CFTC News Release 4499-01 (SACV-00-940)
For Release: March 20, 2001
U.S. DISTRICT COURT IN CALIFORNIA ISSUES ORDER ENJOINING RABB SABIN AND ART SMITH FROM FRAUDULENTLY SOLICITING CUSTOMERS TO SUBSCRIBE TO WEBSITE THAT TOUTED THEIR PURPORTEDLY PROFITABLE COMMODITY OPTIONS TRADING METHODOLOGY
Defendants Are Ordered To Pay Restitution of Over $384,700 and Civil Monetary Penalties Totaling $100,000
WASHINGTON – The Commodity Futures Trading Commission (CFTC) announced today that, on February 28, 2001, U.S. District Court Judge David O. Carter of the U.S. District Court for the Central District of California entered a default judgment and order of permanent injunction against defendants Rabb Sabin of Silverado Canyon, California, and Art Smith of Orange, California, who did business under the names of Westar Financial Services, The Cash Nursery (TCN), and www.the-cash-nursery.com.
The court’s order arises out of a two-count complaint filed by the CFTC on September 26, 2000 that alleged, among other things, that Sabin and Smith fraudulently solicited members of the public by advertising a commodity options methodology on their internet website. (See CFTC News Release #4451-01, September 27, 2000.)
Specifically, the CFTC complaint alleged that commencing in 1996, the defendants, while acting and operating as commodity trading advisors, committed fraud by making material misrepresentations concerning (1) the profitability of their actual trading using the TCN methodology for trading commodity options, (2) their trading backgrounds, (3) the presentation of hypothetical trades as actual trades and (4) customers’ ability to view actual trading by TCN before the trades were actually placed. The CFTC complaint charged them with violating the anti-fraud provisions of the Commodity Exchange Act (CEA) and the CFTC regulations.
The court ordered Sabin and Smith, jointly and severally, to pay restitution of $384,771.25, plus pre-judgment interest, and each to pay a $50,000 civil monetary penalty. In addition, the court permanently enjoined defendants from committing fraud in violation of sections 4c(b) and 4o of the CEA and sections 33.10 and 4.41(a) and (b) of the CFTC regulations.
The CFTC brought this action against Sabin and Smith as part of the CFTC’s law enforcement initiative to clean-up Internet websites that fraudulently promote commodity trading systems or advisory services (see CFTC News Releases 4442-00, September 7, 2000, and 4397-00, May 1, 2000, respectively). The CFTC has also issued a Consumer Advisory to warn the public about false and misleading claims on Internet websites touting outstanding performance with little risk if a customer uses the advertised futures or options trading system or advisory services.
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