For Release: June 12, 2002
MICHIGAN ATTORNEY CHARGED WITH $6 MILLION COMMODITIES FRAUD
Federal Government Alleges that Charles Mady Issued False Account Statements To Hide Mounting Commodity Trading Losses and Misappropriated Over $1 Million
WASHINGTON, D.C.-- The Commodity Futures Trading Commission (CFTC) announced today the filing of a complaint in federal court on June 11, 2002, against Charles G. Mady of Northville, Michigan, and relief defendants Mady Funding Company LLC and Mady Futures, Inc. Mady is a sole practitioner attorney with an office in Livonia, Michigan, and has never been registered with the CFTC in any capacity.
The CFTC complaint charges that Mady solicited and accepted over $6 million for trading in a commodity pool, then misappropriated more than $1 million of the funds entrusted to him for trading and issued false account statements that misrepresented the results of his trading.
Federal Court Freezes Assets and Bars the Destruction of Books and Records
Also, on June 11, 2002, the Honorable Nancy G. Edmunds of the U.S. District Court for the Eastern District of Michigan entered a preliminary injunction by consent against Mady and the relief defendants, freezing their assets, preventing the destruction or alteration of their books and records, granting CFTC staff immediate access to those records, and enjoining Mady from further violations of the Commodity Exchange Act (CEA), as charged in the complaint.
The CFTC complaint alleges that, since at least October 1999, Mady has solicited and accepted customer funds for use in trading commodity futures and commodity options. According to the complaint, after accepting $6 million from one investor, he transferred approximately $4.8 million into a commodity trading account, misappropriating the remaining $1.2 million.
Mady Allegedly Sent the Investor a Series of 27 False Trading Statements
According to the complaint, Mady then manufactured and sent the investor a series of 27 false trading statements that inflated the value of the account, when it actually suffered net trading losses in excess of $2.5 million. For example, the May 20, 2002, statement Mady sent his customer showed the value of the customer’s account as exceeding $6 million, when the actual value was $850, the complaint charges.
The complaint also alleges that Mady solicited and accepted funds from at least 15 other individuals to trade commodity futures, without the required registration as a commodity pool operator, and commingled pool funds with his own.
In its continuing litigation against the defendants, the CFTC is seeking permanent injunctive relief, an accounting, restitution to customers, disgorgement of ill-gotten gains, disgorgement of funds traceable to the fraud from the relief defendants, and civil monetary penalties of up to $120,000 for each violation of the CEA, or triple the monetary gain to Mady, whichever is greater, among other remedial relief.
The following Division of Enforcement staff are responsible for the case: Scott R. Williamson, Elizabeth M. ;Streit, Clifford Histed, Ralph Der Asadourian, and Hugh J. Rooney.
Media Enforcement Contact:
Scott R. Williamson
Acting Regional Counsel
CFTC Division of Enforcement
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