CFTC News Release 4368-00 (00-Civ-13-17)
For Release February 22, 2000
CFTC FILES A FRAUD ACTION AGAINST DAVID M. MOBLEY, SR., MARICOPA INTERNATIONAL INVESTMENT CORPORATION, ENSIGN TRADING CORPORATION, AND OTHERS AND A PROPOSED CONSENT ORDER OF PRELIMINARY INJUNCTION AND STATUTORY RESTRAINING ORDER
CFTC Complaint Alleges Defendants Carried Out A Multi-Million Dollar Fraud On Investors In Funds Managed By Mobley and Entities He Owned And Controlled; Defendants’ Alleged Fraudulent Scheme Included The Concealment of Losses Incurring From Trading of Commodity Futures And Options On Behalf Of A Commodity Pool
WASHINGTON – The Commodity Futures Trading Commission (CFTC) announced that it filed with the United States District Court for the Southern District of New York a fraud action against David M. Mobley, Sr. (Mobley) of Naples, Florida, and various entities he owns and controls, including Maricopa International Investment Corporation d/b/a Maricopa Investment Corp.; Maricopa Investment Fund, Ltd.; Maricopa Index Hedge Fund, Ltd.; Maricopa Financial Corporation; Ensign Trading Corporation; Iam, Inc and several relief defendants, which are all entities owned or controlled by Mobley. The CFTC also filed a proposed order of preliminary injunction and statutory restraining order, consented to by Mobley on behalf of all the defendants, which, if entered by the court, will freeze existing assets and preserve books and records. The case has been assigned to the Honorable Robert Conway Casey.
The CFTC's action alleges that defendants carried out a multi-million dollar fraud on investors in funds managed by Mobley and various entities he owned and controlled. The complaint alleges that the fraudulent scheme involved, among other things, management of a commodity pool and the trading of commodity futures and options, in which substantial commodities-related trading losses ultimately were both incurred and concealed from investors. Specifically, the complaint alleges that defendants, while acting as commodity pool operators, failed to disclose to investors that their funds would be traded in commodity futures and options; that Mobley caused certain defendants to issue reports to investors that fraudulently overstated the profitability of their investments while concealing the fact that substantial losses had resulted from trading investor funds in commodity futures and options; and, that Mobley misappropriated investor funds and converted them for his own use and benefit. The complaint also alleges that Mobley is liable as a controlling person for all other defendants' fraudulent acts and practices. The complaint seeks a permanent injunction and an asset freeze, among other relief.
Mobley, Sr. consented, on behalf of all defendants and relief defendants, to an order of preliminary injunction and statutory restraining order, which is now pending before the court. The proposed order would freeze all of the defendants’ assets, pending a hearing on the permanent injunction, and would preserve books and records and make them available to the CFTC.
Phyllis J. Cela, Acting Director of Division of Enforcement, commented that "this action demonstrates the importance of investors assuring themselves that their investments are being handled by responsible persons and being appropriately managed."
The CFTC Complaint Alleges Mobley Carried Out A $59 Million Fraud
Specifically, the CFTC complaint alleges that Mobley conceived and carried out a $59 million fraud on the investors in four funds he created and managed: Maricopa Investment Fund, Ltd., Maricopa Index Hedge Fund, Ensign Trading Corporation, and Maricopa Financial Corporation. As alleged, Mobley claimed to have $450 million under management and told his investors that he invested their funds primarily in major stock index products using computer trading models he developed and to have achieved rates of return averaging approximately 51 per cent per year, net of his management fee of 30 percent. As further alleged, he declined to have his funds audited, explaining to investors that audits would risk divulging his secret and highly profitable trading strategies.
In fact, as alleged, Mobley had no more than about $35 million under management and his trading program was generally unprofitable. He allegedly lost the bulk of the investors' funds through a series of failed business ventures, and used investor funds to support a lavish lifestyle for himself and his family and associates, including an expensive vacation home near Vail, Colorado, sports cars, expensive jewelry, and trips on private jets.
The complaint further alleges that Mobley estimates that since September 1992, more than 170 investors contributed a total of over $140 million into his funds and that most of the investors were wealthy, though some were of modest means and entrusted Mobley with their IRAs. The complaint also alleges that only about $33 million of investor assets, including about $5 million in illiquid assets, appears to remain, and that net of prior redemptions, which Mobley estimates at less than $48 million (and which included substantial profits paid to the redeeming investors at the expense of the remaining investors), total investor losses appear to exceed $59 million.
This action was filed with the substantial assistance of the Federal Bureau of Investigation and coordinated with the filing of a related fraud action by the U.S. Securities and Exchange Commission.
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