For Release: July 21, 2000
U.S. DISTRICT COURT ENTERS CONSENT ORDERS AGAINST JOSEPH P. MCGIVNEY, SR. AND EDWIN A. KOZIOL, JR. REQUIRING THEM TO PAY MORE THAN $800,000 IN RESTITUTION AND PERMANENTLY BARRING THEM AND THEIR COMPANY FROM THE FUTURES INDUSTRY FOR FRAUDULENT COMMODITY POOL SCHEME
The CFTC Alleged that Joseph P. McGivney, Sr. and Edwin A. Koziol, Jr. Pooled More than $1 Million from at Least 105 Investors and Fraudulently Misappropriated Some of the Investors' Funds
WASHINGTON – The Commodity Futures Trading Commission (CFTC) announced today that on July 17, 2000, U.S Magistrate Judge Morton Denlow of the Northern District of Illinois, Eastern Division (Chicago), entered consent orders of permanent injunction against Joseph P. McGivney, Sr., of Midlothian, Illinois, Edwin A. Koziol, Jr., of Oak Lawn, Illinois and JPM, Inc., a dissolved Nevada corporation.
In consenting to the entry of a permanent injunction, the defendants neither admitted nor denied the allegations in the eight-count civil injunctive complaint, which was filed by the CFTC on April 12, 1999 (see CFTC News Release 4254-99, April 13, 1999). The CFTC's complaint alleged that from January 1993 until the filing of its complaint in April 1999, McGivney and Koziol operated a Ponzi scheme in which public investors were defrauded.
According to the complaint, to effect the scheme, McGivney incorporated a series of companies through which he solicited money from individual investors, often under the guise of so-called "loan" agreements between the corporations and the investors. Investors allegedly were told that they would receive a pro-rata share of profits from commodity futures trading purportedly being conducted by the corporations. McGivney, through his various companies, accepted more than $1 million from at least 105 investors, according to the complaint.
The complaint further alleged that McGivney and various of his companies, including JPM, Inc., defrauded commodity investors by fraudulently soliciting funds and also charged that they acted as unregistered CPOs, in violation of section 4m(1) of the CEA. The complaint also alleged that McGivney, Koziol, JPM, Inc. and various McGivney companies defrauded commodity investors by misappropriating investors' funds and that certain companies mailed false statements to investors, in violation of sections 4b(a)(i), 4b(a)(ii) and 4o(1) of the CEA. The complaint further alleged that McGivney, while acting as a CPO, failed to operate his commodity pools as separate legal entities and commingled investor funds with the property of others, in violation of CFTC regulation 4.20; and that McGivney and JPM, Inc. failed to distribute a disclosure document to commodity pool investors, in violation of CFTC regulation 4.21(a).
The consent orders require payment of restitution of totaling more than $800,000, prohibits the defendants from engaging in certain activities in the futures industry on behalf of others or themselves, and permanently enjoins the defendants from violating federal commodity laws and regulations. The consent orders also permanently enjoin McGivney, Koziol and JPM, Inc. from soliciting funds, from controlling or directing the trading of commodity accounts on behalf of any other persons or entities and from seeking registration, or claiming exemption from registration, with the CFTC. Under the terms of the court's orders, defrauded investors are deemed to be third-party beneficiaries of the orders, such that each investor may seek enforcement of the orders.
The complaint also alleges that a portion of the misappropriated investor funds were diverted to Marita McGivney, of Orland Park, Illinois, and Leslie Wnukowski, of Midlothian, Illinois, each of whom was named as a relief defendant in the complaint. Additional court orders entered on July 17, 2000, require Marita McGivney and Wnukowski to pay the sums of $100,000 and $168,920, respectively, in order to recover sums directly traceable to the fraud. These orders against the relief defendants may be enforced by the Commission and third party beneficiaries beginning three years from the entry of the order.
In a separate court order, allegations against seven of McGivney's defunct companies, including five defendants and two relief defendants, were voluntarily dismissed.