For Release: August 14, 2001
CFTC FILES ENFORCEMENT ACTIONS AGAINST LOS
ANGELES-BASED FIRMS SELLING ILLEGAL FOREIGN CURRENCY (FOREX)
INVESTMENTS TO THE RETAIL PUBLIC
Acro Information Service, Inc., Pakco Holdings Limited and Dr. Florentius Chan Charged with Committing Fraud; Acro's Customers were Members of Asian and Other Ethnic Communities
In Second Action, Fintrex, Ovsepyan, and Fox Are Charged with Offering Illegal Off-Exchange Forex Futures Contracts
WASHINGTON – As part of its ongoing efforts to stop illegal sales of foreign currency futures and options contracts, the Commodity Futures Trading Commission (CFTC) announced the filing of two civil injunctive actions in the United States District Court for the Central District of California against California firms and individuals, charging them with soliciting the retail public to invest in illegal foreign currency (forex) futures contracts. Both actions were filed on August 9, 2001.
In the first action, the CFTC charged Acro Information Service, Inc. (Acro) of Monterey Park, California; Pakco Holdings Limited (Pakco) of Carson City, Nevada; Dr. Florentius Chan (Dr. Chan); his wife, Sandy Chan (S. Chan); and Andrew Tai Wai (Wai) with selling illegal forex futures contracts, and also charged Acro, Pakco, and Dr. Chan with fraudulently operating the forex business, which targeted Asian and other ethnic customers.
In the second action, the CFTC charged Fintrex, Inc. (Fintrex) of Glendale, California; Arman Ovespyan (Ovespyan); and Lytresse Fox (Fox), both of whom reside in Los Angeles County, California, with offering illegal forex futures contracts to the retail public.
In both actions, the CFTC obtained emergency restraining orders that froze assets of defendants and prohibited the destruction of the defendants’ books and records.
James E. Newsome, Acting Chairman of the CFTC, commented:
The CFTC is continuing its efforts to protect the retail public from illegal forex firms. In some cases, forex firms prey upon specific ethnic communities and use fraudulent tactics to convince members of these communities to invest money in risky, illegal forex contracts. The Acro and Pakco firms appear to have done that. Like all investors, members of these communities should be wary of promises of great profit at low risk from trading forex contracts and should always exercise caution before making any investment.
CFTC Alleges that Acro Lured Investors with Offers of High-Income Employment
In the two-count CFTC complaint against Acro, Pakco, Dr. Chan, (former owner of Acro), S. Chan (former president of Acro), and Wai (current president of Acro and Pakco), the CFTC alleged that, since at least March 2000, Acro solicited customers by advertising high-income employment opportunities in Asian and other ethnic language newspapers. Customers who responded to the ads were offered purported employment trading forex contracts. According to the complaint, to convince customers to trade, Acro told them that forex trading is profitable and involves little risk of loss. After providing these customers with at most, 10 hours of training, Acro persuaded them to open accounts to trade for themselves. Acro and its employees allegedly represented that their traders made large profits trading their own accounts. The CFTC alleged, however, that almost all Acro customers identified to date lost most, or all, of their money.
Specifically, the CFTC charged that since at least December 21, 2000, Acro, Pakco, and Dr. Chan, as a controlling person of Acro, fraudulently marketed and offered forex futures contracts by misrepresenting the profit potential and risk of loss when trading forex futures contracts, engaging in unauthorized trading, and failing to pay a customer funds represented to be in his account. In addition, all of the defendants were charged with soliciting and accepting funds from customers for the purpose of trading illegal, off-exchange foreign currency contracts since December 21, 2000.
Fintrex, Ovsepyan, and Fox Solicited Customers through Offers of Free Forex Training
In a one-count complaint, the CFTC charged that since December 21, 2000, Fintrex, Ovsepyan (Fintrex’s general manager), and Fox (a general manager and senior broker for Fintrex) have offered illegal forex futures contracts to the retail public. As in the Acro enforcement action, the CFTC alleged that Fintrex obtained customers by placing newspaper ads, including ads in the Los Angeles Times, that offered free training to persons interested in managing foreign currency accounts or acting as currency traders. According to the complaint, Ovsepyan provided two weeks of training and then solicited the trainees to open personal accounts at Fintrex in order to speculate in foreign currency with their own money. Fox then conducted the trading activities for Fintrex.
In its continuing litigation in both cases, the CFTC is seeking preliminary and permanent injunctive relief, restitution for customers, disgorgement of ill-gotten gains, and civil monetary penalties of up to $120,000 for each violation, or triple the monetary gain to defendants for each violation of the Commodity Exchange Act. In the Fintrex action, the Honorable Florence-Marie Cooper set a hearing for August 24, 2001, at 2:30 p.m. on the CFTC's motion seeking a preliminary injunction. In the Acro action, the Honorable Nora M. Manella set a hearing for August 20, 2001, at 10 a.m. on the CFTC’s preliminary injunction motion.
Notes to Editors
These two enforcement actions follow four other actions filed by the CFTC this past spring alleging fraudulent foreign currency (forex) activity. (Please refer to CFTC News Releases 4513-01, May 2, 2001; and 4528-01 June 20, 2001.)
In addition, earlier this year, the CFTC issued a forex Consumer
Advisory urging the public to scrutinize claims of high-return,
low-risk investment opportunities in foreign currency trading. The
Consumer Advisory provides “red flags” to look for,
and cautionary steps customers should take before making an investment.
The CFTC also issued an Advisory, concerning the Commodity Futures
Modernization Act (CFMA) and how forex firms may lawfully
offer foreign currency futures and options trading opportunities to the
retail public (please see CFTC Advisory
06-01, February 5, 2001).
Copies of the complaints filed and orders entered in the Acro and Fintrex actions are available at the CFTC’s Website at http://www.cftc.gov.
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Media Case Contact:
Deputy Regional Counsel
CFTC Western Regional Office
Division of Enforcement
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