UNITED STATES OF AMERICA

DISTRICT OF MINNESOTA

FOURTH DIVISION

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COMMODITY FUTURES TRADING COMMISSION, ) CIVIL ACTION NO. 99-CV-1184

Plaintiff,

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v.

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PELTON STREET PUBLISHING, INC. and )
ROGER MARTIN HOY a/k/a )
ROGER MARTIN, )

Defendants.

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COMPLAINT FOR A PERMANENT INJUNCTION, OTHER EQUITABLE RELIEF,
AND CIVIL MONETARY PENALTIES

I. SUMMARY

1. Since approximately October 1998 and continuing through the present, defendants Pelton Street Publishing, Inc. ("Pelton"), a registered commodity trading advisor ("CTA"), and its president, Roger Martin Hoy ("Hoy"), a/k/a Roger Martin, have fraudulently solicited members of the public to purchase a 90-day commodity trading "course" called "The Keys to the Marvelous Money Machine" (the "Money Machine"). In solicitations sent by bulk mail to prospective customers nationwide, the defendants falsely claim that Hoy has personally made substantial profits through futures trading, that purchasers of the Money Machine are likely to achieve substantial profits with minimal or no risk, and that specific commodity traders have made extravagant profits by using the Money Machine. The defendants' mail solicitations also include testimonials that falsely purport to be from customers who have purchased the Money Machine and make false claims of huge profits achieved by applying the information and trading methods learned through the Money Machine course.

2. In addition, Pelton failed to produce, upon the Commission's request, copies or transcriptions of the advice it has provided to Money Machine customers through recorded telephone messages. Pelton must maintain and produce these records pursuant to Commodity Futures Trading Commission ("Commission") Regulations because it is registered as a CTA and acting as such.

3. Thus, defendants have engaged, are engaging, and are about to engage in acts and practices which violate the anti-fraud and record-keeping requirements set forth in Sections 4b(a)(i) and (iii), 4c(b), and 4o(1) of the Commodity Exchange Act, as amended ("Act"), 7 U.S.C. 6b(a)(i) and (iii), 6c(b), and 6o(1) (1994), and Sections 4.33, 4.41, and 33.10 of the Commission's Regulations, 17 C.F.R. 4.33, 4.41, and 33.10 (1998).

4. Accordingly, pursuant to Section 6c of the Act, 7 U.S.C. 13a-1 (1994), the Commission brings this action to enjoin such acts and practices, and to compel compliance with the provisions of the Act and the Commission's Regulations. In addition, the Commission seeks restitution, disgorgement, civil penalties, and such other equitable relief as the Court may deem necessary and appropriate.

5. Given defendants' pattern of fraudulent activity, unless restrained and enjoined by this Court, the defendants are likely to continue to engage in the acts and practices alleged in this Complaint, as more fully described below.

II. JURISDICTION AND VENUE

6. The Act prohibits fraud in connection with the commodity futures and options market and establishes a comprehensive system for regulating the purchase and sale of commodity futures contracts and options. This Court has jurisdiction over this action pursuant to Section 6c of the Act, 7 U.S.C. 13a-1 (1994), which authorizes the Commission to seek injunctive relief against any person whenever it shall appear to the Commission that such person has engaged, is engaging, or is about to engage in any act or practice constituting a violation of any provision of the Act or any rule, regulation or order thereunder.

7. Venue properly lies with the Court pursuant to Section 6c of the Act, 7 U.S.C. 13a-1(e) (1994), in that the defendants are found in, inhabit, or transact business in this district, and the acts and practices in violation of the Act have occurred, are occurring, or are about to occur within this district.

III. THE PARTIES

8. Plaintiff Commission is an independent federal regulatory agency charged with the responsibility for administering and enforcing the provisions of the Act, 7 U.S.C. 1 et seq. (1994), and the Regulations promulgated under it, 17 C.F.R. 1 et seq. (1998).

9. Defendant Pelton maintains its principal place of business at 601 Lakeshore Parkway, Suite 720, Minnetonka, Minnesota 55305. Since October 9, 1998, Pelton has been registered with the Commission as a CTA. At all times material to this Complaint, Pelton has transacted business in the District of Minnesota.

10. Defendant Hoy resides at 11220 Wild Heron Point, Eden Prairie, Minnesota 55347. He is the president of Pelton. At all times material to this Complaint, Hoy has initiated, directed, controlled or participated in the illegal acts or practices set forth in this Complaint. Hoy uses the alias "Roger Martin."

