Compliancex

Heads are being scratched over a $41.3 million civil judgment handed down against an accused securities swindler who was first sued by regulators back in 2009, but apparently has yet to face any criminal charges.

At center stage in this drama is Gordon A. Driver, a 54-year-old Canadian who also resides in Las Vegas. In 2009, he was sued by the Securities and Exchange Commission, and later by the Commodity Futures Trading Commission, for ripping off $14.1 million from investors in what regulators branded as a futures trading Ponzi scheme.

In 1998, Gordon A. Driver claimed to be developing a proprietary software trading system that would be fool-proof in the slippery futures trading universe. According to the SEC complaint, Driver solicited investors for his company, Axcess Automation LLC, and then started another enterprise, Axcess Fund Management LLC. He promised that by using his software program to buy and sell futures, he could offer investors weekly returns ranging from 1 to 5 percent.

Beginning in February 2006, the SEC said, Gordon A. Driver raised $14.1 million from more than 100 investors in Canada and the U.S. He told investors that he pooled their funds to trade futures, specializing in e-Mini S&P futures.

But the SEC said the operation was actually a Ponzi scheme that invested only $3.7 million in futures trading. Of the total invested, Driver lost $3.55 million, the federal complaint said.

Driver was also accused of misappropriating $10.7 million to make Ponzi payments to earlier investors. In addition, the SEC said he stole $1.1 million to pay for cars, jewelry, Las Vegas gambling junkets, and clothing, and to make $469,000 in cash withdrawals from bank accounts.

In 2010, the CFTC filed its own enforcement action against Driver.

Regulators said Driver solicited friends, neighbors and family to invest in Axcess. He also recruited close relatives of the owners of an Ontario-based Christian television ministry to be “point persons” who recruited new investors for five percent commissions.

“Driver in fact operated Axcess as a Ponzi scheme,” the SEC concluded in its complaint.

In the end, it turned out to be the CFTC enforcement action that led to a judgment entered against Gordon A. Driver and Axcess in U.S. District Court for the Central District of California.

Earlier this month, the CFTC announced that Judge Otis D. Wright III had ordered Driver and his company to pay their victims $9.5 million in restitution, and pay the government $31.8 million in civil penalties. Permanent trading and registration bans were also ordered.

But some consider the obvious question to be why Driver apparently faces no criminal actions. In OC Weekly, published in Orange County, Calif., journalist R. Scott Moxley put it this way:

“I know what you’re thinking. A remorseless white-collar criminal steals $14 million and never got arrested or spent a minute in jail or an hour in prison. How does that happen?”

James Welsh is a financial writer specializing in compliance and securities fraud issues. He also authors the “Top 10” column at www.thestreetsweeper.org, and has held staff editing and writing positions at newspapers including The Times-Picayune of New Orleans and the Orange County (Calif.) Register.

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