42-04
October 15, 2004
Commodity Futures Trading Commission - Three Lafayette Centre - 1155 21st Street,
NW - Washington, DC 20581
Telephone: (202) 418-5080 - Facsimile: (202)
418-5525
Homepage: http://www.cftc.gov
On October 18, 2004, 9:00 – 9:30 p.m., CFTC Acting Chairman Sharon Brown Hruska will give the welcoming remarks at the Commodity Futures Trading Commission’s International Symposium and Training on Derivatives Products, Markets and Financial Intermediaries, Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, IL.
On October 18, 2004, CFTC Commissioner Walter Lukken will attend the Commodity Futures Trading Commission’s International Symposium and Training on Derivatives Products, Markets and Financial Intermediaries, Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, IL.
On October 21, 2004, 11:00 – 12:00 p.m. CFTC Commissioner Walter Lukken will welcome a delegation from the Brazilian Mercantile and Futures (BM&F) to the CFTC.
On October 13, 2004, the Commission held an open meeting to discuss its Technology Advisory Committee.
On October 15, 2004, the Commission will hold a closed meeting to discuss surveillance matters.
Release: #5005-04
For Release: October 12, 2004
U.S. COMMODITY FUTURES TRADING COMMISSION CHARGES FOREIGN FUND FOR DEFRAUDING THOUSANDS OF CUSTOMERS IN INTERNATIONAL PONZI SCHEME
Foreign Fund, Ron Mealing and John Shirck Allegedly Operated Commodity Futures Fraud Involving Foreign Currency Trading
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced that on October 5, 2004, a federal district court judge in Nashville, Tennessee, acting on a CFTC complaint filed earlier that day, issued an order freezing the assets and preventing the destruction of the books and records of defendants Foreign Fund a/k/a First Bank (Foreign Fund) purportedly of King of Prussia, Pennsylvania, Ron Mealing of Nashville, Tennessee, and John Shirck of Mountain View, California.
The CFTC complaint charges Foreign Fund, Mealing, and Shirck with fraud for allegedly misappropriating customer funds in a Ponzi-like scheme where retail customers were solicited via the Internet to trade foreign currency futures. The CFTC also charged the defendants with trading illegal, off-exchange foreign currency futures contracts (forex).
Specifically, the complaint alleges that since at least November 2003, Foreign Fund has defrauded thousands of retail customers by misappropriating more than $3 million that was solicited through the Foreign Fund website, and by emails sent by its agents and representatives, for the purpose of speculating on the value of foreign currencies.
According to the complaint, Foreign Fund did not trade customer funds as promised. The complaint alleges that instead, Foreign Fund—through the actions of Mealing and Shirck—misappropriated most of the funds, which were initially deposited in accounts held in the name of relief defendants MW First Inc. and MW First Trustees Inc., by transferring monies overseas to an account held in Latvia to the benefit of relief defendant Star Connection Inc., or by returning funds to earlier customers in furtherance of the Ponzi-like scheme. Relief defendants Wally Dow, Wolfgang J. Fastian, and Deana Whitley are also alleged to be custodians of certain Foreign Fund customer funds. The court-ordered asset freeze also applies to the relief defendants. Relief defendants are not charged with wrongdoing, but solely with holding funds from the illegal scheme.
The CFTC is seeking a permanent injunction against each defendant, repayment to defrauded customers, return of all ill-gotten gains from the defendants and relief defendants, and civil penalties for each violation of the Commodity Exchange Act and CFTC regulations.
The following CFTC Division of Enforcement staff members are responsible for this case: Todd Kelly, Lael E. Campbell, Patricia Gomersall, Susan Berkowitz, Grant Collins, Paul Hayeck, and Joan Manley.
Media Contacts:
Alan Sobba, (202) 418-5080
Dennis Holden, (202) 418-5088
Office of External Affairs
Staff Contact:
Joan Manley
Deputy Director
CFTC Division of Enforcement
(202) 418-5356
Release: #5006-04
For Release: October 12, 2004
CFTC CHARGES ILLINOIS-BASED COMMODITY TRADING ADVISOR AND ITS PRINCIPALS WITH MISREPRESENTING PROFITS AND RISKS
The Options Advisor L.L.C. and Principals Mark Melin and David Farrra Charged
WASHINGTON, D.C. - The U.S. Commodity Futures Trading Commission (CFTC) announced today the issuance of an administrative order filing and simultaneously settling charges of fraud against The Options Advisor LLC (Options Advisor), and its principals Mark Melin and David Farra.
The order finds that from at least November 2003 through January 2004, Options Advisor, operating through the website www.guaranteedtrades.com, fraudulently solicited subscribers for the Dow Options Trader trading advisory service by guaranteeing that subscribers would trade profitably. According to the order, by making such a guarantee, Options Advisor misrepresented the risks associated with futures and options trading, and overstated the likelihood that subscribers would trade profitably. The order charges that this conduct violated the Commodity Exchange Act (CEA).
Respondents agreed to the entry of the order without admitting or denying the findings in the order. The order requires the respondents to pay a $10,000 civil monetary penalty, make full restitution to every subscriber that purchased the trading advisory service between November 2003 and January 2004, as well as cease and desist from further violations of the CEA and CFTC regulations.
This case reflects the work of the following CFTC investigators and attorneys: Joseph Konizeski, Grant Collins, and Paul Hayeck.
