CFTC News Release 4463-00
For Release October 25, 2000
CFTC CHARGES JAMES STEPHENS III, AND TRENDSYSTEMS, INC. WITH COMMODITY FUTURES AND OPTIONS FRAUD AND OBTAINS STATUTORY RESTRAINING ORDER FREEZING DEFENDANTS’ ASSETS AND RECORDS
WASHINGTON - The Commodity Futures Trading Commission (CFTC) announced today that on October 24, 2000, the Honorable W. Louis Sands of the United States District Court for the Middle District of Georgia entered an ex parte restraining order freezing the assets and preserving the books and records of defendants James Stephens, III, and Trendsystems, Inc., a Georgia corporation, both of Americus, Georgia. The order arises out of an injunctive action filed the same day by the CFTC charging Stephens and Trendsystems with committing commodity futures and options fraud and with the unlawful solicitation and acceptance of customer funds, in violation of the Commodity Exchange Act and CFTC regulations.
Specifically, the CFTC complaint alleges that, since at least February 2000, Trendsystems, a registered Commodity Trading Advisor, and Stephens, a registered Associated Person of Trendsystems, have solicited investors to open managed accounts to be traded by Trendsystems for the purpose of trading commodity futures and options on commodity futures, and that at least some clients gave Trendsystems power of attorney to trade on their behalf. As alleged, after the clients invested with Trendsystems, the defendants 1) misappropriated funds received from clients; 2) falsely misrepresented to clients that Trendsystems was profitably trading on their behalf; 3) issued false statements to clients reflecting purported profits earned for the clients; and 4) unlawfully solicited and accepted clients funds directly into a Trendsystems bank account.
Court Hearing on CFTC's Motion for a Preliminary Injunction Set for December 6, 2000
In its continuing litigation, the CFTC is seeking preliminary and permanent injunctive relief, an accounting, restitution to customers, disgorgement of ill-gotten gains, and civil monetary penalties in amounts of not more than the higher of $110,000 for each violation (or $120,000 for each violation committed on or after October 23, 2000) or triple the monetary gain to the defendants. Judge Sands has scheduled a hearing on the CFTC’s motion for a preliminary injunction in the case for December 6, 2000, and has provided for expedited discovery in connection with the preliminary injunction hearing.
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