WASHINGTON (HedgeWorld.com)–The Commodity Futures Trading Commission brought an action in federal court against a commodity pool operator and its chief executive, alleging the misappropriation of over US$1.4 million in customer funds.

The action, filed Aug. 30, against Melrose Asset Management Corp., Chicago, and John Martin Lofgren, Kenilworth, Ill., also alleges that the defendants sent false statements to two of their investors to hide this misappropriation, and that Mr. Lofgren forged the signature of one investor.

On the same day the complaint was filed, Judge William J. Hibbler, U.S. District Court for the District of Illinois, issued an order freezing the assets of the defendants, and prohibiting the destruction of books and records.

The corporate defendant, Melrose Asset Management, is the manager of The Melrose Fund LLC, a commodity pool organized in February 1998, which current has equity of over US$11 million.

The CFTC alleges that in or around January 2001, the defendants withdrew US$500,000 from The Melrose Fund and used it to pay various expenses, including personal expenses of Mr. Lofgren. Defendants made additional such withdrawals in December 2001 and February 2002.

“Defendant Lofgren forged the signature of one of the pool participants on letters Lofgren created and dated May 10, 2002,” the complaint states. “The letters purported to confirm the pool participant’s withdrawal of capital from the pool.”

Mr. Lofgren did not return a phone call requesting comment.

The National Futures Association, Sept. 4, issued a member responsibility action suspending Melrose Asset Management and Mr. Lofgren from NFA membership, and prohibiting them from soliciting or accepting any customer or pool participant funds and disbursing any funds from any pool trading accounts.

“The MRA will remain in effect until NFA is satisfied that MAMC and Lofgren are in complete compliance with all NFA requirements,” said a spokesperson.