CFTC News Release 4445-00 (00-Civ-207-RHK/SRN)
For Release September 7, 2000
CFTC CHARGES LEONARD G. NAUMAN, EDWARD STEVENSON KIRRIS , III, WILLIAM J. RELF, PENSION AMERICA, INC. , FUTURES PROFIT MAKING, LLC., SELECTIVE FUTURES MANAGEMENT, LLC., SPECIALIZED COMMODITY TIMING, LLC., AND COMMODITY TIMING SPECIALISTS, LLC., WITH COMMODITY POOL FRAUD AND FAILURE TO REGISTER AS COMMODITY POOL OPERATORS
The Complaint Alleges that Nauman, Kirris, and Relf Pooled at least $600,000 From Approximately 36 Investors Mostly in the Minneapolis and Brainerd, Minnesota Areas; Court Issues An Ex parte Restraining Order Freezing Defendants' Assets and Prohibiting the Destruction of Documents
WASHINGTON---The Commodity Futures Trading Commission (CFTC) announced today that on September 6, 2000 it filed an injunctive action in the U.S. District Court for the District of Minnesota against Leonard G. Nauman of Golden Valley, Minnesota; Edward Stevenson Kirris, III of Red Wing, Minnesota; William J. Relf of Hudson, Wisconsin; and the following Minnesota corporations: Pension America, Inc., (PAI); Futures Profit Making, LLC (FPM);Selective Futures Management, LLC (SFM); Specialized Commodity Timing, LLC (SCT);and Commodity Timing Specialists (CTS). The CFTC's injunctive action charges the above defendants with committing fraud and registration violations of the Commodity Exchange Act (CEA) and CFTC regulations in connection with their operation of four commodity pools. None of the individuals or entities named in the complaint is currently registered with the CFTC in any capacity.
On the same day, the court issued an ex parte restraining order freezing defendants' assets and prohibiting the destruction of documents. The court set a hearing date of September 12 for the CFTC's motion for a preliminary injunction in the case.
The CFTC complaint alleges that, since at least April 1997 and continuing through the present, Nauman, Kirris, and Relf solicited, accepted, and pooled at least $600,000 from approximately 36 members of the general public (investors) -- mostly in the Minneapolis and Brainerd, Minnesota areas -- for the purported purpose of trading commodity futures.
Among other things, according to the CFTC's complaint, Nauman, Kirris, and Relf 1) misappropriated funds received from investors, using them for personal expenses, 2) misrepresented their past trading success to potential investors, promising them profitable trading while claiming to be able to limit risks, and, 3) issued false monthly commodity statements to investors in violation of sections 4b(a)(i), (ii) and (iii) of the CEA.
The CFTC complaint also alleges, among other things, that Nauman, Kirris, and Relf each failed to register as commodity pool operators, and that Nauman and Kirris failed to register as commodity trading advisors, in violation of section 4m(1) of the CEA. The complaint further alleges that since Nauman, Kirris, and Relf were acting within the scope of their employment, PAI, FPM, SFM, SCT, and CTS are liable for their actions or omissions. Nauman is also alleged to be liable as a controlling person for the violations of Kirris and Relf.
In its continuing litigation, the CFTC is seeking preliminary and permanent injunctive relief, an accounting to the court of all defendants' assets and liabilities, restitution to customers, disgorgement of ill-gotten gains, and civil monetary penalties of amounts not more than the higher of $110,000 for each violation or triple the monetary gain to defendants, among other remedial relief.
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