CFTC News Release 4401-00 (00-Civ-547-5)
For Release May 17, 2000
CFTC FILES ACTION AGAINST MICHAEL JAMES KONKEL CHARGING HIM WITH FRAUD IN THE OPERATION OF A COMMODITY POOL
Court Issues Ex Parte Order Freezing Assets & Prohibiting Destruction of Books and Records
WASHINGTON – The Commodity Futures Trading Commission (CFTC) announced today that on May 1, 2000, it filed a civil injunctive action in the U.S. District Court for the Middle District of Alabama, charging fraud by Michael James Konkel of Barneveld, Wisconsin, individually and doing business as Venture Fund, Ice Capital Management Inc., Ad Astra, Inc., and the Inscape Funds. On the same day that the Commission filed the case, the court entered an ex parte restraining order that, among other things, freezes the defendant’s assets and preserves books and records.
The CFTC's complaint alleges that over more than a three-year period, Konkel fraudulently solicited individuals to invest over $640,000 in a commodity pool in order to trade commodity futures contracts. The complaint alleges that from 1996 through the present, Konkel, acting individually, and doing business through the names of several firms, successfully solicited at least 15 individuals to invest at least $640,000 into a pooled investment vehicle known to investors variously as the "Fund," "Ice Fund," or "Venture Fund" ("the Fund").
The CFTC complaint further alleges that Konkel, who was not registered with the CFTC as a commodity pool operator, induced these individuals to invest in the Fund by making false profit claims and minimizing the risks of trading in the commodity futures markets. The complaint also alleges that Konkel created and distributed reports to investors falsely representing that the Fund had positive trading results. As further alleged, Konkel claimed that those representations were based on his personal trading results, but Konkel actually sustained over $200,000 in trading losses in his personal trading account.
The complaint charges that by making such false representations, Konkel committed fraud in violation of sections 4b(a) and 4o of the Commodity Exchange Act (CEA) and section 4.41 of the CFTC's regulations. The complaint also charges that Konkel operated as an unregistered commodity pool operator in violation of section 4m(1) of the CEA.
The Complaint Alleges that Since 1996, Approximately $1.3 Million in Investor Funds Has Been Deposited into Konkel’s Personal Bank Accounts
The complaint further charges that Konkel improperly commingled investor funds by depositing investor monies into several personal accounts in violation of section 4.20(a) of the CFTC regulations. Specifically, the complaint alleges that since 1996, a total of approximately $1.3 million in investor funds has been deposited into Konkel’s personal bank accounts. The complaint also alleges that Konkel failed to comply with commodity pool disclosure and reporting requirements in violation of section 4n(4) of the CEA and sections 4.21 and 4.22 of the CFTC’s regulations.
In its continuing litigation against the defendants, the CFTC is seeking injunctions against the alleged violations and other remedial relief including restitution to customers, disgorgement of ill-gotten gains, and civil monetary penalties. The CFTC appreciates the substantial assistance of the National Futures Association in this case.
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