Release 4538-01 (CFTC Docket No. 00-34)
For Release July 5, 2001

CFTC SETTLES CASE AGAINST COMMODITY FIRM
FOR FRAUDULENT ADVERTISING

Federal Regulator Finds that CTS Financial Publishing and Others Used Over One Million Mailings and the Internet to Fraudulently Tout the Potential for Large Profits

WASHINGTON -- The United States Commodity Futures Trading Commission (CFTC) announced today the settlement of a lawsuit against several individuals and companies that fraudulently advertised commodity-trading products through approximately 1.4 million direct-mail advertisements. The CFTC accepted offers of settlement on July 5, 2001, submitted by CTS Financial Publishing, Inc., which was formerly Commodity Trend Service, Inc., of North Palm Beach, Florida, Dearborn Financial Publishing, Inc., of Chicago, Illinois, which owned CTS until July 1998, Dennis Blitz of Chicago, Illinois, and Nick Van Nice of Jupiter, Florida. The settlement is in connection with a complaint filed by the CFTC on September 28, 2000 (see CFTC New Release 4455-00, September 28, 2000).

The CFTC finds in the order that from at least 1994 through 1996, the companies and individuals, through the mailing of approximately 1.4 million direct-mail advertisements, fraudulently advertised numerous CTS products, including Futures Charts, The Million Dollar No-Risk Trading Course, Futures Options Weekly and The Million Dollar Trading Adventure. According to the CFTC order, CTS's advertisements repeatedly conveyed the false message that by using CTS products, significant profits would be easily and immediately realized, and the risk of loss virtually eliminated or significantly minimized. For example, the order finds that CTS made the following fraudulent statements in their marketing:

• Make a fortune trading futures with amazing profits like 224%, 350%, even 500% or more.
• The Floor Trader’s Amazing Secret to 80%-90% Winners in Commodity Options.
• "GAIN AN "UNFAIR" TRADING ADVANTAGE: Hit the jackpot 80% - 90% of the time with a 5-to-1 or better risk/reward return..."

According to the CFTC order, the respondents also committed fraud by: using testimonials from one product to promote other products; representing that Nick Van�Nice and a Dearborn employee were actively and successfully trading; claiming that potential profits are to be made trading options that exhibit seasonal tendencies yet omitting to disclose that those tendencies are already factored into option prices; failing to disclose that selling options involves unlimited risk; and failing to disclose that performance claims were based on hypothetical, not actual, trading.

The CFTC order also notes that for some period in January 2000, CTS, on its website, fraudulently promoted a product called "SwingTrader," by listing profitable trading results -- again without disclosing which of those results were hypothetical.

The CFTC order finds that by their fraudulent conduct, the individuals and companies violated the Commodity Exchange Act (CEA) and CFTC regulations, and:

• directs them to cease and desist from further violations of the CEA and CFTC Regulations;
• requires them to pay a civil monetary penalty of $220,000, for which they are jointly and severally liable; and
• orders CTS to comply with undertakings that prohibit making misrepresentations regarding the profits and risks associated with trading futures or options, and that require it to have all advertisements, promotions or solicitations reviewed by legal counsel for CEA compliance prior to dissemination.

Respondents consented to the entry of the order without admitting or denying the finding therein or the allegations of the complaint.

A copy of the CFTC order may be found at http://www.cftc.gov/

Case Contact:

Lloyd Friesen, Assistant Director
CFTC Division of Enforcement
(202) 418-5346

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Attention: Dennis Holden