CFTC News Release 4476-00 (00-C-7344)
For Release November 22, 2000
CFTC CHARGES MARTIN BROWN AND GEOFFREY S. THOMPSON WITH A FRAUDULENT TRADE ALLOCATION SCHEME AND OBTAINS RESTRAINING ORDER FREEZING ASSETS AND RECORDS
Complaint Also Charges Brown and Thompson With Unauthorized Trading
WASHINGTON - The Commodity Futures Trading Commission (CFTC) announced today that on November 21, 2000, the Honorable George W. Lindberg of the United States District Court for the Northern District of Illinois, Eastern Division, entered a statutory restraining order freezing the assets and preserving the books and records of defendants Martin Brown and Geoffrey S. Thompson and relief defendants Brenda L. Brown, Prairie Garden Condos and Javette L. King. Defendants Brown and Thompson and relief defendant King reside in Chicago, Illinois. Relief defendant Brenda Brown resides in Alsip, Illinois. Relief defendant Prairie Garden Condos is an Illinois corporation located in Alsip. Defendant Thompson is a former CFTC registrant. Defendant Brown and the relief defendants have never been registered with the CFTC.
The court's order arises out of a CFTC complaint filed the same day that charges Brown and Thompson with committing commodity futures fraud, in violation of the Commodity Exchange Act and CFTC regulations.
Specifically, the CFTC’s complaint alleges that from at least February 2000 until October 2000, Brown and Thompson engaged in a scheme to fraudulently allocate profitable commodity interest trades to accounts belonging to the relief defendants and allocate unprofitable trades to commodity interest accounts belonging to other customers. As further alleged, as part of the scheme, the defendants also engaged in unauthorized trading by entering trades for the other customer accounts. The complaint alleges that during the time the defendants perpetrated the fraudulent trade allocation scheme, the relief defendants’ commodity interest accounts amassed approximately $1.5 million in profits, most of which was transferred to bank accounts in the name of the relief defendants.
Court Hearing on CFTC's Motion for a Preliminary Injunction Set for December 12, 2000
In its continuing litigation, the CFTC is seeking preliminary and permanent injunctive relief, 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 Lindberg has scheduled a hearing on the Commission’s motion for a preliminary injunction in the case for December 12, 2000, and has provided for expedited discovery in connection with the preliminary injunction hearing.
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