210 F.3d 783 (7th Cir. 2000)
Jerry W. SLUSSER, First Republic Financial  Corporation, and First Republic Trading  Corporation,  Petitioners,v.Commodity Futures Trading Commission,    Respondent.
No. 99-2947
In the  United States Court of Appeals  For the Seventh Circuit
Argued February 22, 2000Decided April 24, 2000

Petition for Review of an Order of the  Commodity Futures Trading Commission.
Before Coffey, Easterbrook, and Williams, Circuit  Judges.
Easterbrook, Circuit Judge.


1
During the spring of  1989, Jerry Slusser and entities he controls came  into possession of approximately $29 million that  German investors had entrusted to International  Participation Corporation (IPC) for investment in  American financial markets. IPC raised the money  using a prospectus offering investors a choice  from a number of portfolios. Portfolios III and  IV were to be invested in financial futures  traded on a public exchange. Investors were to  receive 65% of all profits; IPC was entitled to  the other 35% (plus a 10% surcharge at the time  of the initial investment) to cover all operating  expenses and trading commissions. Fund III was to  stop trading if it lost 10% of invested funds  (disregarding the 10% surcharge); Fund IV was to  stop losses at 35% of investment. After he gained  control of the $29 million, however, Slusser and  his firms (collectively "Slusser") disregarded  these promises. He charged hefty commissions  against the pooled funds; he invested part of the  money in securities and another part in corporate  acquisitions (two trading corporations that  Slusser treated as his own property); he kept  trading long after the stop-loss marks had been  passed. Slusser repeatedly lied to German  authorities in order to extend his control of the  pool. A kitty that had been approximately $29  million in May 1989 dwindled to $16 million by  November, when Slusser ceased the churning and  wired the remaining funds to Germany. For these  events Slusser has been banned for life from U.S.  futures markets and fined $10 million by the  Commodity Futures Trading Commission. 1999 CFTC  Lexis 167, Comm. Fut. L. Rep. para.27,701 (July  19, 1999). He wants us to set aside the CFTC's  order.


2
The CFTC found that Slusser had violated the  Commodity Exchange Act, 7 U.S.C. sec.sec. 1-25,  in three principal ways. First, he failed to  register with the CFTC as a "commodity pool  operator" and its "associated person" even though  he was managing a commodity pool--initially on  behalf of IPC, then after the end of May 1989 in  his own right, following a contractual assumption  of IPC's position. See sec.sec. 4k(2), 4m of the  Act, 7 U.S.C. sec.sec. 6k(2), 6m. Second, after  assuming IPC's duties to the investors Slusser  failed to adhere to the contractual limitations  the prospectus placed on use of the funds, and in  the process violated the Act and the implementing  regulations by charging more than $3 million in  improper commissions, devoting money to uses  other than those allowed by the prospectus,  commingling pool funds, and diverting investors'  money to personal purposes. See sec.4o(1) of the  Act, 7 U.S.C. sec.6o(1), and 17 C.F.R. sec.4.20.  Third, Slusser committed multiple frauds. See  sec.4b(a) of the Act, 7 U.S.C. sec.6b(a). Many of  the tall tales were told to German authorities in  order to buy time. For example, at the end of May  1989 Slusser told the Germans that trading had so  far been profitable and that investors would  suffer substantial losses if the futures  contracts were liquidated prematurely. In July  Slusser wrote to a German criminal prosecutor  that "many of the traded instruments will mature  over the next 90 days. We project profits from  these positions at maturity, but there will be  substantial reductions in value if prematurely  liquidated." The assertions about profits to date  were false, and the remaining assertions were  nonsense, designed to deceive persons ignorant  about futures markets. Contracts traded on public  exchanges (as these were) do not "mature" and are  not "liquidated"; they either expire or are  closed by acquiring offsetting positions, which  realizes all accrued gain or loss without penalty  for "premature" action. See generally Chicago  Board of Trade v. SEC, 883 F.2d 525 (7th Cir.  1989). Slusser knew this well. The positions that  he told the German official must be left  undisturbed for 90 days soon were closed, and the  accounts were turned over many times (with  commissions deducted for each turn) before  Slusser finally distributed the residue.


