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UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION

COMMODITY FUTURES TRADING 

COMMISSION, 

 Plaintiff, 

v.

LONG LEAF TRADING GROUP, INC. ET AL., 

Defendants.

 No. 20 C 3758

Judge Thomas M. Durkin 

MEMORANDUM OPINION AND ORDER

The CFTC filed this motion [111], seeking injunctive relief and civil monetary

penalties against Defendants Long Leaf Trading Group, James Donelson, and Jeremy 

Ruth pursuant to 7 U.S.C. § 13a-1. For the reasons discussed below, the CFTC’s 

motion is granted in part. 

Background

The Commodity Futures Trading Commission (“CFTC”) brought this action

against Long Leaf Trading Group (“Long Leaf”) and several of its principals and 

employees, alleging multiple counts of fraud and other violations of the Commodity 

Exchange Act, 7 U.S.C. §§ 1-26 (“the Act”), and related Regulations, 17 C.F.R. §§ 1-

190. The CFTC accused Long Leaf and its agents of defrauding customers with 

misleading information about losses and profit potential to solicit trades and generate 

commissions as part of its “out-of-the-money” options trading program. The CFTC 

further claimed that Long Leaf and certain employees failed to comply with 

commodity trading advisor, or “CTA,” and/or associated person, or “AP,” registration 

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and disclosure requirements. The CFTC moved for “partial” summary judgment 

against Long Leaf, Donelson, and Ruth (together, “Defendants”); the CFTC explained 

that the motions were “partial” insofar as the CFTC would separately seek injunctive 

relief and civil monetary penalties should the Court grant the motion. See R. 76 at 1 

n.1, R. 77 at 1 n.1, R. 79 at 1 n.1. 

On July 27, 2022, the Court granted the CFTC’s motions for partial summary 

judgment against Defendants. See R. 106 (CFTC v. Long Leaf Trading Grp., Inc., No. 

20 C 03758, 2022 WL 2967452 (N.D. Ill. July 27, 2022)). The Court ordered Long Leaf 

to pay $5,767,145 in restitution and $4,010,994 in disgorgement, held Donelson 

jointly and severally liable with Long Leaf for $2,376,738 in restitution and 

$1,235,413 in disgorgement, and ordered Ruth to pay $301,541.39 in both restitution 

and disgorgement. Id. 

The CFTC now asks the Court to enjoin Defendants from: (1) “engaging in . . .

substantially any activity relating to commodity interests, i.e., a ‘trading ban;’” (2) 

“applying for registration or acting in a capacity that requires registration by 

Defendants, i.e., a ‘registration ban;’” and (3) “engaging in . . . further violative 

conduct of the kind described in the Complaint” under Section 6c(b) of the Act, 7 

U.S.C. § 13a-1(b). See R. 111 at 2. The CFTC also requests that the Court impose civil 

monetary penalties of three times Defendants’ ill-gotten gains under Section 6c(d) of 

the Act, 7 U.S.C. § 13a-1(d). Id. at 1. Donelson filed a response in opposition to the 

CFTC’s motion. See R. 116. Ruth and Long Leaf did not respond. 

Discussion 

I. Injunctive Relief

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Section 6c(b) of the Act authorizes the Court to enter injunctive relief upon a 

showing that a violation occurred and there is “some reasonable likelihood of future 

violations.” CFTC v. Hunt, 591 F.2d 1211, 1220 (7th Cir. 1979). In determining 

whether there is some reasonable likelihood of future violations, courts consider the 

totality of the circumstances, including whether the violation was systematic or an 

isolated occurrence and whether the violator maintains that his conduct was 

blameless. See id. In addition, “the commission of past illegal conduct is highly 

suggestive of the likelihood of future violations.” CFTC v. Garofalo, No. 10-CV-2417, 

2011 WL 4954082, at *6 (N.D. Ill. May 5, 2011) (citation omitted). Trading and 

registration bans are appropriate when a defendant’s violation of the Act or 

Regulations poses a threat to the integrity of the markets regulated by the CFTC. See

Monieson v. CFTC, 996 F.2d 852, 863 (7th Cir. 1993) (noting the CFTC takes a broad 

view of what threatens the integrity of the markets). 

The Court has already concluded that Defendants violated the Act and

Regulations. See R. 106 at 12-29. Here, there is also a reasonable likelihood that 

Defendants will commit future violations. The Court addresses each Defendant in 

turn.

