New Canaan Man Convicted Of Wire Fraud: Authorities

NEW CANAAN, CT — A federal jury convicted a New Canaan man and a former Southport man Thursday after they engaged in a multi-year fraud scheme to manipulate U.S. commodities markets, according to federal officials.

The offenders are Edward Bases, 59, of New Canaan, a former senior trader at Deutsche Bank and Bank of America in New York, and John Pacilio, 57, formerly of Southport and a former senior trader at Bank of America and Morgan Stanley in New York, a news release from the U.S. Department of Justice said.

The two fraudulently pushed market prices up or down by placing large “spoof” orders in the precious metals futures markets that they did not intend to fill, in order to manipulate prices for their own gain and that of the banks, and to defraud other traders, according to the news release.

“These defendants undermined public confidence in U.S. commodities markets by manipulating prices to create the false appearance of supply and demand,” Assistant Attorney General Kenneth Polite Jr. said in the news release. “This verdict shows that the Department of Justice is committed to holding accountable those who line their pockets by manipulating our financial markets through fraud.”

Bases and Pacilio taught other traders how to engage in spoofing, the news release said. Electronic chat messages introduced as evidence showed that Bases said, “I know how to ‘game’ this stuff,” and that Pacilio admitted to spoofing and said, “If you spoof this it really moves,” according to the news release.

“Illegally moving market prices in a direction that suits individual interests is a quick way to lose investor confidence and rack up federal criminal charges,” Jacqueline Maguire, acting assistant director in charge of the FBI’s New York Field Office, said in the news release. “The FBI will continue to pursue those who manipulate our financial markets.”

As a result of Bases’s and Pacilio’s scheme, market participants, some of whom testified at trial, were induced to trade at prices, quantities and times that they otherwise would not have traded, according to the news release.

Bases was convicted of conspiracy to commit wire fraud affecting a financial institution and wire fraud affecting a financial institution, the news release said. Pacilio was convicted of conspiracy to commit wire fraud affecting a financial institution, wire fraud affecting a financial institution and commodities fraud, according to the news release.

Conspiracy to commit wire fraud and wire fraud affecting a financial institution carry a maximum sentence of 30 years in prison, and commodities fraud carries a maximum sentence of 25 years’ imprisonment, the news release said.