant Galles controlled Tyche directly or indirectly, and did not act in good 

faith or knowingly induced, directly or indirectly, Tyche’s conduct alleged in Count 2 of 

Plaintiff’s Complaint. Therefore, under 7 U.S.C. § 13c(b), Galles is liable for Tyche’s violations 

of 7 U.S.C. § 6o(1)(A) and (B). 

E. Commodity Fraud in Violation of 7 U.S.C. § 9(1) and 17 C.F.R. § 180.1 by all 

Defendants 

83. In Count 3 of the Complaint, Plaintiff alleges commodity fraud by all Defendants 

in violation of Section 6(c)(1) of the Act, 7 U.S.C. § 9(1), and Regulation 180.1(a)(1)-(3) (2022). 

84. Section 7 U.S.C. § 9(1) provides, in pertinent part, that: “It shall be unlawful for 

any person, directly or indirectly, to use or employ, or attempt to use or employ, in connection 

with any swap, or a contract of sale of any commodity in interstate commerce, or for future 

delivery on or subject to the rules of any registered entity, any manipulative or deceptive device 

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or contrivance, in contravention of such rules and regulations as the Commission shall 

promulgate[.]” 

85. The Commission issued 17 C.F.R. § 180.1 pursuant to this authority. Regulation 

180.1(a)(1)-(3) states, in pertinent part, that: 

“It shall be unlawful for any person, directly or indirectly, in connection with any swap, 

or contract of sale of any commodity in interstate commerce, or contract for future 

delivery on or subject to the rules of any registered entity, to intentionally or recklessly: 

(1) Use or employ, or attempt to use or employ, any manipulative device, scheme, 

or artifice to defraud; 

(2) Make, or attempt to make, any untrue or misleading statement of a material 

fact or to omit to state a material fact necessary in order to make the 

statements made not untrue or misleading; [or] 

(3) Engage, or attempt to engage, in any act, practice, or course of business, 

which operates or would operate as a fraud or deceit upon any person.” 

86. Defendant Phillip Galles, and the Tyche entity defendants acting together as a 

common enterprise, intentionally or recklessly, in connection with contracts of sale of 

commodities for future delivery on or subject to the rules of a registered entity, 

a. used or employed, or attempted to use or employ, a scheme or artifice to 

defraud; 

b. made, or attempted to make, in connection with contracts of sale of 

commodities in interstate commerce, untrue or misleading statements of 

material fact, or omitted to state material facts necessary to make the 

statements made not untrue or misleading; and 

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c. engaged in, or attempted to engage in, acts, practices, or a course of business 

that operated or would operate as a fraud or deceit on their customers. 

87. As a result, Galles’ and Tyche’s fraudulent conduct violated 7 U.S.C. § 9(1) and 

17 C.F.R. § 180.1(a)(1)-(3). 

88. The foregoing acts, omissions, and failures occurred within the scope of Galles’ 

employment or office with Tyche. Therefore, Tyche is liable for his acts, omissions, and failures 

in violation of 7 U.S.C. § 9(1) and 17 C.F.R. § 180.1(a)(1)-(3), pursuant to 7 U.S.C. § 2(a)(1)(B) 

and 17 C.F.R. § 1.2. 

89. Defendant Galles controlled Tyche directly or indirectly, and did not act in good 

faith or knowingly induced, directly or indirectly, Tyche’s conduct alleged in Count 3 of 

Plaintiff’s Complaint. Therefore, under 7 U.S.C. § 13c(b), Galles is liable for Tyche’s violations 

of 7 U.S.C. § 9(1) and 17 C.F.R. § 180.1(a)(1)-(3). 

F. Commingling of Funds, Failure to Receive Funds in Commodity Pool’s Name, 

Failure to Separately Operate Pool, in Violation of 17 C.F.R. § 4.20 

90. In Count 4 of the Complaint, Plaintiff alleges that Tyche Asset Management LLC 

violated Regulation 4.20(a)-(c), 17 C.F.R. § 4.20(a)-(c) (2022). 