First, Donelson’s violations were not isolated or inadvertent. Over the course 

of two years, he knowingly, or at least with reckless disregard for the truth, misled 

customers about losses, potential returns, and his own trading experience, in addition 

to failing to comply with registration and disclosure requirements. Id. at 12-22. 

Further, he appears to believe he is blameless. In opposition to the present motion, 

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Donelson makes excuses for his misconduct, such as that his omissions occurred a 

few months into his tenure and that he “believed he was moving the company in the 

right direction.” R. 116 at 2. That he continues to downplay the seriousness of his

actions at this juncture makes it all the more likely that he will engage in similar 

misconduct in the future. Moreover, Donelson’s prior experience and current 

employment put him in a position where he could violate the Act and related 

Regulations again. Donelson has worked in the financial industry, and in particular 

with trading firms, for over a decade and continues to do so today. According to the 

CFTC, after Long Leaf ceased operations, Donelson began a trading software venture 

and consulted for several trading firms. R. 111 at 4. Donelson does not dispute any of 

these facts or make any suggestion that he is leaving the trading industry behind. To 

the contrary, he asserts that he needs to trade in order to pay the previously ordered 

restitution and disgorgement. Donelson’s continued involvement in the financial 

industry and trading in combination with his failure to acknowledge the gravity of 

his misconduct demonstrates some reasonable likelihood that he will commit future 

violations. 

Similarly, over the course of two years, Ruth knowingly misled customers 

about the history of losses and the probability of returns in Long Leaf’s trading 

program. R. 106 at 24-27. And his employment since leaving Long Leaf has put him 

in a position to commit other violations. Ruth joined another trading firm called 

Postrock Brokerage LLC (“Postrock”) where he continued working with customers to 

trade out-of-the-money options, and subsequently tried to start his own introducing 

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broker firm. What’s more, the National Futures Association (“NFA”) brought a 

complaint against Ruth related to his work at Postrock, alleging that he made 

misleading statements to customers, failed to disclose customer losses and the impact 

of commissions on account performance, and placed unauthorized trades and trades 

with no economic benefit on behalf of customers. See R. 111-3. Ruth settled these 

charges on a no-admit-or-deny basis, but the fact of the complaint and the remarkable 

similarity between the allegations and his conduct at Long Leaf at least raises the 

specter of misconduct going forward. Ruth’s lack of response to the present motion 

deprives the Court of any facts to the contrary. Moreover, his hostile response to the 

CFTC’s efforts to confer on a briefing schedule for the present motion suggests a lack 

of respect for the agency’s enforcement authority, and in combination with his work 

since leaving Long Leaf, amounts to a reasonable likelihood of future violations. See 

R. 113-1. 

Finally, Long Leaf, acting through its principals and employees, failed to 

inform and misled customers regarding past poor performance of its trading program 

and the probability of potential returns for over four years, in addition to committing 

registration and disclosure violations. R. 106 at 29. Such systematic conduct suggests 

a reasonable likelihood of future violations. While Long Leaf has since been 

involuntarily dissolved for a failure to pay fees, that dissolution can be undone and 

does not preclude the relief sought. R. 111-2; see, e.g., SEC v. Diversified Corp. 

Consulting Grp., 378 F.3d 1219, 1228 (11th Cir. 2004) (affirming entry of injunction 

against a dissolved corporation); SEC v. Amerindo Inv. Advisors Inc., No. 05 CIV. 

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5231 RJS, 2014 WL 2112032, at *13 (S.D.N.Y. May 6, 2014) (enjoining “inactive” 

corporation), aff’d, 639 F. App’x 752 (2d Cir. 2016). Indeed, there are some facts that 

suggest Donelson may resurrect the entity under a new name. R. 111 at 7. Donelson 

did not comment on the future of Long Leaf in his response. And like Ruth, Long Leaf 

provided no response in opposition to this motion. In sum, because there is some 

reasonable likelihood that Defendants will engage in future violations, a permanent 

injunction against future violations of the Act and Regulations is appropriate. 

