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No. 53-99 December 24, 1999 |
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On December 17, 1999, the Commission
held a closed meeting to discuss surveillance matters
Release:
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#4349-99 (CFTC
Docket No. 00-02)
For Release:
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December 20, 1999
CFTC FILES AND SETTLES ACTION AGAINST GEORGE W. VELISSARIS FOR COMMODITY POOL FRAUD
CFTC Finds that Velissaris Defrauded Investors by Misappropriating Commodity Pool Funds and Misrepresenting the Profitability of the Commodity Pools, and Orders Restitution to Defrauded Investors, Among Other Sanctions
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced
today that it issued an order on December 16, 1999, instituting
administrative proceedings against and simultaneously accepting an offer
of settlement from George W. Velissaris, of
Northbrook, Illinois. Velissaris was registered as an associated
person of Paine Webber Inc., from April 1985 until February 1989, but has
not been registered with the CFTC in any capacity since that time.
The CFTC order finds that Velissaris violated the anti-fraud provisions
of the Commodity Exchange Act (CEA) (sections 4b(a)(i)-(iii),
4o(1)) by making misrepresentations about the profitability of his
commodity pools when soliciting investors, misappropriating investor
funds, and issuing statements to investors that falsely represented that
the commodity pools were profitable.
The CFTC's order finds that Velissaris was the sole managing partner
of ACG Partners, L.P. (ACG), and that, as such, he
fraudulently operated two successive commodity pools, ACG I and ACG II,
from March 1996 through July 1998. The order specifically finds that
Velissaris fraudulently solicited and accepted at least $323,000 from
investors in ACG I, lost approximately $61,000 trading commodity futures,
misappropriated at least $99,000, repaid three ACG I investors using, in
part, funds he solicited from investors in ACG II, and issued false
statements to pool participants.
The CFTC's order also finds that Velissaris violated CFTC regulation
4.20(c) by withdrawing $82,000 from ACG's checking account and
transferring those funds to his personal account, thus commingling the
property of the two pools he operated with his own funds.
Without admitting or denying the CFTC's findings, Velissaris
consented to the entry of the order that:
--�������� directs him to cease and desist from violating the provisions of the CEA and CFTC regulations with which he was charged;
--�������� permanently prohibits him from trading on contract markets;
--�������� orders him to pay $103,662.93 as restitution, plus interest, to defrauded investors, pursuant to a five-year payment plan;
--�������� requires him to liquidate all futures and options positions held by him or on his behalf, or in which he has any beneficial interest; and
--�������� requires him to comply
with his undertakings, including that he never seek registration or
exemption from registration in any capacity with the CFTC, and never
engage in any activity requiring registration or exemption from
registration.
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#4350-99 (CFTC Docket No.00-03)
For Release:
���������� December 20,
1999
CFTC FILES ADMINISTRATIVE COMPLAINT AGAINST CARL DEAN DIXON,
CHARGING THAT HE COMMITTED COMMODITY FRAUD AND FAILED TO REGISTER AS A
COMMODITY TRADING ADVISOR
CFTC Alleges that Dixon Made Misrepresentations and Deceptive
Statements and Provided False Reports in Connection With His Fraudulent
Solicitation of, and Advice to, Students of His Futures Trading
Course
WASHINGTON � The Commodity Futures Trading Commission (CFTC)
announced today that on December 16, 1999, it filed a three-count
anti-fraud administrative complaint against Carl Dean
Dixon, last known to reside in Davie, Florida.
The complaint alleges that Dixon committed fraud by means of misrepresentations and deceptive statements made to prospective and actual futures trading students concerning, among other things, his experience and success as a futures trader, and by creating false reports purporting to show his profitable trading in violation of the anti-fraud provisions of the Commodity Exchange Act (CEA). The complaint also alleges that Dixon violated the CEA's registration provisions by failing to register as a commodity trading advisor (CTA) while acting in that capacity.
Specifically, the complaint alleges that between at least January and
December 1998, Dixon offered a Treasury bond futures trading course to
the public, promising to teach a trading methodology that would yield
high returns over a short period, and offering a double-money-back
guarantee if students did not earn at least a certain weekly sum after
using the methodology for a few weeks. Dixon, however, failed to teach
such a system or return the students' tuition, the complaint
alleges.
Dixon also allegedly solicited students by making material
misrepresentations that he was an experienced and successful futures
trader whose successes resulted in an opulent lifestyle. Dixon, however,
was neither experienced nor successful as a commodity trader and was
verging on bankruptcy, according to the complaint.
Dixon also solicited two students using sham account statements
reflecting phony trading profits to reinforce his assertions that he was
a profitable, high-volume trader for his own account, the complaint
alleges. Furthermore, it is alleged that Dixon solicited students by
claiming to have taught students to become successful traders using his
trading methods, when in fact he had rarely, if ever, taught students to
trade successfully.
The complaint alleges that Dixon's solicitations were false,
deceptive and misleading because they misstated and failed to disclose
facts material to the students' decisions to sign up for his
tutoring, all in violation of sections 4b and 4o of the CEA. The
complaint also alleges that Dixon also failed to register as a commodity
trading advisor in violation of section 4m(1) of the CEA.
A public hearing has been ordered to determine whether the allegations
are true, and, if so, what sanctions are appropriate in the public
interest.
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#4351-99 (CIV-92-6832)
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December 20, 1999
Florida District Court Orders $2.29 Million in Disgorgement from
Marc Stephen Wuensch for Commodity Options Fraud
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced
today that on December 7, 1999, U.S. District Court Judge Ursula
Ungaro-Benages of the Southern District of Florida entered a final order
of disgorgement of $ 2.29 million against Marc Stephen
Wuensch of Pembroke Pines, Florida, in CFTC v. Trinity
Financial Group, Inc. et al. Wuensch was formerly the president of
Carrington Financial Corp. Inc. and sales manager of
Trinity Financial Group, Inc., both registered
introducing brokers in Aventura, Florida. As the court previously found,
this case involved the fraudulent solicitation of customers to purchase
options on commodity futures contracts.
