Release: 4506-01 (2:98 CV 00216J)

For Release: April 5, 2001


The Consent Order Requires Mark and Steve Schenk to Pay Restitution and Disgorgement and Permanently Bars Them From Trading Commodity Futures and Options For Others and From Seeking Registration with the CFTC.

WASHINGTON — The Commodity Futures Trading Commission (CFTC) announced today that on March 29, 2001, U.S. District Court Judge Bruce Jenkins of the U.S. District Court for Utah entered a permanent injunction against Mark Schenk and John Steven Schenk (Steve Schenk) in a case involving the fraudulent operation of the Sunrise Fund, L.L.C., a commodity pool.

The court’s order stems from a six-count complaint filed by the CFTC on March 27, 1998 against Mark and Steve Schenk and six others (see CFTC News Release # 4129-98, April 1, 1998). The CFTC’s complaint charged Mark and Steve Schenk with failing to disclose material facts to their pool participants, issuing false statements, and failing to provide actual and prospective pool participants with an adequate Disclosure Document in connection with the operation of the Sunrise Fund in violation of the Commodity Exchange Act (CEA) and CFTC regulations.

According to the CFTC’s complaint, Mark and Steve Schenk accepted approximately $127,000 from at least 18 pool participants to trade commodity futures and accepted $40,000, which had been invested in the Wasatch Fund, a commodity pool operated by John Larry Schenk, the father of Mark and Steve Schenk (see CFTC News Release # 4406, June 12, 2000). The complaint alleged, among other things, that Mark and Steve Schenk failed to disclose to the pool participants that the Sunrise Fund had incurred substantial losses; instead, they issued false account statements reflecting a loss of approximately only 6 percent, thus failing to disclose the actual losses of approximately 22 percent and overstating the true value of each pool participant’s account.

The court's order, entered by Judge Jenkins, 1) requires Mark and Steve Schenk to pay the defrauded Wasatch Fund pool participants $18,000 in restitution, 2) orders Mark and Steve Schenk, each, to disgorge $16,000 representing their individual profits from the conduct alleged in the CFTC’s complaint, and 3) prohibits Mark and Steve Schenk from trading commodity futures or options for their own account for 10 years.

In addition, the order, among other things, permanently:

1) enjoins the defendants from further violations of the CEA and CFTC regulations, as charged;

2) prohibits the defendants from soliciting or accepting new clients or participants for commodity futures or options trading;

3) prohibits the defendants from seeking registration or claiming exemption from registration with the CFTC; and

4) prohibits the defendants from controlling or directing the trading for any commodity interest account for or on behalf of any other person.

In August 1999, The Honorable Bruce Jenkins entered consent orders of permanent injunction against Douglas Foster and Robert Moncur, two of the co-defendants in this action (see CFTC News Release #4310-99, August 30, 1999). In April 2000, the court entered a consent order of permanent injunction against a third co-defendant, Brian Tobler (see CFTC News Release # 4394-00, April 11,2000). In May 2000, the court entered permanent injunctions against John Larry Schenk, Sam Gray, and Fidelity Traders Group, Inc. (see CFTC News Release # 4406, June 12, 2000).

This case was filed as the result of a joint investigation by the CFTC’s Division of Enforcement and the State of Utah Division of Securities. As a result of this investigation, over $850,000 has been returned to victims of this fraudulent scheme and a related securities scheme. In addition, as the result of related criminal charges filed by the Utah Attorney General, John Larry Schenk has been convicted of securities fraud and racketeering and is currently serving two to five years in prison.

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