3
Slusser's principal response is to assert, as  if it were incontestable truth, a view of matters  that the administrative law judge and the  Commission found incredible, irrelevant, or both.  For example, Slusser insists that he did not know  about the promises IPC made in the prospectus  regarding the uses of the funds and the way the  pool manager would be compensated; indeed,  Slusser insists that for many months he did not  know anything about the funds' origin, and that  when he learned their general source he did not  know that the $29 million represented the  proceeds of Funds III and IV rather than other  pools mentioned in the prospectus. The ALJ  concluded, on the basis of substantial evidence  (including not only the contract by which Slusser  assumed all of IPC's obligations but also  documents showing that Slusser had an account at  Commerzbank Dusseldorf into which investors  deposited funds), that Slusser knew no later than  June 1, 1989, exactly what his obligations as the  pool's new manager were. But suppose this is  wrong, and Slusser never learned the provenance  of the funds. Then what was he doing trading at  a riotous pace, rather than purchasing safe  vehicles such as Treasury bills until the money's  owner could be determined? Slusser made the most  of an opportunity to charge big commissions  without supervision. The CFTC as regulator of pool  operators is entitled to require more  conscientious management of unknown investors'  money.


4
Although the CFTC's findings of fact are  supported by substantial evidence, Slusser  insists that they are legally insufficient to  prove that he committed fraud. Slusser lied to IPC  when he promised to manage the funds according to  the prospectus; he lied to German officials when  he said that premature liquidation would turn  profits into losses; he lied to the investors in  a letter sent in July 1989 asserting that his  management of the funds had been successful (it  had been quite unprofitable--except to Slusser),  that he was subject to regulatory oversight  (neglecting to mention his failure to register  with the CFTC), and that the principal would be  returned by September (Slusser clung to the money  until November, when the investors and German  officials induced him to hand over the remainder  by promising not to prosecute him for his  conduct). Still, Slusser insists, he is not  culpable, because none of these persons testified  that he relied on Slusser's statements--and  reliance is an element of fraud, at least in  private litigation where the plaintiff must show  causation. See, e.g., Basic, Inc. v. Levinson,  485 U.S. 224, 243 (1988) (securities litigation);  Restatement (2d) of Torts sec.sec. 525, 548  (1977). We may assume that a causal chain from  deceit to injury also is essential in private  actions under 7 U.S.C. sec.25, which requires the  plaintiff to show "actual damages" attributable  to a violation of the Act, and that reliance is  the usual way to show causation.


5
Must the public prosecutor show that a private  person was taken in? In criminal prosecutions the  answer is no, unless the statute expressly makes  reliance an element of the offense. See Neder v.  United States, 527 U.S. 1 (1999) (prosecution for  mail, wire, tax, and bank frauds). Three courts  of appeals have reached the same conclusion for  fraud actions prosecuted by the SEC under  sec.10(b) of the Securities Exchange Act, 15  U.S.C. sec.78j(b). SEC v. North American Research  & Development Corp., 424 F.2d 63, 84 (2d Cir.  1970); SEC v. Blavin, 760 F.2d 706, 711 (6th Cir.  1985); SEC v. Rana Research, Inc., 8 F.3d 1358,  1363-64 (9th Cir. 1993). Reliance, unlike the  "connection" between the misconduct and a  purchase or sale of securities, see Aaron v. SEC,  446 U.S. 680 (1980), is not a statutory element  and therefore is not an essential part of an  administrative case. Is there any reason to treat  administrative prosecutions under the Commodity  Exchange Act differently? Slusser observes that  sec.10(b) of the Securities Exchange Act  prohibits not only deceptive but also  manipulative devices, while sec.4b of the  Commodity Exchange Act does not refer to  manipulation. True enough, but nothing turns on  this; Ernst & Ernst v. Hochfelder, 425 U.S. 185  (1976), concluded that the plaintiff in all  private sec.10(b) actions must demonstrate the  ingredients of common-law fraud. When it held in  Basic that reliance is one of these elements, the  Court did not suggest that matters would differ  if the plaintiff stressed "manipulation" rather  than "fraud"; it is better to say that  manipulation is a species of fraud. North  American Research, Blavin, and Rana Research hold  that there is a difference between private and  public actions, not that there is a difference  between "fraud" and "manipulation."