On September 29, 1997, after a 17-day trial, the court found Carrington
and Wuensch liable for "systematic and willful" violations of
the anti-fraud and supervisory provisions of the Commodity Exchange Act
(CEA) in connection with the fraudulent solicitation of customers. Among
other things, the court found that "Carrington and Wuensch failed to
establish and maintain meaningful procedures for deterring and detecting
fraud by their employees, that Wuensch knew of specific incidents of
misconduct and failed to take reasonable steps to correct the
problems," and that "the improper sales practices . . .
continued since the filing of this action with Wuensch's approval and
active participation."
The court also found that associated persons at Carrington fraudulently
solicited customers by misrepresenting and omitting material facts
concerning, among other things, the profit potential of and risks
involved in trading commodity options.
In the September 29, 1997 order, the court also permanently enjoined
Wuensch and Carrington from violating the anti-fraud and supervisory
provisions of the CEA, and permanently enjoined the remaining defendant,
Frank Sidoti, from violating the registration provisions
of the CEA. Further, the court ordered defendants to disgorge all profits
that Wuensch and Sidoti received from Carrington and Trinity, prohibited
the transfer of assets, and ordered Carrington, Wuensch, and Sidoti to
transfer all books and records to a receiver, among other relief. The
court appointed a receiver who seized control of Carrington and
terminated its operations. Subsequently, the Commission staff worked with
the receiver in the preparation of a report and recommendation for
disgorgement to the court.
In the December 7, 1999 order, the court stated that Trinity's and
Carrington's business operations under Wuensch's supervision and
control were "pervasively fraudulent," and that "Wuensch
encouraged, condoned, and participated in pervasive fraud." The
court based its $2.29 million order of disgorgement upon Wuensch's
undisputed income from Trinity's and Carrington's fraudulent
activity during the years 1991 through 1994, the period for which there
was record evidence of fraud.
No Opinions Updates were issued during this period.
On December 12, 1999, the Commission authorized for
publication in the Federal Register a proposed rulemaking regarding the
establishment of trading prohibitions for persons associated with
self-regulatory organizations -- Commission Regulation 1.59.
The Chicago Mercantile Exchange proposed amendments to its oriented strand board futures contract. Vol. 64, No. 243, 12/20/99, p. 7112.
NOTE:
All Comment Letters must be received by the Commission no later than the closing date specified in the applicable Federal Register release. Any requests for an extension of the comment period must be made in writing - - before the expiration of the comment period - - to the Commission's Office of the Secretariat.
Comment period concerning the Commission's proposal to eliminate fees
for futures and option contract market applications ends,
December 27, 1999.
Comment period concerning the Chicago Mercantile Exchange's proposal
to amend its oriented strand board futures contract ends, January
4, 2000.
Comment period concerning the Commission's proposal to revise its
procedures for the review of contract market rules and rule amendments
ends, January 25, 2000.
Comment period concerning the Commission's proposal to amend its
rules to create an exemption from registration requirements for commodity
trading advisors that provide advice by means of media such as
newsletters, Internet web sits, and non-customized computer software
ends, February 7, 2000.
Gerald P. Bellizzi v. Brandon Financial Group, Inc. (d/b/a
"Ken Wolf Commodities"), David Jude Javor, LFG, L.L.C., and
Kenneth J. Wolf. Filed December 17, 1999. Complainant and
respondents filed a stipulation of dismissal. Accordingly, the proceeding
was dismissed. Joel R. Maillie, Judgment Officer. CFTC Docket No.
99-R141.
Brigid O. Hensley v. Coastal Commodities Corporation, Universal
Financial Holding Corp., and Raymond Vincent Giguere. Filed
December 17, 1999. Respondents Universal, Giguere and Coastal failed to
make the second payment under the terms of a settlement agreement and
thus breached the settlement agreement. Respondents agreed that in the
event of such a breach, they would be subject to a default sanction in
the full amount of the claim, less any amount received from the
respondents. Accordingly, the stay was vacated and based on
respondents' default, it was concluded that Raymond Vincent Giguere
and Costal Commodities Corporation had violated the CEAct and Commission
regulations causing $15,270.25 in damages; and that Universal Financial
Holding Corporation was liable as guarantor of Coastal Commodities.
Universal Financial Holding Corporation, Coastal Commodities Corporation
and Raymond Vincent Giguere were ordered to pay to Brigid O. Hensley
reparations of $15,270.25, plus interest on that amount at 5.670%
compounded annually from April 3, 1998, to the date of payment, plus $125
in costs for the filing fee, less any amount received from the
respondents. Philip V. McGuire, Judgment Officer. CFTC Docket No.
99-R69.
Randy C. Laumb and Cindy Laumb v. Rosenthal Collins Group, LLC
d/b/a Spike Trading Division and William R. Bowens, II. Filed
December 21, 1999. The parties settled this matter and submitted a joint
notice of satisfaction and withdrawal of complaint. Accordingly, this
matter was dismissed. Philip V. McGuire, Judgment Officer. CFTC Docket
No. 99-R181.
No Opinions and Orders were issued during this period.
No CFTC Letters were issued during this period.
The Commodity Futures Trading Commission's Office of Public Affairs has updated the "Foreign Instrument Approvals & Exemptions," Backgrounder. To obtain a copy, please contact the Office of Public Affairs at (202) 418-5080 or visit the Commission's website at http://www.cftc.gov. (See Attachment.)