Commodity Futures Trading Commission v. Carducci
- P. Castel
- 1:19-cv-08351
- U.S. District Court · Southern District of New York
- 9
In Commodity Futures Trading Commission v. Carducci, Judge Castel entered default judgment imposing injunctions, restitution, and penalties after defendants did not appear.
Dominick Vincent Carducci and Vos Capital Management, LLC were subjected to permanent restrictions and joint financial obligations. Pool participants identified by the CFTC could receive distributed restitution, while the CFTC and National Futures Association were assigned enforcement and monitoring roles under the order.
What happened
Commodity Futures Trading Commission v. Carducci involved the Commission’s request for judgment against Dominick Vincent Carducci and Vos Capital Management, LLC. The defendants were served, did not appear or answer, and the Clerk entered defaults against them.
Because the defendants defaulted, the court treated the complaint’s properly stated facts as admitted. The court permanently barred the defendants from specified commodity-interest activities and ordered them to pay $953,875 in restitution and $2,861,625 in civil penalties, jointly and severally.
Judge Castel granted the Commission’s motion for default judgment. The National Futures Association was appointed to collect and distribute restitution, and the court kept jurisdiction to enforce or modify the order.
The detailed version
- Commodity Futures Trading Commission v. Carducci · No. 1:19-cv-08351
- P. Castel
- June 23, 2020
Background
The Commodity Futures Trading Commission (CFTC) filed the complaint on September 9, 2019, against Dominick Vincent Carducci and Vos Capital Management, LLC (Vos). The opinion states that Carducci was personally served on October 5, 2019, and that Vos was served through an agent on September 13, 2019. Neither defendant appeared. On November 5, 2019, the Clerk of Court issued certificates of default against both defendants.
The CFTC moved for default judgment on January 23, 2020. The opinion also states that Carducci was sentenced in the District of South Carolina to 24 months’ imprisonment and ordered to pay more than $900,000 in restitution in connection with the same scheme involved in this case.
Court’s Reasoning
The court explained that a defendant who defaults admits the complaint’s well-pleaded factual allegations. Because the defendants’ default counted as an admission of the complaint’s allegations, the court concluded that it did not need to conduct the fact-finding process proposed by the CFTC.
Ruling
Judge P. Castel granted the CFTC’s motion for entry of default judgment.
The judgment permanently restrained and prohibited Carducci from directly or indirectly engaging in conduct violating the specified provisions of the Commodity Exchange Act and related regulations. It imposed similar permanent restraints on Vos under the provisions specified in the order. The defendants were also permanently prohibited from activities including trading on or subject to the rules of a registered entity, entering into transactions involving commodity interests for certain accounts, directing commodity-interest trading for others, soliciting or accepting funds for purchasing or selling commodity interests, applying for or claiming certain Commission registration exemptions, and acting in specified roles for regulated persons or entities.
The defendants were ordered to pay $953,875 in restitution jointly and severally. This means each defendant could be required to pay the full amount, subject to the order’s provisions. The National Futures Association was appointed as the court’s monitor to collect restitution and distribute it equitably to eligible pool participants. Restitution payments made by Carducci in the related criminal case would receive dollar-for-dollar credit against the restitution obligation.
The defendants were separately ordered to pay a $2,861,625 civil monetary penalty jointly and severally. The order states that this amount equals three times the monetary gain to the defendants from their violations. Post-judgment interest would accrue on either obligation if it was not paid immediately.
Other Provisions
The order made eligible pool participants who suffered losses intended third-party beneficiaries, allowing them to seek enforcement of the order concerning unpaid restitution. It also required the defendants to cooperate with the monitor, imposed notice requirements concerning changes to their contact information while amounts remained unpaid, and stated that the court would retain jurisdiction to ensure compliance and address motions to modify or obtain relief from the order.
Read the full 9-page opinion on CourtListener, the free public archive maintained by the Free Law Project.