6
Section 4b of the Commodity Exchange Act does  differ from sec.10(b) of the Securities Exchange  Act, but the differences all favor the CFTC. For  example, although sec.10(b) does not prohibit  attempted deceits, and this is a good reason why  a private plaintiff must show actual reliance  rather than just a potential for reliance,  sec.4b(a)(i) makes it actionable "to cheat or  defraud or attempt to cheat or defraud such other  person" (emphasis added). Perhaps, then, it is  unnecessary to show reliance even in a private  action--for an attempt that fails (perhaps  because no one relied on it) is nonetheless a  violation of sec.4b(a)(i). Section 4b(a)(ii)  reinforces this possibility by declaring that it  is unlawful "willfully to make or cause to be  made to such other person any false report or  statement", and sec.4b(a)(iii) adds that it is  forbidden "willfully to deceive or attempt to  deceive such other person by any means  whatsoever". Slusser made (or caused to be made)  many false statements; these may be condemned  under sec.4b(a)(ii) and (iii) without proof of  reliance even if the CFTC did not establish all  elements of common-law "fraud." See also Philip  McBride Johnson & Thomas Lee Hazen, II  Commodities Regulation sec.5.08[17][B] at 5-165  n.821 (3d ed. 1998) (concluding that the CFTC need  not establish reliance).


7
Although none of Slusser's other objections to  the CFTC's decision on the merits requires  comment, there is a serious problem with the $10  million fine. Section 6(c)(3) of the Act, 7  U.S.C. sec.9(3), permits the Commission to  "assess . . . a civil penalty of not more than  the higher of $100,000 or triple the monetary  gain to such person for each such violation". The  Commission justified the $10 million penalty as  appropriate in relation to Slusser's gain but did  not notice that the treble-gain provision entered  the Act in 1992. Section 212(b) of Pub. L. 102-  546, 106 Stat. 3609. Back in 1989, when Slusser  was managing the funds, the maximum penalty was  $100,000 per violation. Only clear statutory  language justifies retroactive application of an  increase in damages or civil penalties, see  Landgraf v. USI Film Products, 511 U.S. 244  (1994), and nothing in the 1992 amendments so  much as hints at retroactivity. Thus the maximum  penalty is $100,000 per violation. The complaint  filed by the Division of Enforcement listed only  six violations. Most of the violations narrated  by the complaint entail multiple acts or  statutes; it would have been easy to separate the  events into tens if not hundreds of violations,  or to allege that each day of managing the funds  without registration as a commodity pool operator  was a separate violation. But the CFTC's staff did  not do any of these things, perhaps because 7  U.S.C. sec.13b implies that fines for each day of  a series of violations are appropriate only after  the CFTC has issued a cease-and-desist order. Just  as the sentence in a criminal case is limited by  the number of counts alleged in an indictment  times the maximum punishment for each offense, so  the penalty in an administrative prosecution is  limited by the number of violations alleged in  the complaint times the maximum fine per  violation. A reasonable person in Slusser's  position would have assumed that his maximum  exposure was $600,000 and financed his defense  accordingly.


