United States District Court, D. Connecticut
ORDER DENYING MOTION TO DISMISS SUPERSEDING
Jeffrey Alker Meyer United States District Judge
a criminal case about an alleged conspiracy to engage in
commodities fraud involving the trading of precious metals
futures contracts. Defendant Andre Flotron has filed a motion
to dismiss the superseding indictment. I conclude that the
indictment properly alleges the legal requisites and facts to
establish an unlawful conspiracy to commit commodities fraud.
I further conclude that the superseding indictment is not
unconstitutionally vague. Accordingly, I will deny
defendant's motion to dismiss.
superseding indictment alleges that defendant traded in
futures contracts for precious metals on behalf of UBS AG,
one of the world's largest banking and financial services
companies. According to the indictment, “a precious
metals futures trader can defraud market participants by
bidding to buy or offering to sell precious metals futures
contracts with the intent, at the time the bid or offer is
placed, to cancel the bid or offer before it is
executed.” Doc. #58 at 3 (¶ 9). The indictment
explains how such a practice-known as
“spoofing”-may be used to defraud market
a. A trader places one or more large orders either to buy or
to sell certain futures contracts which the trader intends to
cancel before they are executed (the “Trick
Orders”). To drive prices up, the trader places Trick
Orders to buy, which create the false impression in the
market of increased demand. To drive prices down, the trader
places Trick Orders to sell, which create the false
impression in the market of increased supply.
b. In conjunction with the Trick Orders, the same trader also
places, on the opposite side of the market, one or more
orders in a much lower quantity that the trader actually
intends to execute (the “Genuine Orders”).
c. Other market participants react to the false impression
created by the Trick Orders by offering to buy or sell at
prices, quantities, and at times that they otherwise would
not. This, in turn, often causes the market price of a given
futures contract to rise or fall.
d. When the market prices changes as a result of the Trick
Orders in a manner, and to a degree, that the trader intends,
the trader's Genuine Orders are often filled at favorable
prices, quantities, and at times that otherwise would not
have been available, but for the Trick Orders.
Doc. #58 at 3-4 (¶ 10).
indictment goes on to allege that defendant and
co-conspirators engaged in such practices for more than five
years. It alleges that “[t]he Trick Orders placed by
FLOTRON and his co-conspirators frequently, and fraudulently,
induced other market participants to place offers to buy or
bids to sell precious metals futures contracts at prices,
quantities, and at times that they otherwise would not,
driving up or down the price of those precious metals futures
contracts and causing FLOTRON's and his
co-conspirators' Genuine Orders to be filled.”
Id. at 5-6 (¶ 17). The indictment further
alleges that “[b]etween approximately July 2008 and
approximately November 2013, FLOTRON and his co-conspirators
placed hundreds of Trick Orders for precious metals futures
contracts in an effort to cause Genuine Orders placed by
FLOTRON and his co-conspirators to be filled at prices,
quantities, and at times that they otherwise would
not.” Id. at 6 (¶ 20).
well established that an indictment is legally sufficient if
it tracks the elements of the offense and alleges facts with
sufficient precision to give a defendant fair notice of the
charge he must meet. See, e.g., United States v.
Bout, 731 F.3d 233, 240 (2d Cir. 2013). Moreover, when
an indictment alleges a conspiracy, it need not allege with
technical precision all the elements essential to the
commission of the crime that is the object of the conspiracy.
does nothing to suggest that the indictment here fails at a
technical level to allege the requisite elements of the
conspiracy crime or that it otherwise fails to give him fair
notice as a factual matter of what the prosecution alleges
that he did wrong. Defendant contends instead that the facts
as alleged in the indictment do not amount to the crime of
commodities fraud. He argues that he made no false or
fraudulent representation to any market participant and that
every buy or sell order he placed into the market was a
bona fide order that was available to be traded upon
by any market participant until later cancelled before
execution. By his reckoning, even if the Government proves
every fact it has charged in the indictment, he has committed
true that an indictment may be subject to dismissal if the
facts it alleges do not amount to the charged crime.
Nevertheless, a fact-based challenge to an indictment is not
a permissible vehicle for the Court to scrutinize the
anticipated sufficiency of the Government's evidence,
because the Government is entitled to marshal and present its
evidence at trial subject to a proper challenge for
sufficiency under Fed. R. Crim. P. 29. Accordingly, my role
at this pre- trial stage is solely to determine whether,
assuming all of the facts as alleged in the indictment are
true, a ...