There is a legal precedent regarding contempt charges that basically state that if a person is held for an extended time period without compliance and there no longer is any reasonable chance that further incarceration will produce the desired result, then the person being held on contempt is to be released. That never happened in Armstrong’s case because he was being held on behalf of the members of the “club.”
He subsequently sued the prison system for negligence for locking a known homicidal maniac in the same cell with him. The result? This is what recently happened after promises were made during Martin’s “confession” that they would not seek restitution.
NEW YORK FEDERAL COURT ORDERS MARTIN ARMSTRONG, PRINCETON GLOBAL MANAGEMENT AND PRINCETON ECONOMICS INTERNATIONAL TO PAY MORE THAN $27 MILLION IN REMAINING RESTITUTION IN CFTC ANTI-FRAUD ACTION
The following information was released by the Commodities Futures Trading Commission:
The U.S. Commodity Futures Trading Commission (CFTC) announced today that it obtained more than $27 million in remaining restitution and permanent injunctions in consent orders that settle its fraud charges against Martin Armstrong of Maple Shade, N.J., and his investment firms Princeton Global Management Ltd. (PGM) and Princeton Economics International Ltd. (PEI). In addition to the restitution awards, the consent orders bar Armstrong, PEI and PGM from trading, applying for registration, engaging in any activity requiring registration or acting as a principal of any registered entity or person.
The Honorable Kevin P. Castel of the U.S. District Court for the Southern District of New York entered the consent orders of permanent injunction on June 24, 2008, and July 31, 2009.
Armstrong is currently serving a five-year sentence at the Federal Correctional Institution at Fort Dix, N.J. On August 7, 2006, Armstrong pled guilty in a related criminal action brought by the Office of the U.S. Attorney for the Southern District of New York (USAO). Armstrong was sentenced pursuant to the April 10, 2007, order of the Honorable John F. Keenan of the U.S. District Court for the Southern District of New York.
The consent orders arise from a CFTC complaint filed on September 13, 1999, against Armstrong, and PGM and PEI, the corporations he directed as chairman (see CFTC Press Release 4312-99, September 14, 1999). The complaint alleged that from approximately November, 1997, to September, 1999, Armstrong, PEI and PGM defrauded customers by operating and managing a commodity pool that concealed substantial trading losses incurred as the result of commodity futures trading. The complaint further charged Armstrong, PEI and PGM with issuing reports to customers that fraudulently represented the net asset value of their interests in the commodity pool. A related civil action was filed by the Securities and Exchange Commission.
This Order against Armstrong, PEI and PGM entirely resolves the CFTC's charges.
Order Follows Previous CFTC Settlements with Participants in the Fraudulent Scheme.
In July, 2004, the CFTC entered an order against Harold Ludwig, former co-director, with Martin Armstrong, of PGM, which required Ludwig to pay $4.9 million in restitution and a $2 million civil monetary penalty for his role in fraudulently allocating profitable trades to benefit himself rather than the Princeton customers. Also in July, 2004, the CFTC entered an order against William Rogers and Maria Toczylowski, the former President and Vice President, respectively, of the commodity futures division of Republic New York Securities, Corp. (Republic). The order required them to pay $6 million and $400,000 in restitution and $2 million and $240,000 in civil monetary penalties, respectively, for their roles in executing net asset value letters that intentionally misrepresented the true values of the Princeton accounts and for assisting in fraudulently allocating trades to the detriment of Princeton customers (See CFTC Press Release 4952-04, July 13, 2004).
In December, 2001, the CFTC entered an order against Republic, a futures commission merchant through which the trading was conducted, that imposed a $5 million civil monetary penalty against Republic for its role in assisting Armstrong, PGM and PEI in hiding significant trading losses and in operating a Ponzi scheme. (See CFTC Press Release 4590-01, December 17, 2001).
Former Customers Injured by the Scheme Have Received More Than $600 Million in Return for Their Losses.
At the outset of this matter, at the CFTC's request, the U.S. District Court froze Armstrong's, PGM's and PEI's assets and appointed a receiver to recover and distribute assets to defrauded investors. The receiver has thus far distributed more than $50 million in restitution as part of an interim distribution ordered by the court (see CFTC Press Release 5054-05, March 14, 2005). An additional $569 million as part of a related proceeding filed by the USAO against Republic (see CFTC Press Release 4590-01, December 17, 2001) has also been distributed to the defrauded investors.
The CFTC appreciates the assistance and coordination of the Office of the U.S. Attorney for the Southern District of New York and the Securities and Exchange Commission in this matter. The CFTC also thanks the Court appointed Receiver, his staff and legal counsel for their efforts in successfully recovering and distributing assets to the defrauded investors.
The following CFTC Division of Enforcement staff were responsible for this case: Stephen J. Obie, Vincent A. McGonagle, Lenel Hickson, Jr., Steven Ringer and Sheila Marhamati.
This action was taken in direct retaliation for Martin suing the prison system, plain and simple.
The SEC had earlier agreed to review his case but have denied him any relief. Below is Martin’s latest argument to the SEC.