For Release: July 22, 2002
NEW YORK FOREIGN CURRENCY FIRMS CHARGED WITH FRAUDULENTLY SOLICITING OVER $15 MILLION FROM AS MANY AS 400 CUSTOMERS NATIONWIDE TO INVEST IN ILLEGAL FOREIGN CURRENCY (FOREX) FUTURES CONTRACTS
CFTC Obtains Federal Court Order Freezing Assets of Defendants International Financial Services (New York), Inc., International Financial Services (New York), LLC, John Walker Robinson, and Chan Kow Lai
WASHINGTON, D.C. -- The Commodity Futures Trading Commission (CFTC) announced today the filing of an action in federal court in New York against defendants International Financial Services (New York), Inc. (IFS Inc.), International Financial Services (New York), LLC, (IFS LLC), both located in New York, New York, John Walker Robinson also of New York and President of IFS, Inc., and Chan Kow Lai of New Jersey and Hong Kong and technical consultant and member of the Board of Directors for IFS, Inc.
The CFTC complaint alleges that the defendants have fraudulently solicited and obtained more than $15 million dollars from as many as 400 retail customers to invest in illegal off-exchange foreign currency (FOREX) futures contracts. The complaint also alleges that the defendants used inexperienced salespeople recruited from various ethnic communities who solicited family and friends to invest. In addition, the complaint names Sociedade Comercial Siu Lap Limitada (Siu Lap) of Macao as a relief defendant, and alleges that it unlawfully received more than $4 million of the fraudulently obtained funds from the defendants and should be required to return those funds.
Court Issues Order Freezing Defendants’ Assets
Shortly after the CFTC filed its complaint, the Honorable Charles Brieant of the United States District Court for the Southern District of New York issued an order freezing the assets of the defendants and prohibiting the destruction of documents.
"One of my convictions is to maintain a strong and swift Enforcement Division. We will not allow scam artists to operate in our jurisdiction. Whether it involves the Enron investigation or FOREX fraud, our Enforcement Division aggressively pursues and prosecutes all activity that is in violation, or appears to be in violation, of the Commodity Exchange Act," said James Newsome, Chairman of the CFTC.
"Illegal foreign currency fraud is a plague that must be eradicated. The CFTC is doing everything within its power to quarantine and stomp out this activity," said Gregory Mocek, the CFTC's Director of Enforcement. The CFTC complaint alleges that, from at least March 2000 to the present, defendants duped hundreds of unsophisticated, retail customers across the United States with enticements of substantial profits with little risk to invest over $15 million in managed foreign currency trading accounts, which are, in fact, illegal off-exchange foreign currency futures contracts. According to the complaint, after the customers invested their money, the defendants routinely fleeced the customers of their investments by 1) using trading strategies that locked in customer losses, 2) imposing commissions and placing restrictions on orders that made profiting unlikely, and 3) continuing to trade after customers asked for their accounts to be closed. The complaint alleges that most of the more than $15 million of customer funds have been lost through trading losses, commissions, and fees.
In its continuing litigation, 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 of the Commodity Exchange Act ($110,000 for each violation occurring before October 23, 2000), or triple the monetary gain to defendants, whichever is greater.
The CFTC appreciates the invaluable assistance it received from the U.S. Marshals
Over the past year, the CFTC has brought 14 other enforcement actions alleging the
sale of illegal foreign currency futures and options (see CFTC News Releases 4652-02, June 10, 2002; 4636-02, May 2, 2002; 4611-02, February 27, 2002; 4513-01, May 2, 2001; 4528-01, June 20, 2001; 4551-01, August 14, 2001; and 4563-01, August 28, 2001).
Investors seeking information on FOREX investments should review the CFTC’s Consumer Advisory on Foreign Currency Fraud listing warning signs of FOREX scams. The CFTC also has issued two Advisories on how FOREX firms may lawfully offer foreign currency futures and options trading opportunities to the retail public (see CFTC Advisory 06-01, February 5, 2001; CFTC Press Release 4625-02, March 21, 2002; and CFTC Advisory, March 21, 2002).
The following Division of Enforcement staff members are responsible for this case: Charles Sgro, Beth Morgenstern, Karl Cooper, Christina Kang, Eliud Ramirez, Jr and Judith Slowly.
A copy of the CFTC complaint and restraining order may be obtained at www. cftc.gov.
Media Enforcement Contact:
Regional Counsel, Eastern Regional Office
CFTC Division of Enforcement
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