For Release: February 7, 2008
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today the issuance of a consent order settling CFTC commodity fraud charges against Edward R. Velazquez and three companies that he controlled, V-Tek Trading Group, Inc., V-Tek Capital, Inc. (IL) and V-Tek Capital, Inc. (BVI), and imposing over $11.6 million in sanctions.
This consent order, which was entered by the United States District Court for the Northern District of Illinois on January 31, 2008, stems from a complaint filed by the CFTC on September 8, 2004 (see CFTC News Release4988-04, September 16, 2004).
In the consent order, the court finds that at least 121 foreign and U.S. customers gave at least $8.88 million to the V-Tek Capital companies for the purpose of investing in its purported “common stock”, “convertible preferred stock” or “convertible preferred fixed income” programs. As found in the order, those V-Tek Capital customers appear to have received back approximately $2.48 million, leaving approximately $6.4 million still owed to them by defendants. Also per the terms of the order, defendants were found to owe V-Tek Trading Group, Inc. customers approximately $300,000.
The court also finds that approximately $3 million of the funds given to V-Tek Capital (BVI) and (IL) were pooled and used by Velazquez to trade commodity futures and foreign currencies from September 2003 through September 2004; Velazquez’s trading of these funds resulted in losses of approximately $1.1 million. The court further finds that the defendants misappropriated customer funds and/or made material misrepresentations and gave false and deceptive statements to their clients and pool participants through the use of the Internet and other means. In particular, the court found that Velazquez misappropriated at least $1.03 million from a V-Tek Capital (IL) bank account and that some of the positive trading performance records for 1995 through 1999 portrayed in the V-Tek Trading Group, Inc. Disclosure Documents were false.
Velazquez and the companies were ordered to pay $6,742,116 in restitution to customers and also pay a $4,951,332 civil monetary penalty. The consent order also permanently enjoins defendants from: 1) engaging in further violations, and 2) engaging in future commodity trading on behalf of themselves or others.
The following CFTC Division of Enforcement staff are responsible for this action: Susan Gradman, William Janulis, Judy McCorkle, Venice Bickham, Scott Williamson, Rosemary Hollinger, and Richard Wagner.
Last Updated: June 19, 2008