91. With certain exemptions not applicable here, 17 C.F.R. § 4.20(a) requires that a 

CPO must operate its commodity pool as an entity cognizable as a legal entity separate from its 

operator. 

92. 17 C.F.R. § 4.20(b) prohibits CPOs from receiving pool participants’ funds in any 

name other than that of the pool. 

93. 17 C.F.R. § 4.20(c) prohibits a CPO from commingling the property of any pool it 

operates with the property of any other person. 

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94. Tyche Asset Management LLC, while acting as a CPO, failed to operate its 

commodity pools as legal entities separate from the pools’ operator, failed to receive pool 

participants’ funds in the name of the pools when funds were deposited funds into Tyche Asset 

Management LLC’s bank accounts, and commingled the property of the pools and pool 

participants’ funds with property of Defendants and others. 

95. By reason of the foregoing, Defendant Tyche Asset Management LLC violated 

17 C.F.R. § 4.20(a)-(c). 

96. Defendant Galles controlled Tyche Asset Management LLC directly or indirectly, 

and did not act in good faith or knowingly induced, directly or indirectly, Tyche Asset 

Management LLC’s conduct alleged in this Count. Therefore, under 7 U.S.C. § 13c(b), Galles is 

liable for Tyche’s violations of 17 C.F.R. § 4.20(a)-(c). 

G. Misrepresentations to National Futures Association by Tyche Asset Management 

LLC and Galles in Violation of 7 U.S.C. § 13(a)(4) 

97. In Count 5 of the Complaint, Plaintiff alleges that Tyche Asset Management LLC 

violated Section 9(a)(4) of the Act, 7 U.S.C. § 13(a)(4). 

98. Section 7 U.S.C. § 13(a)(4) makes it unlawful for any person willfully to falsify, 

conceal, or cover up by trick, scheme or artifice a material fact, or to make any false, fictitious, 

or fraudulent statements or representations, or to make or use any false writing or document 

knowing the same to contain any false, fictitious, or fraudulent statement or entry to a registered 

entity, board of trade, swap data repository, or futures association designated or registered under 

the Act and acting in furtherance of its official duties under the Act. 

99. Tyche Asset Management LLC and Galles violated 7 U.S.C. § 13(a)(4) by 

willfully: 

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a. falsifying, concealing, or covering up by trick, scheme or artifice, material 

facts about the operations of the Tyche entity defendants in filings with, and in 

communications with representatives of, NFA, a futures association 

designated or registered under the Act acting in furtherance of its official 

duties; and 

b. making false, fictitious, or fraudulent statements or representations to NFA, a 

futures association registered under the Act, in connection with an 

examination, in furtherance of National Futures Association’s official duties 

under the Act. 

100. These acts, omissions, and failures occurred within the scope of Galles’ 

employment or office with Tyche Asset Management LLC. Therefore, Tyche Asset 

Management LLC is liable for his acts, omissions, and failures in violation of 7 U.S.C. 

§ 13(a)(4), pursuant to 7 U.S.C. § 2(a)(1)(B) and 17 C.F.R. § 1.2. 

101. Defendant Galles controlled Tyche Asset Management LLC directly or indirectly, 

and did not act in good faith or knowingly induced, directly or indirectly, Tyche Asset 

Management LLC’s conduct alleged in this Count. Therefore, under 7 U.S.C. § 13c(b), Galles is 

liable for Tyche’s violations of 7 U.S.C. § 13(a)(4). 

H. Operation of the Tyche Entities as a Common Enterprise 

102. Galles operated the Tyche entities as a Common Enterprise. 

103. During the Relevant Period, the Tyche entity defendants shared a single website: 

tycheam.com. 

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104. Despite being incorporated or organized in various jurisdictions, the Tyche entity 

defendants’ business operations were all conducted from the same offices and through the same 

employees. 

105. Galles comingled funds received from participants in various Tyche entity bank 

and trading accounts for the various Tyche entities. 

