CFTC Ex. 535

Case: 1:20-cv-03758 Document #: 77-19 Filed: 11/05/21 Page 1 of 33 PageID #:1322
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DECLARATION UNDER PENALTY OF PERJURY OF 

JOSEPH J. PATRICK PURSUANT TO 28 U.S.C § 1746 

I, Joseph J. Patrick, hereby declare as follows: 

1. I am employed with the United States Commodity Futures Trading Commission 

(“CFTC”) as a Senior Investigator in the Division of Enforcement (“Division”). 

2. My primary responsibilities include conducting investigations to determine 

whether there have been violations of the Commodity Exchange Act and Commission 

Regulations. In connection with these responsibilities, I analyze bank records, documents related 

to trading, account opening documents, and customer records for commodity futures, commodity 

options, swaps, and off-exchange foreign currency (“forex”) accounts; trace the flow of funds 

through bank, commodity futures, commodity options, and forex trading accounts; review 

corporate formation documents filed with various state and federal agencies; and review 

applicable registration information for entities and individuals in the U.S. futures industry, 

among other activities. 

3. From June 1996 to July 2010, I held various regulatory compliance positions at 

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

futures industry. In these positions, I was responsible for conducting examinations and 

investigations of commodities, futures, options and forex trading firms, including performing 

analyses of trading activity, cash flows, and sales practices and initiating formal disciplinary 

actions when violations of NFA rules were detected. 

4. I received a Bachelor of Science degree in Accounting in 1996 from University of 

Illinois at Chicago and hold a certification as a Certified Fraud Examiner (CFE). 

5. In March 2019, I was assigned to an investigation concerning Long Leaf Trading 

Group, LLC (“Long Leaf”) and its owners James A. Donelson (“Donelson”) and Timothy Evans 

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(“Evans”). Among other things, I was assigned to review and summarize trading records of 

Long Leaf’s retail customers, including without limitation daily trade confirmations, monthly 

activity statements, and emails between Long Leaf and its customers, in order to determine the 

total trading losses by customers that agreed to participate in Long Leaf’s “trading program” 

between June 2015 and December 2019 (“Relevant Period”). 

6. To that end, I reviewed trading records produced by Gain Capital Group, LLC 

(“Gain”), a CFTC registered futures commission merchant (“FCM”) located in Bedminster, New 

Jersey, and Cunningham Commodities, LLC (“Cunningham”), a CFTC registered FCM located 

in Chicago, IL. I also reviewed documents and testimony provided by Long Leaf to determine 

which accounts belonged to customers that participated in the trading program. 

7. Truthful and accurate summaries of the foregoing, which I personally prepared, 

are set forth herein as Exhibit A and include the monthly and cumulative profits and losses 

(“PNL”) incurred at Gain and Cunningham by Long Leaf customers participating in the trading 

program. I do not offer any opinion with respect to these records, and I have not made any 

independent determinations as to whether these the records support inferences which support the 

CFTC’s claims. The extent of my analysis has been to format, filter, and summarize customer 

trade data provided by Long Leaf’s FCMs. 

A. Records Reviewed 

8. In April 2019, the National Futures Association (“NFA”), a futures and options 

industry self-regulatory organization, produced records to the CFTC reflecting that, since 

September 2019, Long Leaf introduced its customer futures accounts to Cunningham. NFA 

records produced to the CFTC also reflect that prior to September 2019, Long Leaf introduced 

accounts to Gain. 

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9. On May 13, 2019, I issued a request under Section 4g of the Commodity 

Exchange Act to Gain for, among other items, records regarding the futures and options accounts 

and trading activity of Long Leaf’s customers. 

10. As part of Gain’s response to the 4g request, Gain produced, in July 2019, a 

dataset in Excel format containing the customer trading data reflected in the daily activity 

statements that Gain issued to Long Leaf’s customers. The dataset was called Long Leaf 

Balances.xlsx (“Gain Dataset”) and contained more than 325,000 rows of data representing all 

daily activity statements compiled for Long Leaf customers from January 2014 to December 

2018. 

