Commodities Probe Yields Its First Three Guilty Pleas

CHICAGO —  Three commodities traders Tuesday became the first to plead guilty in the Justice Department’s probe of alleged customer cheating by traders and brokers at the Chicago Mercantile Exchange and the Chicago Board of Trade.

Brian E. Sledz, 29, pleaded guilty to one charge of wire fraud and one charge of violating the Commodity Exchange Act. His brother, James G. Sledz, 24, and Thomas A. Braniff, 33, each pleaded guilty to one charge of mail fraud and one charge of violating the Commodity Exchange Act. The three live in Chicago suburbs.

Appearing before U.S. District Court Judge George M. Marovich, the three admitted to participating in prearranged and sham trades in the Japanese yen pit at the Chicago Mercantile Exchange. In each case, customers were cheated.

The three are cooperating with the government’s four-year-long investigation and will testify as prosecution witnesses in trials of other yen pit traders and brokers.

Tuesday’s admissions were part of a plea agreement with the U.S. attorney. As a result, federal prosecutors said they would not make any sentencing recommendations. Brian Sledz faces a maximum sentence of 10 years in prison, fines of up to $350,000 and restitution to cheated customers. James Sledz and Braniff each face up to six years in prison, fines of $350,000 and restitution.

The three were among 46 brokers and traders indicted by a federal grand jury last week in the first round of charges resulting from the FBI’s undercover investigation of customer cheating at the world’s two largest commodities exchanges.

Many Are Cooperating

A third of the regular yen pit brokers and traders were among those indicted and most of the remaining 18 are expected to enter pleas in appearances before Judge Marovich today.

The other 25 traders and brokers who were indicted traded in the Swiss franc pit at the Mercantile Exchange and in the soybean and Treasury bond pits at the Board of Trade. They will make their preliminary court appearances by the end of next week.

Of the 46 indicted, at least 14 are reportedly cooperating with federal authorities; one published report put the number at twice that.