CFTC News Release 4354-00 (3:98 Civ 0281AS)
For Release January 21, 2000
INDIANA FEDERAL COURT ENTERS JUDGMENT AGAINST MARKET CAPITAL GROWTH, INC.; CARMEN FIELD; AND MONA SMITH AND ORDERS RESTITUTION OF OVER $1.2 MILLION TO BE PAID TO DEFRAUDED INVESTORS IN COMMODITY POOL FRAUD CASE
Court Also Enters Consent Orders Of Permanent Injunction Against Steven D. Hudkins, Bart BeMiller and Robert J. Riethman and Orders Hudkins and BeMiller To Pay Restitution Of Over $600,000
WASHINGTON – The Commodity Futures Trading Commission (CFTC) announced today that on December 8, 1999, the Honorable U.S. District Court Judge Allen Sharp of the U.S. District Court for the Northern District of Indiana entered a judgment after trial against Market Capital Growth, Inc. (MCG) of Elkhart, Indiana, Carmen J. Field of Richardson, Texas (formerly of South Bend, Indiana), and Mona Smith of South Bend, Indiana, finding that they fraudulently operated a commodity pool called HFI, which was operated through MCG, and ordering, among other sanctions, payment of restitution of over $1.2 million.
On January 12, 2000, Judge Sharp also entered consent orders of permanent injunction against the remaining defendants in this litigation, Steven D. Hudkins of Elkhart, Indiana, Bart BeMiller of Wakarusa, Indiana, and Robert J. Riethman of Indianapolis, Indiana, based on their alleged involvement in the fraudulent operation of the HFI pool and another commodity pool called MCG. The court’s orders arise out of an eight-count injunctive complaint alleging commodity pool fraud filed by the CFTC on May 29, 1998 (see CFTC News Release 4152-98, June 8, 1998).
Court Finds That Field and Smith Knowingly and Intentionally Engaged in Fraud
In issuing his decision against MCG, Field, and Smith, Judge Sharp found, among other violations, that they had violated the anti-fraud provisions of the Commodity Exchange Act (CEA).
Specifically, Judge Sharp found that, 1) Field and Smith knowingly and intentionally made false representations to investors in the HFI pool, including making false claims that all investor money would be used to trade commodity futures, 2) HFI investors had never experienced losses in any given month, and 3) HFI investors in a particular commodity futures investment program would receive annual returns of 10 to 20 percent, and investments in another commodity futures investment program would be secured by Treasury Bills. Judge Sharp also found that the evidence showed that HFI never had funds on deposit in a commodity futures account and that Field systematically bilked 113 HFI investors out of approximately $1.7 million over a seven-year period, with Smith fully and knowingly involved in the scheme for at least its last two years.
Judge Sharp, among other sanctions, permanently enjoined MCG, Field, and Smith from violating the CEA's anti-fraud provisions, prohibited them from seeking registration with the CFTC in any capacity or acting in any capacity requiring registration and otherwise engaging in any commodity futures trading related business activity, ordered Field to disgorge her ill-gotten gains in the amount of $880,811 and Smith to disgorge $146,154; and ordered MCG, Field, and Smith to pay restitution of over $1 million and Field to pay additional restitution of over $200,000.
In the Consent Orders, Hudkins, BeMiller, and Riethman Enjoined, Ordered to Pay Monetary Sanctions, and Barred From The Commodity Futures Trading Industry
The consent orders of permanent injunction entered by Judge Sharp against Hudkins and BeMiller included findings that Hudkins and BeMiller made false representations to MCG pool investors concerning past profits of the pools, Hudkins’ experience as a commodity trader, and/or other misrepresentations similar to those made by Field and Smith. The orders also find that Hudkins and BeMiller used only a portion of investor funds for trading in commodity futures, that some investor funds were used to make returns to other investors in a manner akin to a Ponzi scheme, that they issued false statements to investors showing purported profits, and that they misappropriated investor funds for their personal use.
In consenting to the orders, Hudkins stipulated to, and BeMiller admitted, the allegations of the complaint and the findings of fact in the consent orders. By the terms of the consent, Hudkins and BeMiller, among other sanctions, are permanently enjoined from violating the CEA's anti-fraud provisions and from seeking registration with the CFTC in any capacity or acting in any capacity requiring registration and otherwise engaging in any commodity futures trading related business. Hudkins and BeMiller are ordered to disgorge $592,395 and $69,722, respectively, and are jointly and severally liable to pay restitution of over $600,000 to MCG investors, pursuant to a payment plan. Hudkins is ordered to pay additional restitution of over $200,000 to another group of HFI and MCG investors, also pursuant to a payment plan.
Riethman, without admitting or denying the allegations of the complaint or findings in the order, consented to the entry of an order that finds that he solicited over $23,000 from two investors in the MCG pool, by making representations that proved to be false concerning, among other things, the past profits of the pool, guarantees of future profits, and Hudkins’ experience as an investor. The order permanently enjoins Riethman from violating the anti-fraud provisions of the CEA, bars him from any business activities related to commodity futures trading for a five-year period, and orders him to disgorge $3,000 and to pay restitution of over $23,000 and a civil monetary penalty of $10,000.
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