11. On May 13, 2019, I issued a request under Section 4g of the Commodity 

Exchange Act to Cunningham for, among other items, records regarding the futures and options 

accounts and trading activity of Long Leaf’s customers. As part of Cunningham’s response to 

the 4g request, Cunningham produced, in the summer and fall of 2019, a series of Excel files 

containing customer activity records for all Long Leaf customers for each month from 

September 2018 through December 2019. The excel files contained over 1,300 rows of data 

representing all monthly activity statements compiled by Cunningham for Long Leaf customers. 

I combined the data Cunningham produced in the Excel files into a single dataset. 

(“Cunningham Dataset”). 

12. On November 30, 2020, in response to a document request issued by the CFTC, 

Long Leaf produced an Excel spreadsheet to the CFTC with the filename “Self Directed Traders 

as of 7262018_4682365.xlsx” containing the names and account numbers for 40 Long Leaf 

customer accounts. The document is attached hereto as Exhibit B. 

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13. During his June 23, 2021 deposition, on pages 130:7 – 131:24, defendant 

Donelson confirmed that the customer accounts identified in Exhibit B were the only Long Leaf 

accounts that did not participate in the trading program during the Relevant Period. 

14. Using the list of accounts in Exhibit B for reference, I identified and marked each 

customer account in the Gain and Cunningham Datasets as a) self-directed, or b) a participant in 

the trading program. I then filtered the results to review only the accounts of customers who 

participated in the trading program. 

B. Net Losses for Trading Program Participants 

Profit and Loss at Gain for customers participating in trading program 

15. To determine the PNL, net of all commissions and fees, realized by Long Leaf 

customers trading at Gain and participating in the trading program during the Relevant Period, I 

combined the values contained within the Gain dataset in the “OptionPremium”, 

“Commissions”, “ClearingFees”, “GiveInFees”, “NFAFees”, “TransactionFees”, and 

“AllOtherFees” fields into a summary field called Net Realized PNL. 

16. To confirm the accuracy of the values reflected in the Gain Dataset, on a sample 

basis, I traced and agreed the values in the columns of the Gain Dataset to the individual monthly 

customer activity statements produced by Gain during the investigation. I did the same thing 

with respect to the Net Realized PNL reflected in the Gain Dataset. 

17. Based on my review of the Gain Dataset, Long Leaf customer accounts 

participating in the trading program suffered trading losses at Gain totaling $4,564,485 during 

the Relevant Period. See Ex. A. 280 of the 285 customer accounts in the Gain Dataset that 

participated in the Long Leaf trading program during the Relevant Period lost money. 

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18. Long Leaf’s pleadings reflect that Defendant Evans was CEO of Long Leaf from 

at least June 2015 through November 2017. (Doc. 23, Long Leaf’s Ans. ¶¶ 17-18.) $3,390,407 

of the Long Leaf customer losses in the Gain Dataset were incurred during that period. See Ex. 

A. $1,174,078 of those losses were incurred between December 2017 and September 2018, i.e., 

when Donelson was CEO but before the switch to Cunningham. 

Profit and Loss at Cunningham for customers participating in trading program 

19. To determine the PNL, net of all commissions and fees, at Cunningham incurred 

by Long Leaf customers participating in the trading program during the Relevant Period, I 

combined the values contained within the Cunningham dataset in the “Realized PNL”, 

“Commission”, “Clearing Fee”, “NFA Fee”, and “Transaction Fee” fields into a summary field 

called Net Realized PNL. 

20. To confirm the accuracy of the values reflected in the Cunningham Dataset, on a 

sample basis, I traced and agreed the values in the columns of the Cunningham Dataset to the 

individual monthly customer activity statements produced by Cunningham during the 

investigation. I did the same thing with respect to the Net Realized PNL reflected in the 

Cunningham Dataset. 

21. Based on my review of the Cunningham dataset, Long Leaf customers 

participating in the trading program suffered losses at Cunningham totaling $1,202,660 during 

the Relevant Period. See Ex. A. 108 of the 118 customer accounts in the Cunningham Dataset 

that participated in the trading program during the Relevant Period lost money. 

 

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Total Losses 

22. Overall, Long Leaf customers participating in the trading program lost a 

combined total of $5,767,145 at Gain and Cunningham between June 2015 and December 2019. 

See Ex. A. These losses include losses from trading, as well as commissions and fees. 

23. $2,376,738 of the losses occurred when Donelson was CEO. See Ex. C. 