IV. FACTS

The Money Machine Course

11. Through direct-mail solicitations, the defendants sell a 90-day "course" called "The Keys to the Marvelous Money Machine" ("Money Machine"), which purportedly teaches purchasers how to achieve huge profits with minimal or no risk by trading commodity futures and options. More than 500 customers have purchased the course at a price of $229.

12. The Money Machine consists of a 160-page manual, three audiotapes, and 90-day access to messages recorded by defendants that can be retrieved through an automated telephone system. The Money Machine manual describes basic information about futures and options trading, including an explanation of opening and closing prices, placement of orders, and how to read commodity market information in the Wall Street Journal. The manual also provides a trading strategy through which one identifies trends in various commodities markets and trades in response to those trends, and purportedly teaches how to use stop loss orders and options to trade in a manner described as "virtually risk free." Moreover, through the manual, the defendants urge customers to purchase access to the telephone course line beyond the initial period for $79 for each additional 90 days. The audiotapes sold to customers generally repeat information contained in the manual.

13. Through the recorded messages played on what defendants refer to as the telephone "course line," defendants purport to identify current trends in various commodity markets and recommend the commodity markets that they believe present the most profitable trading opportunities. Defendants also inform customers of trades that Hoy is purportedly making in his personal trading account based upon the identified trends. The course line is updated twice weekly.

Defendants' Misrepresentations

Claims Concerning Hoy's Profits

14. Through their mail solicitations, the defendants claim that Hoy has made significant profits using the Money Machine system. For instance, the defendants claim that:

(a) Hoy has "made a LOT of money using a handful of reliable, defined-risk methods that I'm about to reveal to you" (emphasis in original);

(b) Hoy has "actually used these methods to become a wealthy man"; and

(c) Hoy made $1,800 trading July wheat contracts, only investing a margin of $400.

15. These claims are false. Since Hoy began futures trading on his own behalf in February 1997, he has lost more than $300,000. In addition, the defendants' claims about profits Hoy has made through trading in specific commodities markets are false.

Claims Concerning Risk of Loss

16. Through their mail solicitations, the defendants claim that using the Money Machine system will eliminate, or virtually eliminate, the risk of trading losses. For instance, Pelton's brochures promise:

(a) "Big Profits with LITTLE or no risk" (emphasis in original);

(b) "an insurance policy to `guarantee' that you're protected from loss;"

(c) "No risk if we're wrong, and only profit if we're right" (emphasis in original);

(d) "very little loss, if any;" and

(e) a system "without risks."

17. Furthermore, a chapter of the trading manual, entitled "How to Bring Your Risk to Virtually Zero" and the audiotapes provided with the course materials claim that through stop loss orders and purchasing commodity options traders can virtually eliminate the risks of commodities trading.

18. These claims are false because the information and trading strategies presented by the Money Machine will not eliminate, or virtually eliminate, the risk of trading in the commodities markets, and Hoy himself has lost substantial amounts through trading in those markets.

Claims That Pelton's Customers Have Profited and Are Likely to Profit

19. Defendants falsely claim that Money Machine customers have made extraordinary profits while trading with the Money Machine system, and that customers can earn high profits "regularly and consistently."

20. Defendants' mail solicitations contain several testimonials in which purported "real Course members" claim they have made enormous profits trading with the Money Machine system. These testimonials include the following:

After taking your course and applying the methods you described in the manual, my income has grown tremendously. In just two weeks with the system, I made a cool $6,000. [sic] profit. The "Keys" work like a charm. Thanks for everything.

J.C.
San Diego, CA

Thanks to Roger, I made $2,500 in just a few weeks, with almost no risk.

L.B.
Mesa, AZ

All in all I probably spent just a few minutes a day learning his methods and have already earned back the cost of my enrollment, many, many times over.
I say give Roger and his course a try. You don't have anything to lose. I tried his program and I'm glad I did. Bravo!

D.C.
El Salvador, San Salvador

21. Some, if not most, of defendants' testimonials are false. Many of the individuals whose purported testimonials appear in defendants' mail solicitations have not, in fact, purchased the Money Machine. In addition, the claims of extroardinary profits that appear in the testimonials are false.

Claims That Specific Commodity Traders Have Made Huge Profits By Using the Money Machine System

22. Through their mail solicitations, defendants represent or imply that specific commodity traders have used Hoy's trading methods, or "keys," to reap huge profits. In one instance, the defendants represent or imply that an investor made $200 million by using the "Marvelous Money Machine."

23. These claims are false. The investor who defendants claim made $200 million has never used defendants' Money Machine course to trade and did not authorize the use of his name in defendants' mail solicitations.

