CFTC New Release 4444-00 (CFTC Docket 00-27)
For Release September 7, 2000
CFTC FILES ANTI-FRAUD ENFORCEMENT ACTION AGAINST RICHARD A. VIELE, BERNADETTE FLAVELL, KEVIN KATES, AND SYSTEMS OF SUCCESS -- ALL OF FLORIDA
CFTC Alleges that Viele, Flavell, Kates and Systems of Success Fraudulently Misrepresented the Profitability and Performance Records of Various Futures Trading Systems Developed and Marketed by Them
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today the filing of a two-count administrative complaint against Richard A. Viele, Bernadette Flavell, Systems of Success, a company operated out of Viele and Flavell’s home in Coral Springs, Florida, and Kevin Kates, of Deerfield Beach, Florida. The CFTC complaint alleges, among other things, that Viele, Flavell, Systems of Success, and Kates committed sales solicitation fraud in connection with their commodity futures trading systems.
Systems of Success and Viele have never been registered with the CFTC in any capacity; however, Flavell has been registered as a commodity trading advisor (CTA) with the CFTC since June 4, 1998, and Kates was registered as a CTA from May 22, 1996, to December 30, 1998.
Specifically, the CFTC complaint alleges that, from approximately September 1996 through January 1999, the respondents fraudulently solicited members of the public to purchase signals generated by various systems developed and marketed by respondents and to attend workshops run by Viele, Flavell, and Systems of Success in order to trade exchange-traded commodity futures contracts. As alleged, in their advertisements, promotional materials, and other solicitations of workshop attendees and prospective attendees, respondents consistently misrepresented the performance and profitability records of the trading systems and the risks involved in trading pursuant to their systems. As further alleged, respondents fraudulently presented hypothetical trading results as actual trading results.
For instance, the CFTC complaint alleges that the respondents claimed that their systems showed monthly profits ranging from $3,650 to $16,650, when in fact, Viele had either suffered a monthly net loss or had not traded at all, and various clients suffered losses. By such acts, the CFTC complaint alleges that the respondents violated the anti-fraud provisions of the Commodity Exchange Act (CEA) and Commission regulations. The complaint also alleges that respondents violated Commission regulations by failing to include the required cautionary statement about the limitations of hypothetical trading in their advertising or in their track record promotional materials.
A public hearing has been ordered to determine whether the allegations are true, and, if so, what sanctions are appropriate and in the public interest. Possible sanctions include an order directing respondents to cease and desist from violating the CEA and Commission regulations, civil monetary penalties, restitution to defrauded customers, trading prohibitions, and revocation, suspension, or restriction of Flavell’s and Kates’ registrations with the CFTC.
NOTE TO EDITORS:
In other CFTC enforcement actions today, the CFTC also announced that it filed and simultaneously settled four administrative actions and filed a civil injunctive complaint in the United States District Court for the Northern District of California involving the fraudulent promotion of commodity trading systems over the Internet (see CFTC News Release 4442-00, September 7, 2000). Those actions are part of the CFTC’s on-going law enforcement initiative to address the fraudulent solicitation of customers by commodity trading advisors over the Internet.
On May 1, 2000, the CFTC announced the law enforcement initiative in conjunction with the filing and simultaneous settlement of ten administrative actions against promoters of commodity trading systems who used the Internet to solicit customers and the issuance of a related Consumer Advisory concerning such solicitations (see CFTC News Release 4397-00, May 1, 2000).
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