Defendants’ fraudulent conduct also warrants permanent trading and 

registration bans. Fraud is one of the “primary threats to market integrity.” See

CFTC v. Harrison, 255 F. Supp. 3d 645, 646 (D.S.C. 2015). Thus, contrary to 

Donelson’s contention, courts have imposed permanent trading and registration bans

where, as here, defendants failed to disclose information and made misleading 

statements to their customers. See, e.g., CFTC v. Wilshire, 531 F.3d 1339, 1343, 1347-

48 (11th Cir. 2008) (affirming permanent injunction against engaging in commodityrelated activity where defendants “made misleading statements to investors, 

promised high profits, suggested that other customers were very successful, 

downplayed the risks of commodity trading, and used seasonal information to suggest 

profit potential”); CFTC v. Complete Devs., LLC, No. 4:10 CV 2287, 2014 WL 794181, 

at *17, 27 (N.D. Ohio Feb. 26, 2014) (imposing permanent trading and registration 

bans where defendants made false statements to investors regarding risk of loss, 

rates of return, and the experience of the trading team); CFTC v. First Capitol 

Futures Grp., No. CIVA10900488CVWDW, 2010 WL 1713617, at *2, 10 (W.D. Mo. 

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Feb. 18, 2010) (entering permanent trading and registration bans where defendants 

misrepresented potential profits and risks of trading options and failed to disclose 

their losing performance record). 

Donelson’s assertion that a permanent trading ban will make it impossible for

him to make any meaningful payment toward the amount he owes in restitution and 

disgorgement is neither supported by any specific facts as to his finances nor relevant. 

The only question is whether he is reasonably likely to violate the Act or 

accompanying Regulations if not enjoined. Donelson’s claim that he needs to trade in 

order to pay the ordered amount, coupled with his claim that he will “likely never” be 

able to pay it, only serves to increase that likelihood. The Court thus finds that 

permanent trading and registration bans and an injunction on further violations of 

the Act and Regulations are appropriate with respect to Defendants. 

II. Civil Monetary Penalty

Section 6c(d)(1) authorizes the Court to assess a civil monetary penalty not 

exceeding the greater of $199,094 or triple the monetary gain to the Defendants for 

each violation. See 7 U.S.C. § 13a–1(d)(1); 17 C.F.R. § 143.8 (prescribing the inflationadjusted maximum penalty). A civil monetary penalty must be rationally related to 

the offense. See Monieson, 996 F.2d at 862. Accordingly, to determine the appropriate 

civil monetary penalty, courts consider: “(1) the nature of the violations, (2) the 

existence of any injuries inflicted on others by reason of the violations, and (3) a 

review of the sanctions imposed for similar violations.” See CFTC v. Powderly, No. 17 

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C 3262, 2019 WL 1045004, at *2 (N.D. Ill. Mar. 5, 2019) (citing Monieson, 996 F.2d at 

862). 

Here, Defendants’ violations were demonstrably serious and caused real harm 

to retail investors. For a period of years, customers collectively lost millions of dollars

through Long Leaf’s trading program, while Defendants collected millions in 

commissions. Donelson and Ruth knew about and withheld information about Long 

Leaf’s history of losses and made misleading statements to their customers about the 

prospect of returns, and in Donelson’s case, his own experience. Defrauding 

customers is a violation of the core provisions of the Act and should be considered 

very serious. Wilshire, 531 F.3d at 1346 (citation omitted). Donelson and Long Leaf 

also went beyond this fraud in failing to comply with certain registration and 

disclosure requirements. 

Given the seriousness of the violations and the substantial harm to customers, 

civil monetary penalties are warranted against Defendants. However, on review of 

sanctions in other cases, imposing the penalty that the CFTC requests of three times 

Defendants’ respective ill-gotten gains would be excessive. This case does not feature

the aggravating circumstances that are typically present in cases where courts 

impose the maximum civil monetary penalty, such as fictitious or prearranged 

trading or the misappropriation of customer funds for personal use. Cf. CFTC v. 

McDonnell, 332 F. Supp. 3d 641 (E.D.N.Y. 2018); CFTC v. Li, No. 15 C 5839, 2016 

WL 8256392 (N.D. Ill. Dec. 9, 2016); CFTC v. Sarvey, No. 08 C 192, 2012 WL 426746 

(N.D. Ill. Feb. 10, 2012); CFTC v. Driver, 877 F. Supp. 2d 968 (C.D. Cal. 2012).