V. VIOLATIONS OF THE COMMODITY EXCHANGE ACT

COUNT I

VIOLATIONS OF SECTIONS 4b(a)(i), (iii), AND SECTION 4c(b) OF THE ACT AND

COMMISSION REGULATION 33.10:

FRAUD BY MISREPRESENTATION

24. Paragraphs 1 through 23 are re-alleged and incorporated herein.

25. Since on or about October 1998 and continuing through the present, defendants have violated Sections 4b(a)(i), (iii) and 4c(b) of the Act, 7 U.S.C. 6b(a)(i), (iii), 6c(b), and Commission Regulation 33.10, 17 C.F.R. 33.10 (1998), in that they have cheated or defrauded or attempted to cheat or defraud other persons and willfully deceived or attempted to deceive other persons, by, among other things:

(i) misrepresenting that Hoy has personally made substantial profits trading in the commodities markets;

(ii) misrepresenting that the Money Machine teaches purchasers how to trade in the commodities markets with minimal or no risk;

(iii) misrepresenting that purchasers of the Money Machine have made and are likely to achieve substantial profits by using the Money Machine; and

(iv) misrepresenting that specific commodity traders have made substantial profits by using the Money Machine.

26. Hoy, as principal of Pelton, directly or indirectly controlled Pelton and did not act in good faith or knowingly induced, directly or indirectly, the acts constituting the violations described in this Count I. Pursuant to Section 13(b) of the Act, 7 U.S.C. 13c(b), therefore, defendant Hoy is liable for violations of Section 4b(a)(i) and (iii) and Section 4c(b) of the Act and Commission Regulation 33.10, as described in this Count I.

COUNT II

VIOLATIONS OF SECTION 4o(1) OF THE ACT:

FRAUD BY COMMODITY TRADING ADVISORS

27. Paragraphs 1 through 26 are re-alleged and incorporated herein.

28. Since on or about October 1998 and continuing through the present, defendants have violated Section 4o(1) of the Act, 7 U.S.C. 6o(1) (1994), in that they directly or indirectly employed or is employing a device, scheme, or artifice to defraud customers or prospective customers, or has engaged or is engaging in transactions, practices or a course of business which operated as a fraud or deceit upon investors or prospective investors by using the mails or other means or instrumentalities of interstate commerce. Their fraudulent acts include, but are not limited to: (i) misrepresenting that Hoy has personally made substantial profits trading in the commodities markets; (ii) misrepresenting that the Money Machine teaches purchasers how to trade in the commodities markets with minimal or no risk; (iii) misrepresenting that purchasers of the Money Machine have made and are likely to achieve substantial profits by using the Money Machine; and (iv) misrepresenting that specific commodity traders have made substantial profits by using the Money Machine.

29. Hoy, as principal of Pelton, directly or indirectly controlled Pelton and did not act in good faith or knowingly induced, indirectly or indirectly, the acts constituting the violations described in this Count II. Pursuant to Section 13(b) of the Act, 7 U.S.C. 13c(b), therefore, defendant Hoy is liable for violations of Section 4o(1) of the Act, as described in this Count II.

COUNT III

VIOLATIONS OF COMMISSION REGULATION 4.41:

ADVERTISING IN FRAUDULENT MANNER

30. Paragraphs 1 through 29 are re-alleged and incorporated herein.

31. Since on or about October 1998 and continuing through the present, defendants violated Commission Regulation 4.41(a), 17 C.F.R. 4.41(a) (1998), in that they advertised in a manner which employed a device, scheme or artifice to defraud prospective customers or customers by, among other things:

(i) misrepresenting that Hoy has personally made substantial profits trading in the commodities markets;

(ii) misrepresenting that the Money Machine teaches purchasers how to trade in the commodities markets with minimal or no risk;

(iii) misrepresenting that purchasers of the Money Machine have made and are likely to achieve substantial profits by using the Money Machine; and

(iv) misrepresenting that specific commodity traders have made substantial profits by using the Money Machine.

32. Hoy, as principal of Pelton, directly or indirectly controlled Pelton and did not act in good faith or knowingly induced, indirectly or indirectly, the acts constituting the violations described in this Count III. Pursuant to Section 13(b) of the Act, 7 U.S.C. 13c(b), therefore, defendant Hoy is liable for violations of Commission Regulation 4.41, as described in this Count III.

