David Smothermon, a former commodities trading executive, was sentenced to three years in prison by U.S. District Judge Alvin K. Hellerstein for wire fraud related to concealing significant trading losses from his employer. The sentencing was announced by Jay Clayton, United States Attorney for the Southern District of New York.
“David Smothermon engaged in a fraudulent scheme that always ends badly: he concealed trading losses and inflated performance, induced his firm to award him a $15 million bonus, and when the losses were discovered, his firm was devastated,” said U.S. Attorney Jay Clayton. “That devastation cost hundreds of jobs, including in New York. Our Office has no tolerance for insiders who like to enrich themselves at the expense of our fellow New Yorkers.”
According to court documents, Smothermon worked from 2005 through September 2016 at a privately owned Manhattan-based company involved in international commodities trading. He served as CEO of its Houston-based subsidiary focused on liquefied petroleum gas (LPG) trading and sat on the company’s board.
Between December 2015 and September 2016, Smothermon made false entries into the company’s accounting system to hide substantial losses from financial derivatives and physical LPG trades. He inflated valuations on financial positions and directed others to alter contract terms so they appeared more profitable than they were. These actions concealed over $240 million in losses.
The scheme enabled Smothermon to secure a discretionary bonus; in May 2016 he received approximately $15 million—$11.6 million paid immediately in cash—from the company.
In late August 2016, discrepancies were found between physical contracts and accounting records, prompting an internal review. On September 1, 2016, Smothermon resigned after admitting he had mispriced his trading book. The discovery led to large financial losses for the company and resulted in significant downsizing with hundreds of layoffs.
In addition to imprisonment, Smothermon was sentenced to three years’ supervised release and ordered to forfeit $11.6 million while paying restitution totaling $19,550,081. As part of his plea agreement after pleading guilty in May 2025, he paid $8 million toward restitution that month and another $300,000 before sentencing.
Jay Clayton commended the Federal Bureau of Investigation’s role in investigating the case.
The prosecution was handled by Assistant U.S. Attorneys Qais Ghafary and Matthew Weinberg from the Complex Frauds and Cybercrime Unit.
