For Release: August 5, 2002
FEDERAL COURT APPOINTS RECEIVER TO TAKE CONTROL OF ASSETS OF MICHIGAN ATTORNEY IN COMMODITIES FRAUD CASE
The CFTC Charged Defendant Charles Mady With Issuing False Account Statements To Hide Mounting Commodity Trading Losses and Misappropriating Investor Funds
WASHINGTON D.C. - The Commodity Futures Trading Commission (CFTC) announced today the entry of a consent order by Judge Arthur J. Tarnow of the U.S. District Court in Detroit appointing Rodger D. Young, Young & Susser, P.C., Southfield, Michigan, as a receiver for the purpose of marshalling, preserving, accounting for and liquidating the assets of Charles Mady, a defendant in an action filed by the CFTC on June 11, 2002. In that action, the CFTC has charged Mady with misappropriating over $1 million of investor funds given to him for purposes of trading commodity futures contracts and with issuing false statements to investors to hide trading losses.
The proceeds of the liquidation of Mady’s assets by the receiver are to be used to compensate the investors. Mady stipulated in the court order that he owes between $11 million and $12 million to investors. The court entered the order on August 1, 2002.
The complaint filed by the CFTC against Mady and two relief defendants, Mady Funding Company LLC and Mady Futures, Inc., charges Mady with soliciting and accepting over $6 million for trading in a commodity pool and misappropriating over $1 million of those funds. According to the complaint, Mady manufactured and sent one 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 the investor showed the value of the account as exceeding $6 million when the actual value was $850, according to the complaint. 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.
Also, on June 11, 2002, the Court entered a preliminary injunction by consent against Mady and the relief defendants, freezing their assets and preventing the destruction or alteration of their books and records.
In its continuing litigation against the defendants, the CFTC is seeking permanent injunctive relief, an accounting, restitution to investors, disgorgement of ill-gotten gains, disgorgement of funds traceable to the fraud from the relief defendants and civil monetary penalties of not more than the higher of $120,000 for each violation or triple the monetary gain to Mady, among other remedial relief.
The following Division of Enforcement staff is responsible for the case: Scott R. Williamson, Elizabeth M. Streit, Clifford Histed, Ralph DerAsadourianand Hugh J. Rooney.
Media Enforcement Contact:
Elizabeth M. Streit
Senior Trial Attorney
CFTC Division of Enforcement
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