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Therefore, the Court has determined to assess civil monetary penalties equal to half 

of Defendants’ respective ill-gotten gains. The Court acknowledges that some courts 

have applied higher penalties in similar circumstances. See, e.g., Complete Devs., 

2014 WL 794181, at *29 (imposing civil monetary penalty equal to amount received 

in commissions). But here, in light of the amounts Defendants must pay in restitution 

and disgorgement and the permanent bans on trading and registration, penalties 

equal to half of Defendants’ ill-gotten gains are adequate and not unduly harsh. 

Donelson argues no civil monetary penalty is necessary because the ordered 

restitution and disgorgement constitute sufficient deterrence. However, civil 

monetary penalties serve several important purposes that are distinct from the aims

of restitution and disgorgement. Civil monetary penalties “signify the importance of” 

and “act to vindicate” provisions of the Act and the Regulations and “remind both the 

recipient of the penalty and other persons subject to the Act that noncompliance 

carries a cost.” CFTC v. Emerald Worldwide Holdings, Inc., No. CV03-8339AHM, 

2005 WL 1130588, at *11 (C.D. Cal. 2005) (citation omitted). It follows then that

courts commonly impose civil monetary penalties alongside restitution and 

disgorgement in cases such as this one where Defendants defrauded customers. See, 

e.g., CFTC v. Battoo, No. 12-CV-07127, 2016 WL 3059856, at *12 (N.D. Ill. Jan. 11, 

2016) (ordering defendants to return the funds solicited from customers, disgorge illgotten gains, and pay a civil monetary penalty); First Capitol, 2010 WL 1713617, at 

*10-13 (ordering restitution of customer losses, disgorgement of ill-gotten gains, and 

civil monetary penalties); CFTC v. Carnegie Trading Grp., Ltd., 450 F. Supp. 2d 788, 

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806 (N.D. Ohio 2006) (same). For these reasons, it is appropriate to impose a civil 

monetary penalty in addition to the previously ordered restitution and disgorgement.

Donelson further suggests that he is unable to pay any additional penalty, and 

that imposing such a penalty would make it impossible for him to pay what he owes 

in restitution and disgorgement. The Court may, but is not required to, consider a 

defendant’s ability to pay in assessing a civil monetary penalty. Powderly, 2019 WL 

1045004, at *4 (citing Brenner v. C.F.T.C., 338 F.3d 713, 723 (7th Cir. 2003)). But 

here, Donelson did not provide any support for his asserted inability to pay. He did 

not include a declaration or point to any specific facts regarding his finances, net 

worth, salary, or earning potential. Cf. CFTC v. Reisinger, No. 11-CV-08567, 2017 

WL 4164197, at *10 (N.D. Ill. Sept. 19, 2017), vacated on other grounds (N.D. Ill. Sept. 

25, 2018) (considering inability to pay civil monetary penalty where defendant 

included a declaration stating that she was unemployed and had a negative net 

worth). Instead, the record reflects his ongoing employment as an independent

consultant. See R. 111-1. Donelson’s asserted inability to pay, without any support

and with facts to the contrary, does not justify a lesser penalty. 

The Court therefore assesses civil monetary penalties as follows: Donelson is 

jointly and severally liable with Long Leaf for a civil monetary penalty of $617,706.50. 

Long Leaf is separately ordered to pay a civil monetary penalty of $1,387,790.50. 

Lastly, Ruth is ordered to pay a civil monetary penalty of $150,770.50. 

Conclusion 

For the foregoing reasons, the Court grants in part the CFTC’s motion for 

supplemental relief. The Court permanently enjoins Defendants from (1) trading 

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commodity interests, directly or indirectly, for themselves or on behalf of others; (2) 

applying for registration or acting in any capacity that requires registration; and (3) 

violating the Act or any Regulations. Donelson is jointly and severally liable with 

Long Leaf for a civil monetary penalty of $617,706.50. Long Leaf is further ordered 

to pay a civil monetary penalty of $1,387,790.50. Ruth is ordered to pay a civil 

monetary penalty of $150,770.50. The civil monetary penalties are immediately due 

and owing, but only after Defendants’ restitution and disgorgement obligations have 

been satisfied should any payments be applied to satisfy any portion of the civil 

monetary penalties. 

ENTERED:

 

 

 ______________________________ 

Honorable Thomas M. Durkin

United States District Judge

Dated: December 6, 2022

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