A former Deutsche Bank commodities trader has appealed his conviction to the Supreme Court in a last-ditch attempt to avoid prison, arguing prosecutors misused the wire fraud statute in order to sentence him.
James Vorley, who was a London-based trader of precious metals futures at the German lender, was convicted on wire fraud charges in federal court in Illinois in 2020, along with co-defendant Cedric Chanu. Both men were sentenced to 12 months and a day in prison last year for “spoofing” the futures market for gold and silver between 2008 and 2013.
Spoofing involves placing bogus orders to create the illusion of substantial supply or demand, which moves prices. Computers then cancel the orders before they can be executed, allowing spoofers to exploit the manipulation for their own gain. The practice became illegal as part of the 2010 Dodd-Frank Act.
Vorley, who is due to surrender himself to prison in November, has asked the Supreme Court to review his case, saying the conviction marked “yet another expansion of the fraud statutes that threatens to criminalise virtually any conduct that a prosecutor deems deceptive or dishonest”.
He argued in the court filing that the orders he placed were not fraudulent under the wire fraud statute because he did not lie to the market about his willingness to fulfil them.
According to the filing, courts are split on whether false statements, or just an “implied misrepresentation” are sufficient to convict a defendant of wire fraud.
The latest request comes after Vorley and Chanu’s previous appeal was rejected by a lower court earlier this year. They had argued that the government had charged them with wire fraud in order to bring charges that would otherwise have been time-barred.
Both defendants have previously accused the US Department of Justice of trying to “shoehorn” spoofing into the wire-fraud statute so prosecutors would not be time-barred from charging alleged wrongdoing before 2011, when Deutsche started monitoring trades for spoofing.
Spoofing carries a five-year statute of limitations, compared with 10 years for wire fraud when it affects a financial institution.
Vorley and Chanu were two of eight individuals charged in 2018 as part of what the DoJ dubbed “the largest futures market criminal enforcement action in department history”.
US courts have grown increasingly wary of overly expansionist interpretations of fraud statutes by the DoJ. Former Barclays trader Robert Bogucki was acquitted in 2019 by a judge in California who ruled there was insufficient evidence to bring the case, which alleged wire fraud and conspiracy to commit wire fraud related to a £6bn currency deal involving Hewlett-Packard.
Vorley is also appealing on the basis that prosecutors violated the Speedy Trial Act, which sets time limits for the stages of criminal prosecution. Wire fraud carries a potential prison sentence of up to 30 years.
A decision from the Supreme Court on whether to hear the appeal is expected by the end of November.
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