For Release: March 17, 2006
Washington, D.C.— The US Commodity Futures Trading Commission (CFTC) announced today that on March 7, 2006, the CFTC charged two Mason, Michigan residents, Ty and Monette Klotz, and their two Michigan companies, Aurifex Commodities Research Co. and Aurifex Research LLC, with hedge fund fraud. The number of people that may have been affected by the alleged fraud in the Lansing, Michigan area is as yet unknown. On the same day, the federal district court in Grand Rapids, Michigan, issued a restraining order freezing the defendants’ assets. CFTC v. Aurifex Commodities Research Co., et al., No. 06-CV-0166 (W.D.Mich.).
The CFTC complaint alleges that, between at least April 2004 and February 2006, Ty and Monette Klotz, doing business as Aurifex Investments, engaged in a Ponzi scheme while soliciting participants for and operating what they described as a “private hedge fund.”
According to the complaint, Ty Klotz told potential participants that Aurifex invested participants’ funds in a pooled commodity futures account, and falsely claimed that the Aurifex fund earned monthly profits of 20 percent. The complaint alleges that Klotz falsely assured potential participants that their Aurifex deposits would be insured against loss with Lloyd’s of London, and that Aurifex would receive fees only after participants’ funds doubled.
Also, according to the complaint, Ty Klotz claimed to have more than 200 participants in his fund, and the fund appears to have collected nearly $150,000. The complaint alleges that those funds were deposited into a commodity futures trading account opened in the name of Monette Klotz in April 2004, and that the trading account lost more than $60,000 through January 2006. As alleged, the Klotzes falsely informed participants that the fund was profitable while concealing the trading losses and their misappropriation of participants’ funds. Monette Klotz, the complaint alleges, used participant funds for a down-payment on the purchase of a house, and for the purchase of multiple automobiles.
The complaint also charges the defendants with violations of federal regulations requiring registration of commodity pool operators and their associated persons.
In its continuing litigation, the CFTC is uncovering information about the scope of the fraud while seeking permanent injunctive relief, the return of funds to defrauded customers, repayment of ill-gotten gains, and an award of civil monetary penalties. The next public hearing is set before Chief Judge Robert Holmes Bell of the United States District Court for the Western District of Michigan on March 17 at 2:00 pm to determine if the freeze order should be continued.
The following CFTC staff members are responsible for this case: Susan B. Padove, Mark H. Bretscher, Robert J. Greenwald, Merle K. Hampton, Thomas P. Koprowski, Venice Bickham, Scott R. Williamson, Rosemary Hollinger, and Joan Manley.
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The CFTC encourages members of the public to bring to our attention any suspicious activities involving futures or commodity options, including matters involving foreign currency (forex) investments or suspicious Internet websites.
You may contact the CFTC at 1-866-FON-CFTC (1-866-366-2382), visit us at our Customer Protection web page: (http://www.cftc.gov/cftc/cftccustomer.htm), or fill out our Internet Report Form identifying your concerns (http://www.cftc.gov/enf/enfform.htm).
In addition, the CFTC publishes a series of Consumer Advisories at http://www.cftc.gov/cftc/cftccustomer.htm#advisory alerting the public to warning signs of possible fraudulent activity and offering precautions individuals should take before committing funds.
Last Updated: April 12, 2007