For Release: March 11, 2002
FLORIDA COMMODITY TRADER CHARGED WITH MISAPPROPRIATING AT LEAST $1 MILLION IN CUSTOMER FUNDS AND VIOLATING PRIOR FEDERAL COURT ORDER
CFTC Charges Thomas Chilcott, Ted Whidden, and Leona Westbrook With Fraudulently Operating Commodities Trading Business Known As Trade Master of Southwest Florida
Federal Court Freezes Assets and Bars Destruction of Books and Records
WASHINGTON, D.C. – The Commodity Futures Trading Commission (CFTC) announced today the filing of a 12-count civil injunctive complaint in federal court against defendants Thomas D. Chilcott, individually and doing business as Trade Master of Southwest Florida (Chilcott) of Alva, Florida; Ted Whidden (Whidden) of Fort Meyers, Florida; and Leona Westbrook (Westbrook) of Alva, Florida.
The CFTC complaint, filed on March 6, 2002, charges, among other things, that the defendants have misappropriated at least $1 million in customer funds invested in a commodity pool and have otherwise defrauded commodity investors. The complaint also charges that by engaging in such conduct, Chilcott has violated a federal court order entered in a prior CFTC action that also charged him with fraudulently operating a commodity pool. That order permanently enjoined him from further fraudulent activities and from soliciting or trading any commodity futures or options accounts on behalf of others.
Court Order Freezes Defendants’ Assets
Also, on March 7, 2002, the Honorable John E. Steele of the U.S. District Court for the Middle District of Florida entered a restraining order against the defendants, freezing their assets and preventing the destruction or alteration of their books and records.
The CFTC complaint specifically alleges that since about September 1999, Chilcott and Whidden have solicited prospective investors to open individual commodity trading accounts and to invest in a commodity pool that were to be traded by Chilcott. However, Chilcott and Whidden did not inform these prospective investors that Chilcott was prohibited by a federal court order from soliciting or trading any customer commodity accounts.
As alleged, defendants successfully solicited at least $2.5 million from customers for purposes of investing in the commodity pool. The complaint further alleges that Chilcott and Whidden represented to pool participants and prospective pool participants that the pool was trading profitably and the value of the participants’ shares in the pool were increasing, when, in fact, during the course of the Pool’s operation, it lost approximately $300,000 from trading. In addition, defendants allegedly misappropriated at least $1 million of Pool funds to pay their personal expenses. Defendants returned approximately $425,000 to investors as principal and/or purported profits.
In its continuing litigation against the defendants, the CFTC is seeking preliminary and permanent injunctive relief, restitution to customers, disgorgement of ill-gotten gains, and civil monetary penalties. A hearing has been scheduled for March 15, 2002, before Judge Steele on the CFTC’s motion for preliminary injunction.
(For more information on commodity pool fraud, see the CFTC’s Consumer Advisory-Alert of February 26, 2002: “Beware of Commodity Pool Investment Opportunities Promising Large Profits and Little Risk, Even When Offered by Persons You Know.”)
Richard Wagner, Associate Director
CFTC Division of Enforcement
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