Media Contacts:
Alan Sobba, (202) 418-5080
Dennis Holden, (202) 418-5088
Office of External Affairs
Staff Contact:
Joan Manley
Deputy Director
CFTC Division of Enforcement
(202) 418-5356
Release: #5007-04
For Release: October 12, 2004
CFTC ANNOUNCES PARTICIPATION IN NEW FEDERAL GOVERNMENT FINANCIAL EDUCATION WEBSITE
Washington, D.C. -- The Commodity Futures Trading Commission (CFTC) announced its participation, through a partnership with nineteen other federal agencies, in the launching today of a new financial education website and toll-free hotline number. The mymoney.gov website and the 1-888-mymoney toll-free hotline were established to provide Americans easily access to information that can help them better understand their money –how to save it, invest it, and manage it wisely to meet important personal goals.
In commenting on the launch of the website, CFTC Acting Chairman Sharon Brown-Hruska stated, “It has been a pleasure to have had the opportunity to guide the development of the mymoney.gov website. In today’s world it is critical that consumers have the necessary tools and knowledge to manage their finances – whether that means securing a mortgage, planning for retirement, or saving for their children’s education. It is my belief that by bringing together the specialized and diverse resources of the members of the Financial Literacy and Education Commission on a centralized website, we can move toward the goal of fostering financial education for all Americans.”
On December 4, 2003, President Bush signed the Fair and Accurate Credit Transactions Act. Among other things, this law called for the establishment of the Financial Literacy and Education Commission (Commission) to improve the financial literacy and education of persons in the United States. The legislation specifically charged the Commission with establishing and maintaining a website to serve as a coordinated point of entry to information about federal financial literacy and education programs, and to establish a toll-free hotline available to members of the public seeking information about issues pertaining to financial education.
The Commission, which is made up of twenty federal government agencies, is chaired by the Secretary of the Treasury. CFTC Acting Chairman Sharon Brown-Hruska chaired the Commission’s website subcommittee and Donna Gambrell, Deputy Director of Compliance and Consumer Protection, Federal Deposit Insurance Corporation chaired the toll-free hotline subcommittee.
To learn more about this program please access the mymoney.gov website or call the 1-888-mymoney toll-free number.
Media Contacts:
Alan Sobba, (202) 418-5080
R. David Gary, (202) 418-5085
Office of External Affairs
Staff Contact:
Hilary Schultz
Chief Information Officer
OIRM
202-418-5219
Release: #5008-04
For Release: October 13, 2004
U.S. COMMODITY FUTURES TRADING COMMISSION CHARGES CALIFORNIA MAN AND HIS COMPANY WITH DEFRAUDING CUSTOMERS
James J. Zhou and Jade Trader Allegedly Fraudulently Solicited Customers to Trade Commodity Futures Contracts
WASHINGTON, D.C.—The U.S. Commodity Futures Trading Commission (CFTC) announced today that it filed a complaint in the U.S. District Court for the Central District of California charging that Jade Trader and its director and owner, James J. Zhou, both of Alhambra, California, fraudulently induced clients to purchase commodity futures contracts.
The CFTC complaint, filed on October 1, 2004, alleges that since October 11, 2002, Jade Trader and Zhou fraudulently solicited customers to trade approximately $200,000 in commodity futures contracts through accounts that the defendants managed. Jade Trader posted trading results on its website that falsely represented that its customers were making money when, in fact, customers were losing money, according to the complaint. The complaint also alleges that the defendants made false representations to customers regarding how their accounts would be traded and the risk involved with trading commodity futures contracts.
The complaint further alleges that the defendants should have been registered with the
CFTC and that Jade Trader failed to provide disclosure documents to customers as
required by CFTC regulations.
The CFTC complaint seeks an order of permanent injunction prohibiting defendants from
violating the commodity laws, operating their fraudulent website, and trading
commodity futures contracts. The complaint further seeks a return of funds to
defrauded customers, disgorgement of the defendants’ ill-gotten gains, and civil
monetary penalties.
The following CFTC Division of Enforcement staff members are responsible for this case: Elizabeth Padgett, Lacey Dingman, and Jan Folena.
Media Contacts:
Alan Sobba, (202) 418-5080
Dennis Holden, (202) 418-5088
Office of External Affairs
Staff Contact:
Richard Glaser
Associate Director
CFTC Division of Enforcement
(202) 418-5358
No Seriatim Actions were taken during this week.
No CFTC Federal Register Notices were published during this period.
Note: The Commission must receive all Comment Letters no later than the closing date specified in the applicable Federal Register release. Any request for an extension of the comment period must be made in writing — before the expiration of the comment period — to the Commission's Office of the Secretariat.
No Comment Periods were open during this period.
Jud Walton v. Barkley Financial Corp., Angelo Emanuel Castello, George Allen Griffin, Jr., Melvin Paul Kanawitz and Stuart Rubin. Filed October 12, 2004. The respondents submitted a motion to dismiss based on statute of limitations grounds. After a careful review of the record, it was concluded that the complaint was untimely. Accordingly, the respondents’ motion was granted and Walton’s complaint was dismissed with prejudice. Administrative Law Judge, Bruce C. Levine. CFTC Docket No. 04-R024.
No Opinions and Orders were issued during this period.
No CFTC Letters were issued during this period.
On October 13, 2004, the Commodity Futures Trading Commission's Office of External Affairs updated the Commission’s Backgrounder: Foreign Instrument Approvals & Exemptions. To obtain a copy of the Backgrounder, please contact the Office of External Affairs at (202) 418-5080 or visit the Commission's website at: http://www.cftc.gov/opa/backgrounder/opapart30.htm