C. Commissions Charged by Long Leaf 

Commissions paid on Gain transactions 

24. During the investigation, Gain produced a document to the CFTC reflecting the 

commission payments made by Gain to Long Leaf between December 2012 and April 2019. See 

Ex. D. These records reflect that Gain paid a total of $3,842,619 in commissions to Long Leaf 

between July 2015 and September 2018. 

25. In his June 23, 2021 deposition, on pages 137:20 – 138:1, defendant Donelson 

stated that 90% of the commission payments made to Long Leaf by Gain were attributable to 

customers participating in the trading program. 

26. Based on defendant Donelson’s deposition testimony, I calculated that Long Leaf 

was paid $3,458,357 in commissions by Gain for trading by customers participating in the 

trading program (total Gain commissions paid of $3,842,619 x 90%). 

Commissions paid to Long Leaf by Cunningham 

27. Defendant Donelson testified in his June 23, 2021 deposition, on pages 131:19 – 

131:24, that all Long Leaf customer accounts opened after July 26, 2018 participated in the 

trading program. Since Cunningham carried Long Leaf customer accounts starting in September 

2018 and continuing through December 2019, all Long Leaf customer accounts opened at 

Cunningham were participants in the trading program. 

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Ex. A

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Year‐Month Monthly PNL at Gain

Monthly PNL at

Cunningham

Combined Cumulative Net

Realized Profit and Loss

2015‐06 ($82,559.57) ($82,559.57)

2015‐07 ($161,229.36) ($243,788.93)

2015‐08 $213,899.10 ($29,889.83)

2015‐09 $178,333.01 $148,443.18

2015‐10 ($190,308.58) ($41,865.40)

2015‐11 ($266,748.45) ($308,613.85)

2015‐12 ($250,038.01) ($558,651.86)

2016‐01 ($80,719.77) ($639,371.63)

2016‐02 ($308,626.59) ($947,998.22)

2016‐03 $117,937.05 ($830,061.17)

2016‐04 ($88,049.76) ($918,110.93)

2016‐05 ($84,687.18) ($1,002,798.11)

2016‐06 $3,686.30 ($999,111.81)

2016‐07 ($157,148.64) ($1,156,260.45)

2016‐08 $28,231.34 ($1,128,029.11)

2016‐09 $39,439.47 ($1,088,589.64)

2016‐10 ($113,608.20) ($1,202,197.84)

2016‐11 $51,520.71 ($1,150,677.13)

2016‐12 $209,409.47 ($941,267.66)

2017‐01 ($353,768.99) ($1,295,036.65)

2017‐02 ($387,681.16) ($1,682,717.81)

2017‐03 $159,582.09 ($1,523,135.72)

2017‐04 $113,329.45 ($1,409,806.27)

2017‐05 ($549,086.24) ($1,958,892.51)

2017‐06 $233,971.83 ($1,724,920.68)

2017‐07 ($193,385.87) ($1,918,306.55)

2017‐08 ($1,217,117.86) ($3,135,424.41)

2017‐09 $305,867.87 ($2,829,556.54)

2017‐10 ($97,655.27) ($2,927,211.81)

2017‐11 ($463,194.77) ($3,390,406.58)

2017‐12 $50,662.79 ($3,339,743.79)

2018‐01 ($710,299.72) ($4,050,043.51)

2018‐02 ($210,665.91) ($4,260,709.42)

2018‐03 $69,714.07 ($4,190,995.35)

2018‐04 ($343,316.49) ($4,534,311.84)

2018‐05 ($16,435.94) ($4,550,747.78)

2018‐06 ($44,398.68) ($4,595,146.46)

Long Leaf Trading

Monthly and Cumulative Profits and Losses (PNL)

of Participants in the Trading Program

June 2015 ‐ December 2019

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Year‐Month Monthly PNL at Gain

Monthly PNL at

Cunningham

Combined Cumulative Net

Realized Profit and Loss

2018‐07 ($46,000.72) ($4,641,147.18)

2018‐08 $56,799.03 ($4,584,348.15)

2018‐09 $19,863.26 $118,489.53 ($4,445,995.36)

2018‐10 $19,876.92 ($4,426,118.44)

2018‐11 ($305,473.43) ($4,731,591.87)

2018‐12 ($119,988.99) ($4,851,580.86)

2019‐01 ($40,968.02) ($4,892,548.88)

2019‐02 ($72,530.78) ($4,965,079.66)

