A Chicago federal judge is holding the founder of a defunct Chicago online brokerage firm in contempt of court for failing to pay the legal costs racked up by a former CEO, who successfully sued the founder for defaming and firing him after he blew the whistle on alleged financial finagling. 

Judge Harry Leinenweber issued the contempt order Oct. 5 in U.S. District Court for Northern Illinois, against Joseph J. Fox, also known as Yosef Y. Fox, who founded Ditto Trade. Fox was ordered to pay $44,681 in attorney fees accumulated by former Ditto CEO Paul Simons. On Aug. 11, Leinenweber commanded Fox to pay the money, but Fox did not do so, leading to the contempt citation. 

On top of the fees, Fox has to pay a $500 fine each day until the fees are paid. Leinenweber warned that if Fox fails to clear the debt by Nov. 4, Leinenweber will consider jailing Fox and dismissing a countersuit Fox has against Simons for defamation. A status hearing is set for Nov. 8. 

In a court document Fox filed Oct. 3, Fox declared himself "impecunious and unable to pay any judgment." 

The case, which in Leinenweber's words has had a "long and tangled procedural history," stems from September 2013, when Simons was fired after nine months as CEO of Ditto Trade, which specialized in allowing customers to more or less copy the trading activities of certain equities traders. Simons claimed he was discharged in retaliation for telling the U.S. Securities and Exchange Commission, as well as Ditto’s senior officers, he had discovered possible wrongful conduct on Fox’ part. Fox lives in Los Angeles, according to government documents. 

Simons alleged he had come across records that seemed to indicate Fox had improperly sold his shares in Ditto and Ditto had laid out more than $1 million in expenditures that may have “personally benefitted Fox and his family and affiliates.” 

Simons filed suit against Fox and Ditto in January 2014, contending he was defamed and was fired in retaliation for his disclosures. Fox and Ditto countersued, alleging Simons worked to “undermine” Ditto and committed defamation, breach of employment agreement and breach of fiduciary duty. Last year, Leinenweber dismissed all the complaints against Simons, except the defamation claims. 

Leinenweber found Ditto and Fox in default on March 9, 2016, and in April ordered them to pay $2.7 million in damages and legal costs to Simons. Fox was directed to pay the legal expenses as a sanction, because Leinenweber said Fox failed to appear at a deposition. 

The Ditto companies have gone out of business, according to Simons. In action last year before the Securities and Exchange Commission, Fox consented to pay a $75,000 civil penalty and a $125,210 disgorgement. 

Simons is represented by the Chicago office of the Dallas-based firm of Locke Lord and by the Chicago office of the Detroit-based firm of Honigman, Miller, Schwartz and Cohn. 

Fox had attorneys earlier in the case, but is now representing himself, court records indicated.

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