8
Despite our convenient use of "Slusser" as a  placeholder for Jerry Slusser, his associates,  and the firms he controlled, there were quite a  few participants in this scheme, and three remain  as petitioners in this court--Slusser personally  and two corporations. The statutory cap applies  person-by-person, as well as violation-by-  violation, so the CFTC may be able to justify a  total penalty as high as $1.8 million, though it  may have considerable troublecollecting from the  defunct corporations. This potential trouble  shows one way in which knowing the maximum  penalty might have affected the administrative  litigation. Until the 1992 amendment deleted it,  7 U.S.C. sec.9a contained this language:


9
In determining the amount of the money  penalty . . . , the Commission shall  consider, in the case of a person whose  primary business involves the use of the  commodity futures market--


10
the appropriateness of such penalty to the  size of the business of the person  charged, the extent of such person's  ability to continue in business, and the  gravity of the violation;


11
and in the case of a person whose primary  business does not involve the use of the  commodity futures market--


12
the appropriateness of such penalty to the  net worth of the person charged, and the  gravity of the violation.


13
The two corporate parties, at least, are covered  by the first of these clauses, which courts  generally call the "collectibility" condition.  Slusser believes that he personally comes within  the second clause, so that the Commission must  consider the appropriateness of the penalty in  light of his net worth. Yet the record does not  contain any information on Slusser's net worth,  the size of the two corporate parties, or the  effect of any penalty on their ability to  continue in business.


14
Each side blames the other for this deficiency.  Slusser contends that the CFTC has both the burden  of production and the burden of persuasion; the  CFTC asserts that Slusser had the burden of  production and that, because he (and the two  corporations) kept mum, the burden of persuasion  became irrelevant. Perhaps Slusser adopted his  strategy of silence because he anticipated a  $600,000 maximum penalty and feared that evidence  about net worth would embolden the Commission to  demand the full $600,000. But that's just  speculation. All we know is that the record is  empty.


15
When casting the burden of production on  Slusser and the firms, the CFTC cited two of its  decisions. In re Grossfeld, Comm. Fut. L. Rep.  para.26,921 at 44,465-66 (CFTC Dec. 10, 1996); In  re Rothlin, Comm. Fut. L. Rep. para.21,851 at  27,573 (CFTC Dec. 21, 1981). The Commission's  opinion did not mention Gimbel v. CFTC, 872 F.2d  196 (7th Cir. 1989), which disapproved that  position, at least with respect to the  collectibility consideration for futures traders.  Gimbel holds that the Commission's Division of  Enforcement has the burden of production and must  introduce evidence about the net worth of the  person who will be called on to pay a financial  penalty. Because "the Division failed to meet its  burden of establishing the collectibility of the  proposed penalty", 872 F.2d at 201, we vacated  the financial sanction. Accord, Premex, Inc. v.  CFTC, 785 F.2d 1403, 1409 (9th Cir. 1986).  Neither the CFTC's opinion, which ignored both  Gimbel and Premex, nor the CFTC's brief in this  court, which cites Gimbel only for the  uncontested proposition that an opportunity to  offer evidence satisfies the due process clause,  suggests any reason why the burden of production  with respect to a person's net worth should be  allocated differently from the burden of  production with respect to the collectibility of  a penalty imposed on a commodity futures trader.  The Act is silent on the burden of production, so  we would have been attentive to an argument that  Chevron U.S.A. Inc. v. Natural Resources Defense  Council, Inc., 467 U.S. 837 (1984), permits the  Commission to regulate that aspect of its own  proceedings, provided it shoulders the burden of  persuasion in the end. See Director, OWCP v.  Greenwich Collieries, 512 U.S. 267 (1994);  Steadman v. SEC, 450 U.S. 91 (1981). See also  Vermont Yankee Nuclear Power Corp. v. Natural  Resources Defense Council, Inc., 435 U.S. 519  (1978). By placing its head deep in the sand, and  refusing to acknowledge the adverse judicial views, the Commission disabled itself from making  such a pitch. If it wants to impose any financial  penalty on these parties, the CFTC must bear both  the burden of production and the burden of  persuasion on collectibility and net worth.


16
The order of the Commission is enforced to the  extent it revokes the registrations of, and bans  trading by, the three petitioners, and orders  them to cease and desist from further violations  of the Act. The petition for review is granted to  the extent the Commission imposed financial  penalties, and the matter is remanded for  proceedings consistent with this opinion.

