For Release: December 23, 2009
Washington, DC - The Commodity Futures Trading Commission (CFTC) today announced that it obtained more than $5.4 million in restitution and civil monetary penalties in a federal court default judgment order against Zurich Futures and Options, Inc. (Zurich), a Belize-registered corporation, and Michele LaBruce, both of Hollywood, Fla. The order also permanently prohibits Zurich and LaBruce from engaging in certain commodity-related activity, including registering with the CFTC in any capacity and trading.
The default order, entered on December 22, 2009, by the Honorable Paul C. Huck of the U.S. District Court for the Southern District of Florida, resolves a CFTC anti-fraud enforcement action filed in February, 2009, which charged the defendants with fraudulently soliciting customers to trade commodity options, using false claims of CFTC registration and membership with the National Futures Association (NFA) and operating as an unregistered Introducing Broker (IB) (see CFTC Press Release 5620-09, February 25, 2009).
Specifically, the order requires Zurich and LaBruce jointly and severally to pay defrauded customers $1,357,299 in restitution and a $4,071,897 civil monetary penalty. According to the order, the defendants fraudulently solicited approximately $1.45 million from at least 60 customers who opened accounts to trade commodity options.
The order finds that defendants falsely claimed that Zurich was a member of the NFA and registered with the CFTC. The court also found that, through the Zurich website, solicitation materials, and the activities of their brokers, the defendants created a false impression that Zurich was a successful, well-established international investment banker with an experienced investment team and offices in Zurich, Switzerland and Toronto, Canada. In fact, Zurich was nothing more than a Hollywood, Fla.-based sham operation that maintained only “virtual offices” or “mail drop” offices in Zurich and Toronto through which the defendants re-routed customer calls and funneled mailings of solicitation materials and account opening documents.
LaBruce is the wife of CFTC defendant Adam Leon
The order finds LaBruce liable directly for her own fraudulent activity and liable as a controlling person for Zurich’s fraud. LaBruce is the wife of Adam Leon, a CFTC defendant in an anti-fraud action brought in 2005. In September 2006, the CFTC obtained a judgment against Leon as part of the CFTC action against Presidential FX, Inc. for fraudulent solicitation of customers in connection with foreign currency option contracts. Leon was ordered to pay $1.5 million in restitution and a $1 million civil monetary penalty and was permanently barred from engaging in any commodity-related activity (see CFTC Press Release 5234-06, September 27, 2006).
The CFTC gratefully acknowledges the assistance of the Belize Financial Intelligence Unit, the Ontario Securities Commission, the Swiss Federal Market Supervisory Authority and the Israel Securities Authority in investigating this matter.
The following CFTC Division of Enforcement staff members are responsible for this case: Alan I. Edelman, James H. Holl, III, Kara Mucha, Michelle Bougas, Gretchen L. Lowe and Vincent McGonagle.
Last Updated: December 23, 2009