Release: #4518-01 (00-Civ547-5)
For Release: May 22, 2001
WISCONSIN RESIDENT MICHAEL JAMES KONKEL BARRED FROM TRADING COMMODITY INVESTMENTS IN CFTC FRAUD CASE
Alabama Federal Court Requires Defendant Konkel to Make Restitution of $790,000 to Defrauded Investors and Pay a Civil Fine of Up to $440,000 and Bars Him From Registering with the CFTC
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that it has obtained a court order banning a defendant from soliciting investors. The U.S. District Court for the Middle District of Alabama entered a consent order of permanent injunction against Michael James Konkel of Barneveld, Wisconsin. The consent order enjoins Konkel -- who solicited investors through business entities called Venture Fund, Ice Capital Management, Inc., Ad Astra Inc. and the Inscape Funds -- from violating the anti-fraud, registration, and recordkeeping provisions of the Commodity Exchange Act (CEA) and CFTC regulations, requires him to pay $790,000 in restitution to investors, and a civil monetary penalty of up to $440,000, pursuant to a payment plan, and permanently bars him from seeking registration with the CFTC and from trading commodity futures.
The consent order arises of out of a four-count CFTC complaint filed against Konkel on May 1, 2000, that charged him with, among other violations, fraudulently soliciting customers to invest in a commodity pool he was operating (see CFTC News Release 4401-00, May 17, 2000). Specifically, the complaint alleged that, from 1996 through 2000, Konkel fraudulently solicited customers to invest over $640,000 in a commodity pool referred to as the Ice Fund. As set forth in the complaint, Konkel, as an unregistered pool operator, deceived Ice Fund participants by misrepresenting the profitability of pool investments, and by providing false and misleading account statements to investors. These deceptions masked Konkel’s commingling of Ice Fund assets with the property of other persons. The complaint also alleged that Konkel commingled investor funds with his own money, and used customer investments to pay for his personal expenses.
The complaint describes how Konkel used promotional materials, letters, telephone calls, group meetings, and seminars to market his commodity pool to members of the public. As alleged, Konkel used his association with a Henry County, Alabama resident to market the Ice Fund to other Henry County residents. At one point, the complaint charges, approximately 40 to 50 people attended a meeting at a Henry County resident's home, where Konkel told the potential investors about the Ice Fund. "Konkel represented to investors that the Ice Fund had positive trading results. These claims of profitable trading were false and misleading ," the complaint charged. The complaint also charged that after accepting funds from investors, Konkel reported to investors that the Ice Fund had a positive performance record for a three month period. However, as alleged, Konkel was only trading futures in his personal futures account--using investor funds-- and had lost money trading in two out of the three months of trading that account.
Konkel, in consenting to the entry of the order, neither admitted nor denied the allegations in the complaint or the order's findings. The order finds, among other things, that the defendant violated Federal commodity laws as alleged in the CFTC's complaint, and enjoins him from further such violations. The order also
1) requires Konkel to pay restitution of $790,000, plus post-judgment interest, to investors by turning over funds now frozen at financial institutions, and thereafter pursuant to a ten-year payment plan;
2) requires Konkel to pay, upon the satisfaction of his restitution obligation, a civil monetary penalty of up to $440,000, which is also pursuant to the ten-year payment plan;
3) prohibits Konkel from acting as an unregistered commodity pool operator or from violating the risk disclosure and recordkeeping provisions of the CEA and Commission regulations; and,
4) permanently bars him from seeking registration with the CFTC or acting in any capacity requiring CFTC registration, and from trading on any futures market on behalf of himself or others.
The CFTC appreciates the substantial assistance and cooperation of the National Futures Association, the Alabama Securities Commission, and the Wisconsin Division of Securities in this matter.
# # #