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RELEASE: pr5245-06

  • Release: 5245-06

    For Release: October 12, 2006

    U.S. Commodity Futures Trading Commission Charges Virginia Man and California Corporation with Fraud

    Washington, D.C.— The U.S. Commodity Futures Trading Commission (CFTC) announced today the filing of a civil complaint in the United States District Court for the Eastern District of Virginia against Michael Hayes, a Virginia resident, and Coldwell Publishing, Inc. (Coldwell), a California corporation. Hayes is Coldwell’s owner and sole employee.

    The CFTC complaint, filed on September 29, 2006, charges Hayes and Coldwell with fraudulently promoting a commodity futures and options trading system that was contained in a book entitled, The Insider’s Profit Matrix (IPM), which was authored by Hayes under the pseudonym Frank Richards.

    Specifically, according to the complaint, Hayes authored both the trading system and the promotional material used to sell that system to the general public through Coldwell. The complaint alleges that Hayes acted as a commodity trading advisor by offering and selling approximately 15,000 copies of the book to the public, grossing more than $1 million in sales from 2001 through 2004.

    In order to sell the book, Hayes used fraudulent promotional material mass-mailed to the public, the complaint alleges. The promotional material allegedly misled the public into believing that IPM’s performance record and profit results presented were based an actual trading, when, in fact, the results were either derived from hypothetical trading or simply made-up. The complaint further alleges that Hayes’ promotional material for IPM overstated the profit potential of the trading system, failed to adequately warn potential purchasers of the risks inherent in futures and options trading, and presented hypothetical performance results without the required cautionary statement.

    Coldwell, according to the complaint, is liable for Hayes’ violations of the Commodity Exchange Act because Hayes’s actions were done within the scope of his employment and agency with Coldwell.

    In the ongoing litigation, now before the Honorable Rebecca Beach Smith, United States District Judge, the CFTC is seeking permanent injunctive relief, disgorgement of all benefits received from the fraudulent advertising, and civil monetary penalties.

    Media Contacts
    Alan Sobba
    202-418-5080

    Dennis Holden
    202-418-5088

    Last Updated: July 26, 2007

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