For Release July 18, 2001
CFTC CHARGES CHICAGO AREA RESIDENTS WITH FRAUDULENT PROMOTION OF PORK BELLY TRADING SYSTEM
According to the Complaint, a Year's Worth of Service Cost $4,500 and Ads Touted that Customers Could Have Made as Much as 700%
WASHINGTON D.C. – The United States Commodity Futures Trading Commission (CFTC) announced today the filing of a five-count administrative complaint alleging that from at least March 1998 through October 1999, several Chicago area residents and their firm committed fraud by using misleading and fraudulent advertising to solicit customers to purchase trading recommendations that were generated by a commodity futures trading system.
The complaint alleges that Global Telecom, Inc., a registered commodity trading advisor, and Cameron Ownbey, a principal and registered associated person (AP) of Global Telecom and former AP of RB&H, Financial Services, LP (RB&H), all of Chicago, Illinois, fraudulently solicited customers in connection with the sale of a commodity trading system.
As alleged, Global Telecom promoted and offered to the public a pork belly futures trading system, called the Pro-Managed system through advertisements in trade magazines, on the Internet, and free seminars.
Global Telecom and Ownbey, the complaint states, made false promises of huge profits and mischaracterized the performance record of the system. According to the complaint, claims that “you could have made 700% with our trading system,” and “learn how we can make you over 300% profit per year on a small investment” were not supported by any track record, and, in fact, the proprietary account that Global Telecom maintained at RB&H consistently lost money trading the system. As alleged, these losses were not disclosed in the advertising of Global Telecom or to its customers or prospective customers.
The complaint further alleges that Ownbey and others conducted Global Telecom's business from the offices of RB&H, that all of the customers who purchased the system were solicited to open accounts at RB&H, and that a majority of those customers did so. The complaint states that RB&H was aware of Global Telecom's advertisements, was aware that RB&H and its employees were earning commissions from the trading by customers common to Global Telecom and RB&H, and was required by its procedures to review the Global Telecom advertisements -- but did not do so.
The complaint charges RB&H with liability for the fraudulent acts of Ownbey and its other employees with respect to customers common to Global Telecom and RB&H and for failing to diligently supervise its employees in their solicitations of customers to open accounts at RB&H.
CFTC Files and Settles Related Action against Mark Pennings & Clayton Caulkins
The CFTC also announced today the issuance of an order, filing and settling a related administrative proceeding against Mark Pennings of Chicago, IL and Clayton Caulkins of Evanston, IL, APs of RB&H and former principals and APs of Global Telecom. The CFTC finds in the order that Pennings and Caulkins also fraudulently solicited customers to purchase the signals from Global Telecom's pork belly trading system and to open accounts at RB&H, in violation of the Commodity Exchange Act (CEA) and CFTC regulations.
The order against Pennings and Caulkins: 1) directs them to cease and desist from further violations of the CEA and CFTC regulations; 2) requires them to pay civil monetary penalties of $27,194 and $34,500, respectively, pursuant to payment plans; 3) suspends their registrations with the Commission as APs for a period of six months; and 4) requires them to comply with undertakings set forth in their offers of settlement, among which is their agreement to not apply for or claim exemption from registration with the CFTC for a period of six months and to cooperate with the CFTC in its prosecution of the charges in the related administrative proceeding.
Pennings and Caulkins consented to the entry of the order without admitting or denying the findings of the order.
A public hearing has been ordered to determine whether the allegations in the administrative complaint against Global Telecom, Ownbey, and RB&H are true and, if so, what sanctions are appropriate. Possible sanctions include a cease and desist order, trading prohibitions, restitution, and civil monetary penalties.
Acting Regional Counsel, Central Regional Office
Division of Enforcement, (312) 886-3090