In an Initial Decision issued on August 24, 1998, Commodity Futures Trading Commission Administrative Law Judge (ALJ) George H. Painter found that, during 1989, Jerry W. Slusser, formerly of Indianapolis, Indiana, and currently of Las Vegas, Nevada, and First Republic Financial Corporation (FRFC) (formerly known as Vancorp Financial Services) of Indianapolis, Indiana, misappropriated nearly $6 million of customer funds, made material misrepresentations and omissions of facts to customers, and failed to register with the Commission and make required disclosures in their operation of two commodity pools.Slusser has also donated hundreds of thousands of dollars to other Indiana Republicans in recent years, including Massa's former boss, Gov. Mitch Daniels and Indiana Secretary of State Todd Rokita and the Indiana Republican Party. It looks like Slusser has even flown Gov. Daniels around in one of his private jets he leases on a number of occasions as well when it wasn't being used for, ahem, other "business matters."
The ALJ found Slusser, the owner and chairman of the board of FRFC and a registered associated person, liable for FRFC's violations as a controlling person of the firm and that another of Slusser's corporations, First Republic Trading Corporation (FRTC), a registered introducing broker also of Indianapolis, aided and abetted FRFC's and Slusser's fraud.
The ALJ also found that FRFC illegally acted as a commodity pool operator (CPO) without being registered with the CFTC, that Slusser illegally acted as an associated person of a CPO without registration, and that FRFC violated CFTC regulations governing the operation of commodity pools and required disclosures to pool participants.
ALJ Orders $10 Million Fine Against Slusser, FRFR, and FRTC
The ALJ ordered Slusser, FRFC, and FRTC to cease and desist from further violations, permanently banned them from trading commodity futures, revoked the registrations of First Republic Trading and Slusser, and ordered Slusser, FRFC, and FRTC --jointly and severally -- to pay a $10 million civil monetary penalty, the largest ever assessed in a litigated Commission administrative proceeding.
In 2003, Time magazine featured a story entitled "The Great Energy Scam" in which it shed some more light on who this mysterious businessman Jerry W. Slusser is:
With some exceptions, the 21st century version of synthetic-fuel plants uses competing coal-altering processes developed by a handful of companies, which make money by licensing their technology. One is Earthco, a mysterious Las Vegas enterprise whose technology is used in 10 plants in six states. An Earthco founding principal was Jerry W. Slusser, 57, who has been involved in a string of curious businesses. In 1998 a Commodity Futures Trading Commission judge found that Slusser and two of his companies "pilfered millions of dollars from customers using the commodities market to carry out their scheme." Some of the money was funneled through accounts of Slusser's Sterling International Bank Ltd., which existed as a post office drop on the Caribbean island of Montserrat. The commission barred Slusser and his firms from trading commodity futures and assessed a $10 million penalty, the largest ever in an administrative hearing. A U.S. appeals court, while acknowledging there had been "multiple frauds," reduced the fines to $600,000, which Slusser has again appealed.Massa has stated the biggest challenge the next prosecutor in Marion County will have is "restoring public confidence not only in the prosecutor’s office but in law enforcement writ large.” My question to Massa is how he can accept money from someone like Slusser and assure us he will not be influenced by the acceptance of such questionable contributions. Slusser has the right to donate money to whom ever he pleases, but candidates for public office have the right to turn down campaign contributions they receive. Hasn't Mitch Daniels, Mark Massa, our state's chief securities enforcer, Todd Rokita, or anyone else in my party asked the question whether it is appropriate to be accepting contributions from Slusser? According to FEC records, Slusser has maxed out contributions to Rokita this year and GOP Senate candidate Dan Coats. Has nobody learned the lessons from Tim Durham?
The investor's home in a gated country-club community just off the Las Vegas strip is also the official address of more than 80 Slusser-related business ventures with names like 481TL LLC, CCHDDNV Inc., N15SB LLC and QEAT4 LLC. With their principals scattered across the country, the companies have the appearance of being tax-avoidance devices, just like the synfuels scheme. What, if anything, does Earthco's synfuel process do? Calls for information to Earthco and its employees were fruitless. When TIME reached Slusser, he promptly hung up the telephone after hearing the writer identify himself. A call to Earthco's office in Las Vegas proved equally unproductive. A woman who identified herself as Susan Trimboli said any questions would have to be answered by a Jim Scott in Sacramento, Calif. He turned out to be James Scott, who works out of Earthco's Las Vegas office. He is the president of Mid-Power Service Corp., another Las Vegas energy business. Until two weeks ago it was in bankruptcy court. Scott did not return calls, but Mark Davis, a Sacramento attorney and Scott associate, did. Asked about Slusser's current connection with Earthco, Davis replied, "The answer is zero. Neither as a shareholder, officer—no capacity whatsoever." But Davis declined to discuss Slusser's earlier involvement, the nature or origin of Earthco's technology or how it has reduced American dependence on foreign oil. "That's really all I have to say," he said.