106. There was no operational distinction between the entities in the overall Tyche 

business scheme. Galles controlled the operations of the Tyche entity defendants, including their 

financial activity in bank and trading accounts. 

107. Therefore, the Tyche entity defendants are jointly liable for the violations of the CEA 

and Regulations described in this order as a Common Enterprise. 

I. Need for Injunctive Relief 

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

Defendants 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. PERMANENT INJUNCTION 

IT IS HEREBY ORDERED THAT: 

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

of the Act, 7 U.S.C. § 13a-1, Defendants are permanently restrained, enjoined and prohibited 

from directly or indirectly: 

a. Cheating or defrauding, or attempting to cheat or defraud, persons; willfully 

making or causing to be made to other persons any false report or statement or 

willfully entering or causing to be entered for any person any false record; or 

willfully deceiving or attempting to deceive a person by any means whatsoever; in 

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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, in violation of Section 4b(1)(A)-(C) of the Act, 7 U.S.C. 

§ 6b(1)(A)-(C); 

b. Engaging in conduct as a Commodity Pool Operator, or an Associated Person 

of a Commodity Pool Operator, and using the mails or any means or 

instrumentality of interstate commerce, directly or indirectly, to employ any 

device, scheme or artifice to defraud any client or participant or prospective 

client or participant of a commodity pool; or engage in any transaction, 

practice or course of business which operates as a fraud or deceit upon any 

client or participant or prospective participant of a commodity pool, in 

violation of Section 4o(1) of the Act, 7 U.S.C. § 6o(1); 

c. Intentionally or recklessly using or employing, or attempting to use or 

employ, any manipulative device, scheme, or artifice to defraud; making, or 

attempting to make, any untrue or misleading statement of a material fact or 

failing to state a material fact necessary in order to make the statements made 

not untrue or misleading; or engaging, or attempting to engage, in any act, 

practice, or course of business, which operates or would operate as a fraud or 

deceit upon any person, in connection with any swap, or contract of sale of 

any commodity in interstate commerce, or contract for future delivery on or 

subject to the rules of any registered entity, in violation of Section 6(c)(1) of 

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the Act, 7 U.S.C. § 9(1), and Regulation 180.1(a)-(c), 17 C.F.R. § 180.1(a)(1)-

(3) (2022); 

d. Failing to operate a commodity pool as a legal entity separate from the pools’ 

operator, failing to receive commodity pool participants’ funds in the name of 

the commodity pools’ bank accounts, and commingling the property of the 

pools and pool participants’ funds with property of pool operator, in violation 

of Regulation 4.20(a)-(c), 17 C.F.R. § 4.20(a)-(c) (2022); and 

e. willfully falsifying, concealing, or covering up by trick, scheme or artifice a 

material fact, or making any false, fictitious, or fraudulent statements or 

representations, or making or using any false writing or document knowing 

the same to contain any false, fictitious, or fraudulent statement or entry to a 

registered entity, board of trade, swap data repository, or futures association 

designated or registered under the Act and acting in furtherance of its official 

duties under the Act, in violation of Section 9(a)(4) of the Act, 7 U.S.C. 

§ 13(a)(4). 

110. Defendants are also permanently restrained, enjoined and prohibited from directly 

or indirectly: 

a. 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) (2022)); 

b. Entering into any transactions involving “commodity interests” (as that term is 

defined in Regulation 1.3, 17 C.F.R. § 1.3 (2022)), their own personal accounts or 

for any account in which they have a direct or indirect interest; 

c. Having any commodity interests traded on their behalf; 

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d. 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; 

e. Soliciting, receiving or accepting any funds from any person for the purpose of 

purchasing or selling any commodity interests; 

f. 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) (2022); and/or 

g. Acting as a principal (as that term is defined in Regulation 3.1(a), 17 C.F.R. 

§ 3.1(a) (2022)), agent or any other officer or employee of any person (as that 

term is defined in 7 U.S.C. § 1a(38)), 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). 

