CFTC News Release 4442-00
For Release September 7, 2000
CFTC FILES FIVE ENFORCEMENT ACTIONS ALLEGING THE FRAUDULENT PROMOTION OF COMMODITY TRADING SYSTEMS OVER THE INTERNET
CFTC Actions Are Part of Initiative To Clean Up Fraudulent Internet Web Sites
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that it has filed five enforcement actions against promoters of commodity trading systems using the Internet. In four of the actions, the CFTC issued orders simultaneously settling the proceedings against respondents. In the fifth action, the CFTC filed a two-count civil complaint in the United States District Court for the Northern District of California, seeking a statutory restraining order and preliminary and permanent injunctive relief against Abdullah Alsafari. In each of these actions, the CFTC finds, or alleges, that the promoters of commodity trading systems made fraudulent claims on the Internet concerning the extraordinary profits to be realized by using their systems to trade commodity futures contracts or options.
The CFTC’s announcement today is part of a continuing law enforcement initiative announced by the Commission on May 1, 2000, directed at cleaning up internet Web sites that fraudulently promote commodity trading systems and advisory services. In the first phase of the initiative, the Commission issued orders filing and simultaneously settling ten administrative proceedings against respondents for the fraudulent promotion of their trading systems. The Commission also issued a CFTC Consumer Advisory warning the public about false and misleading claims on Web sites touting outstanding performance with little risk if a customer used the advertised trading systems or advisory services. (Also see CFTC Press Release 4397-00, May 1, 2000.)
In commenting on today's enforcement actions, CFTC Chairman, William J. Rainer, said:
Through this second phase of the CFTC’s law enforcement initiative, the Commission seeks to reinforce the message that the investing public must be skeptical of claims of easy profits at low risk by using these trading systems to buy commodity futures and options contracts. Sellers of such systems should also be on notice that the CFTC will continue to take vigorous action to clean-up Web sites that use the internet to fraudulently solicit customers.
CFTC Issues Orders Simultaneously Settling Four Of The Five Enforcement Actions Filed Today
In the four actions that the CFTC simultaneously filed and settled, the Commission issued orders finding that the respondents each fraudulently marketed commodity trading systems by misrepresenting the profits they had achieved, or profits one could expect to achieve, by using their systems.
According to the orders, some of the respondents claimed that they personally profited by trading using their systems when in fact they either never traded or lost money trading; other respondents claimed that customers had exceptional profits when in fact the customers had not made such profits or had lost money using the trading systems; one respondent used a customer testimonial claiming highly successful trading but never disclosed the customer’s subsequent substantial losses and that the customer discontinued using the respondent’s system; some respondents also did not make adequate risk disclosures; finally some respondents presented profitable hypothetical trades as actual trades and did not include the required disclaimer concerning the limitations of hypothetical trading. Respondents neither admitted nor denied the findings entered by the CFTC.
The following respondents and their Web sites were the subjects of the CFTC orders: Stanley Edward Moore, of Reno, Nevada; Richard Swannell of Attadale, Australia, International Trading Systems, Ltd. (a Grand Caymans corporation), International Trading Systems Australia PTY, Ltd. (an Australian corporation); Edward Martin (doing business as Black Gold International) of Terre Hill, Pennsylvania; and George Heffernan (doing business as Accutrader and Accutrader Day Trading School) of Evans, Georgia. Moore has been registered with the CFTC as a commodity trading advisor (CTA) since April 1996; none of the other respondents has ever been registered with the CFTC in any capacity.
|Firm or Individual||Internet Web Site Address|
|Stanley Edward Moore||www.rhythmofthemarkets.com|
Richard Swannell, International Trading
Systems Ltd., International Trading Systems Australia PTY Ltd.
|Edward Martin d/b/a Black Gold International||www.b-gold.com|
|George Heffernan d/b/a Accutrader and Accutrader Day Trading School||www.accutrader.com|
The four CFTC settlement orders require the above-named respondents 1) to cease and desist from violating the provisions of the Commodity Exchange Act (CEA) and the CFTC's regulations that the CFTC found they violated; 2) to, among other things, make no unsubstantiated profit or risk claims; and 3) to pay civil monetary penalties, unless respondents have demonstrated to the Commission that they do not have the financial ability to pay such a penalty. The order as to respondent Moore also suspends his registration with the CFTC for a six-month period.
CFTC Civil Complaint Alleges That Abdullah Alsafari Committed Fraud on The Internet By Misrepresenting the Profitability of His Japanese Yen Futures Trading System
The CFTC also announced today the filing of a two-count civil complaint on September 6, 2000, in the United States District Court of the Northern District of California against Abdullah Alsafari, also known as Vincent, Vincenta or Vicenta Alsafari, of Dale City, California, who does business on the internet as www.yentrading.com.
The CFTC complaint alleges that Alsafari violated the anti-fraud provisions of the CEA by fraudulently selling his Japanese yen futures trading system via the Internet and through advertisements in newspapers and demonstrations at local hotels.
Specifically, the CFTC complaint alleges that Alsafari defrauded customers by guaranteeing profits from the use of his system and by guaranteeing refunds, but failing to provide such refunds, to customers who did not make money. As the complaint further alleges, Alsafari falsely represented that he profitably trades foreign currency futures using his system and that no customer has ever requested a refund. According to the complaint, Alsafari’s customers, each of whom paid $3,500 for the trading system, all lost money trading with the system and all of them, with one exception, never received the purchase price refund guaranteed by Alsafari.
In its continuing litigation, the CFTC intends to seek restraining orders prohibiting Alsafari from destroying or altering his records and from further violating the CEA. The CFTC is also seeking preliminary and permanent injunctive relief, an accounting of all of Alsafari's assets and liabilities together with all funds received from and paid out by him to purchasers of his trading system, disgorgement of all ill-gotten gains, restitution directing Alsafari to make whole each and every purchaser of his trading system, and civil monetary penalties of up to $110,000 or triple the monetary gain for each violation of the CEA.
NOTES TO EDITOR:
In addition to the CFTC's Consumer Advisory concerning the fraudulent promotion of trading systems issued on May 1, 2000 (see Beware of Internet Websites Selling Commodity Trading Systems that Guarantee High Profits with Minimal Risks, the Federal Trade Commission (FTC) and the Securities and Exchange Commission (SEC) issued similar advisories (see www.ftc.gov/bcp/menu-internet.htm and www.sec.gov/enforce/intrela.htm) .
# # #