2019‐03 ($56,411.48) ($5,021,491.14)

2019‐04 ($45,604.46) ($5,067,095.60)

2019‐05 ($66,668.59) ($5,133,764.19)

2019‐06 ($281,247.92) ($5,415,012.11)

2019‐07 $301,638.99 ($5,113,373.12)

2019‐08 ($56,352.49) ($5,169,725.61)

2019‐09 $146,099.22 ($5,023,626.39)

2019‐10 ($153,558.29) ($5,177,184.68)

2019‐11 ($485,808.16) ($5,662,992.84)

2019‐12 ($104,151.67) ($5,767,144.51)

Total PNL ($4,564,484.89) ($1,202,659.62) ($5,767,144.51)

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Ex. B

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Ex. C

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Month End

Monthly Customer

PNL

Cumulative Monthly

Customer PNL

12‐2017 $50,662.79 $50,662.79

1‐2018 ($710,299.72) ($659,636.93)

2‐2018 ($210,665.91) ($870,302.84)

3‐2018 $69,714.07 ($800,588.77)

4‐2018 ($343,316.49) ($1,143,905.26)

5‐2018 ($16,435.94) ($1,160,341.20)

6‐2018 ($44,398.68) ($1,204,739.88)

7‐2018 ($46,000.72) ($1,250,740.60)

8‐2018 $56,799.03 ($1,193,941.57)

9‐2018 $138,352.79 ($1,055,588.78)

10‐2018 $19,876.92 ($1,035,711.86)

11‐2018 ($305,473.43) ($1,341,185.29)

12‐2018 ($119,988.99) ($1,461,174.28)

1‐2019 ($40,968.02) ($1,502,142.30)

2‐2019 ($72,530.78) ($1,574,673.08)

3‐2019 ($56,411.48) ($1,631,084.56)

4‐2019 ($45,604.46) ($1,676,689.02)

5‐2019 ($66,668.59) ($1,743,357.61)

6‐2019 ($281,247.92) ($2,024,605.53)

7‐2019 $301,638.99 ($1,722,966.54)

8‐2019 ($56,352.49) ($1,779,319.03)

9‐2019 $146,099.22 ($1,633,219.81)

10‐2019 ($153,558.29) ($1,786,778.10)

11‐2019 ($485,808.16) ($2,272,586.26)

12‐2019 ($104,151.67) ($2,376,737.93)

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Ex. D

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Month

2012 2013 2014 2015 2016 2017 2018 2019

Jan $         133.00 $        2,986.00 $     32,184.00 $        81,612.00 $      113,617.00 $    79,951.00 $        76,029.00

Feb $         105.00 $        4,917.00 $     39,343.00 $      112,240.00 $      155,552.00 $    68,546.00 $          1,765.00

March $           91.00 $        4,636.00 $   106,100.00 $        93,748.00 $      163,237.00 $    59,261.00 $          1,317.00

April $      2,785.00 $        3,086.00 $   347,749.00 $        81,729.00 $      152,764.00 $  102,137.00 $          2,105.00

May $      3,328.00 $        4,595.00 $     40,768.00 $        86,654.00 $      152,618.00 $    98,776.00

June $      6,006.00 $        3,518.00 $     44,627.00 $        93,581.00 $      169,743.00 $    81,151.00

July $      3,144.00 $        4,600.00 $     36,988.00 $        86,171.00 $      141,754.00 $    71,318.00

August $      2,957.00 $        9,503.00 $     48,694.00 $        85,741.00 $      138,742.00 $    76,027.00

September $      3,167.00 $      22,627.00 $     54,540.00 $      108,896.00 $      118,048.00 $    37,000.00

October $      3,808.00 $      31,515.00 $     70,568.00 $      135,705.00 $        59,860.00 $                ‐

November $    12,325.00 $      35,885.00 $     64,373.00 $      123,627.00 $        91,651.00 $      1,179.00

December $                        49.00 $      6,108.00 $      37,432.00 $     53,744.00 $      163,154.00 $        84,474.00 $    11,453.00

Payments Made to:

Beneficiary

Account No. 6339

Bank

ABA 71000013

Year

Payments Made to Long Leaf Trading Group Inc. by GAIN Capital Group LLC

Long Leaf Trading Group, Inc.

JP Morgan Chase Bank, NA

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Ex. E

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