COUNT IV

VIOLATION OF COMMISSION REGULATION 4.33

FAILURE TO KEEP RECORDS REQUIRED BY COMMISSION

33. Paragraphs 1 through 32 are re-alleged and incorporated herein.

34. Beginning in at least October 1998 and continuing through the present, Pelton violated Commission Regulation 4.33(a)(7), 17 C.F.R. 4.33(a)(7) (1998), in that it failed to maintain and produce, upon the Commission's request, copies or transcriptions of the advice it has provided to Money Machine customers through recorded telephone messages.

35. Hoy, as principal of Pelton, directly or indirectly controlled Pelton; and did not act in good faith or knowingly induced, indirectly or indirectly, the acts constituting the violations described in this Count IV. Pursuant to Section 13(b) of the Act, 7 U.S.C. 13c(b), therefore, defendant Hoy is liable for violations of Commission Regulation 4.33(a)(7), as described in this Count IV.

VI. RELIEF REQUESTED

WHEREFORE, Plaintiff respectfully requests that this Court, as authorized by Section 6c of the Act, 7 U.S.C. 13a-1, and pursuant to its own equitable powers, enter:

A. An order of permanent injunction enjoining Hoy and Pelton and all persons insofar as they are acting in the capacity of agents, servants, employees, successors, assigns, or attorneys of Hoy and Pelton, and all persons insofar as they are acting in active concert or participation with Hoy and Pelton who receive actual notice of the Order by personal service or otherwise, from directly or indirectly:

1. Cheating or defrauding or attempting to cheat or defraud other persons, or willfully deceiving or attempting to deceive other persons, in or in connection with any order to make, or the making of, any contract of sale of any commodity for future delivery, made, or to be made, for or on behalf of any other person if such contract for future delivery is or may be used for (a) hedging any transaction in interstate commerce in such commodity or the products or byproducts thereof, or (b) determining the price basis of any transaction in interstate commerce in such commodity, or (c) delivering any such commodity sold, shipped, or received in interstate commerce for the fulfillment thereof, in violation of Sections 4b(a)(i), (iii), and 4c(b) of the Act, 7 U.S.C. 6b(a)(i), (iii), and 6c(b); and doing so in connection with an offer to enter into, the entry into, or the confirmation of the execution of any commodity option transaction in violation of Commission Regulation 33.10, 17 C.F.R. 33.10 (1998);

2. Employing any device, scheme, or artifice to defraud any client or participant or prospective client or participant, or engaging in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or participant or prospective client or participant, by use of the mails or any means or instrumentality or in violation of Section 4o(1) of the Act, 7 U.S.C. 6o(1) (1994);

3. Employing any device, scheme or artifice to defraud any participant or client or artifice to defraud any participant or client or prospective participant or client in violation of Regulation 4.41(a), 17 C.F.R. 4.41(a) (1998); and

4. Failing to keep the original or copies of each report, letter, circular, memorandum, publication, writing, advertisement or other literature or advice (including the tests or standardized oral presentations and of radio, television, seminar or similar mass media presentations) distributed or caused to be distributed by Pelton to any existing or prospective client or subscriber, in violation of Regulation 4.33(a)(7), 17 C.F.R. 4.33(a)(7) (1998).

B. An order requiring Pelton and Hoy to make restitution to every customer whose funds were received or utilized by them as a result of acts and practices which constituted violations of the Act, as described herein, including prejudgment interest;

C. An order requiring Pelton and Hoy to pay civil penalties under the Act, in an amount of not more than the higher of $110,000 or triple the monetary gain to Pelton and Hoy for each violation of the Act committed after that date;

D. An order directing that Pelton and Hoy make an accounting to the court of all their assets and liabilities, together with all the funds they received from persons in connection with the sale of his commodity trading systems, course line access, and other items sold in connection with the Money Machine trading system, including the names, addresses and telephone numbers of any such persons from whom they received such funds, from September 1998 to and including the date of such accounting;

E. An order requiring Pelton and Hoy to pay costs and fees as permitted by 28 U.S.C. 1920 and 2412(a)(2)(1994); and

F. Such other equitable relief, including disgorgement, as the court may deem necessary or appropriate under the circumstances.

Date: August 2, 1999 Respectfully submitted,
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Vincent McGonagle, Trial Counsel
Jacqueline Hamra, Trial Counsel
Lawrence H. Norton, Associate Director
Commodity Futures Trading Commission
Division of Enforcement
Three Lafayette Centre
1155 21st Street, N.W.
Washington, D.C. 20581
(202) 418-5320
(202) 418-5538
Local Counsel
Joan Humes (#214462)
Assistant United States Attorney
300 South Fourth Street
Suite 600
Minneapolis, MN 55415
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