The Case Collapses Under a Special Master’s Scrutiny
Key to the case’s unraveling was a report by former federal judge Jose L. Linares, serving as special master. Linares found that the CFTC had “acted in bad faith” — most notably when it secured an asset freeze against Kazmi based on a false claim that he intended to move over CA$31 million (about US$23 million) offshore to evade justice.
In reality, Canadian authorities had already informed the CFTC that the funds were earmarked for tax payments. The agency failed to disclose this fact for two months, and only corrected the record after Kazmi filed for sanctions.
“The CFTC’s conduct wasn’t a mistake,” Linares concluded. “It was a deliberate maneuver aimed at gaining tactical advantage by freezing nearly all of the defendants’ assets. The resulting expense and disruption were substantial.”
Agency Retreats, Admits Missteps
Judge Kiel dismissed the case with prejudice in May — a final, unappealable decision — and endorsed Linares’ findings in full. Shortly afterward, the CFTC withdrew its original litigation team and reassigned the case to attorneys from its Office of the General Counsel.
CFTC Acting Chair Caroline Pham acknowledged the misconduct, calling the agency’s actions “inexcusable.” The agency did not object to the defense’s fee request, signaling a quiet concession of fault.
