46 Indicted in Futures Fraud Probe : Chicago Charges Include Racketeering, False Tax Returns

A federal grand jury today indicted 46 commodity traders and brokers in the government’s 2 1/2-year investigation into alleged fraud in Chicago’s futures markets.

Atty. Gen. Dick Thornburgh announced at a news conference that charges include racketeering, mail fraud, commodities fraud and the filing of false tax returns and lying to federal agents.

The charges follow an undercover investigation by the FBI of traders at the Chicago Board of Trade and the Chicago Mercantile Exchange, the world’s two largest futures exchanges. The landmark investigation first came to light in January.

According to published reports, as many as 20 traders have agreed to plead guilty to fraud charges and will testify for the government against their colleagues to avoid stiffer penalties and long, expensive trials.

The investigation centered on various alleged trading violations at the exchanges, including conspiracy to skim customer accounts and hide the profits from the Internal Revenue Service.

FBI agents impersonated traders in several trading pits, including the soybean and Treasury bond trading pits at the CBT and the CME’s Japanese yen, Swiss franc and Standard & Poor’s 500 futures pits. Agents secretly tape-recorded conversations and participated in illegal trades.

Those charged were 19 traders from the soybean pit, three in the bond pit, three in the Swiss franc pit and 21 in the yen pit.

Also present for the announcement of the indictments were FBI Director William S. Sessions, Commodity Futures Trading Commission Chairman Wendy Gramm and U.S. Atty. Anton Valukas, whose office led the investigation.

Valukas said traders broke the law and the rules of the exchange by arranging deals with one another before and after the pits opened for trading.

He said the federal investigation will continue beyond the current indictments. “This is an ongoing investigation. It is not a concluded investigation. This is the first step in what we will be doing in connection with these matters,” Valukas said.