IV. RESTITUTION, DISGORGEMENT, AND CIVIL MONETARY PENALTY 

A. Restitution 

111. Defendants shall pay, jointly and severally, restitution in the amount of Five 

Million Three Hundred Twenty-Seven Thousand One Hundred Seventy-Three dollars 

($5,327,173) (“Restitution Obligation”). If the Restitution Obligation is not paid immediately, 

post-judgment interest shall accrue on the Restitution Obligation beginning on the date of entry 

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

entry of this Order pursuant to 28 U.S.C. § 1961. 

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112. Galles is currently the defendant in a criminal action charging him, in part, for the 

misconduct that is at issue in this matter. See United States v. Phillip Galles, Mag. No. 23-8076 

(District of New Jersey, filed May 10, 2023) (“Criminal Action”). For amounts disbursed to 

Defendants’ pool participants as a result of satisfaction of any restitution ordered in the Criminal 

Action, the Defendants shall receive a dollar-for-dollar credit against the Restitution 

Obligation. Within ten days of disbursement in the Criminal Action to Defendants’ pool 

participants, Defendant Galles shall, under a cover letter that identifies the name and docket 

number of this proceeding, transmit to the Chief Financial Officer, Commodity Futures Trading 

Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington, D.C. 20581, and the 

Office of Administration, National Futures Association, 320 S. Canal St., Suite 2400, Chicago, 

Illinois 60606, copies of the form of payment to those pool participants. 

113. To effect payment of the Restitution Obligation and the distribution of any 

restitution payments to Defendants’ pool participants, the Court appoints National Futures 

Association (“NFA”) as Monitor (“Monitor”). The Monitor shall receive restitution payments 

from Defendants and make distributions as set forth below. Because the Monitor is acting as an 

officer of this Court in performing these services, NFA shall not be liable for any action or 

inaction arising from NFA’s appointment as Monitor, other than actions involving fraud. 

114. Defendants shall make Restitution Obligation payments, and any post-judgment 

interest payments, under this Order to the Monitor in the name “Tyche Asset Management –

Restitution Fund” and shall send such payments by electronic funds transfer, or by U.S. postal 

money order, certified check, bank cashier’s check, or bank money order, to the Office of 

Administration, National Futures Association, 320 S. Canal St., Suite 2400, Chicago, Illinois 

60606 under cover letter that identifies the paying Defendants and the name and docket number 

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of this proceeding. Defendants 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. 

115. The Monitor shall oversee the Restitution Obligation and shall have the discretion 

to determine the manner of distribution of such funds in an equitable fashion to Defendants’ pool 

participants identified by the CFTC or may defer distribution until such time as the Monitor 

deems appropriate. In the event that the amount of Restitution Obligation payments to the 

Monitor are of a de minimis nature such that the Monitor determines that the administrative cost 

of making a distribution to eligible pool participants is impractical, the Monitor may, in its 

discretion, treat such restitution payments as civil monetary penalty payments, which the 

Monitor shall forward to the Commission following the instructions for civil monetary penalty 

payments set forth in Part IV.B. below. 

116. Defendants shall cooperate with the Monitor as appropriate to provide such 

information as the Monitor deems necessary and appropriate to identify Defendants’ pool 

participants to whom the Monitor, in its sole discretion, may determine to include in any plan for 

distribution of any Restitution Obligation payments. Defendants shall execute any documents 

necessary to release funds that they have in any repository, bank, investment or other financial 

institution, wherever located, in order to make partial or total payment toward the Restitution 

Obligation. 

117. The Monitor shall provide the Commission at the beginning of each calendar year 

with a report detailing the disbursement of funds to Defendants’ pool participants during the 

previous year. The Monitor shall transmit this report under a cover letter that identifies the name 

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and docket number of this proceeding to the Chief Financial Officer, Commodity Futures 

Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington, D.C. 20581. 

