CFTC News Release 4459-00 (00-Civ-00622ST)

For Release October 5, 2000

UTAH FEDERAL COURT ENTERS PRELIMINARY INJUNCTION AGAINST STEPHEN W. BROCKBANK, CAROL J. LOVE, AND BIRMA, LTD., IN CFTC ENFORCEMENT ACTION CHARGING FRAUDULENT OPERATION OF A COMMODITY POOL

WASHINGTON — The Commodity Futures Trading Commission (CFTC) announced today that on September 25, 2000, U.S. District Court Judge Ted Stewart of the U.S. District Court for Utah issued a preliminary injunction against Stephen W. Brockbank of Salt Lake City; Carol J. Love of West Jordan, Utah; and BIRMA, Ltd., a Utah limited partnership, defendants in a six-count CFTC anti-fraud complaint filed on August 8, 2000 (see CFTC News Release 4437-00, August 22, 2000). The complaint charges the defendants with the fraudulent operation of a commodity pool.

The CFTC’s complaint alleges that from October 1997 through the present, the defendants issued false statements, commingled pool assets with assets of the pool operators, misappropriated investor funds, failed to establish the pool as a legal entity separate from the pool operators, and failed to register as commodity pool operators, all in violation of the Commodity Exchange Act (CEA) and Commission regulations.

The preliminary injunction enjoins the defendants from further violations of the CEA and CFTC regulations, as charged, and from accepting funds for commodities trading. The order also requires that the defendants repatriate all offshore assets in their names or under their control, continues the court's asset freeze against the defendants entered on August 8, 2000, and instructs both parties to cooperate and work together to facilitate the return of investor funds.

In issuing the preliminary injunction, the court found evidence demonstrating that unless the defendants were enjoined, they would continue to engage in fraudulent practices in connection with commodity futures trading. The court also found that the defendants issued false account statements, treated investor funds as their own, commingled investor funds with their own property, and the actual commodities trading results could not be reconciled with the results reported to investors.

In its continuing litigation, the CFTC intends to seek a permanent injunction, disgorgement, restitution, and civil monetary penalties of not more than the higher of $110,000 per violation or triple the monetary gain to the defendants, among other remedial relief.

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