118. The amounts payable to each pool participant shall not limit the ability of any 

pool participant from proving that a greater amount is owed from Defendants or any other person 

or entity, and nothing herein shall be construed in any way to limit or abridge the rights of any 

pool participant that exist under state or common law. 

119. Pursuant to Rule 71 of the Federal Rules of Civil Procedure, each pool participant 

of Defendants who suffered a loss is explicitly made an intended third-party beneficiary of this 

Order and may seek to enforce obedience of this Order to obtain satisfaction of any portion of 

the restitution that has not been paid by Defendants to ensure continued compliance with any 

provision of this Order and to hold Defendants in contempt for any violations of any provision of 

this Order. 

120. To the extent that any funds accrue to the U.S. Treasury for satisfaction of 

Defendants’ Restitution Obligation, such funds shall be transferred to the Monitor for 

disbursement in accordance with the procedures set forth above. 

B. Civil Monetary Penalty 

121. Defendants shall pay, jointly and severally, a civil monetary penalty in the amount 

of Fifteen Million Nine Hundred Eighty-One Thousand Five Hundred Nineteen dollars 

($15,981,519) (“CMP Obligation”). If the CMP Obligation is not paid immediately, then postjudgment interest shall accrue on the CMP Obligation beginning on the date of entry of this 

Order and shall be determined by using the Treasury Bill rate prevailing on the date of entry of 

this Order pursuant to 28 U.S.C. § 1961 (2022). 

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122. Defendants shall pay their CMP 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 266 

Oklahoma City, OK 73169 

(405) 954-6569 office 

(405) 954-1620 fax 

9-AMZ-AR-CFTC@faa.gov 

If payment by electronic funds transfer is chosen, Defendants shall contact Tonia King or her 

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

instructions. Defendants shall accompany payment of the CMP Obligation with a cover letter 

that identifies Defendants and the name and docket number of this proceeding. Defendants 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. 

C. Provisions Related to Monetary Sanctions 

123. Partial Satisfaction: Acceptance by the Commission or the Monitor of any partial 

payment of Defendants’ Restitution Obligation, Disgorgement Obligation, or CMP Obligation 

shall not be deemed a waiver their obligation to make further payments pursuant to this Order, or 

a waiver of the Commission/CFTC’s right to seek to compel payment of any remaining balance.

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V. MISCELLANEOUS PROVISIONS 

124. Notice: All notices required to be given by any provision in this Order shall be 

sent by certified mail, return receipt requested, and by email, as follows: 

Notice to Commission: 

Robert Howell (RHowell@cftc.gov) 

Deputy Director, Division of Enforcement 

Commodity Futures Trading Commission 

Ralph H. Metcalfe Federal Building 

77 W. Jackson Blvd., Suite 800 

Chicago, IL 60604 

Notice to Defendants: 

 Phillip Galles (philgalles@gmail.com) 

 514 North Peshtigo Court, Apartment 3811 

 Chicago, IL 60611 

 

Notice to NFA: 

Daniel Driscoll, Executive Vice President, COO 

 (DDriscoll@NFA.Futures.Org) 

National Futures Association 

320 S. Canal St., Suite 2400 

Chicago, IL 60606 

 

All such notices to the Commission or the NFA shall reference the name and docket number of 

this action. 

125. Change of Address/Phone: Until such time as Defendants satisfy in full their 

Restitution Obligation and CMP Obligation as set forth in this Order, Defendants shall provide 

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

mailing address within ten calendar days of the change. 

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

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

provision to any other person or circumstance shall not be affected by the holding. 

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

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

including any motion by Defendants to modify or for relief from the terms of this Order. 

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

provisions of this Order shall be binding upon Defendants, upon any person under the authority or 

control of any of the Defendants, and upon any person who receives actual notice of this Order, by 

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

participation with Defendants. 

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

Order for Default Judgment forthwith and without further notice. 

IT IS SO ORDERED on this 8th day of November, 2023. 

 _________________________________ 

 Hon. Elaine Bucklo 

UNITED STATES DISTRICT JUDGE

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