For Release: August 15, 2002
UTAH COMPANY AND FOUR UTAH RESIDENTS CHARGED WITH COMMODITY POOL FRAUD
CFTC Alleges Gahma Corporation, John Garrett, Allen Andersen and Robert Heninger Fraudulently Solicited at Least $700,000 from Individuals to Trade Commodity Futures Contracts
CFTC Also Charges Stephen Brockbank, an Advisor to the Pool, with Fraud; This is the Second Fraud Action Filed by the CFTC Against Brockbank
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of an enforcement action against Gahma Corporation (Gahma), a Utah corporation, and four individuals, John Garrett of North Salt Lake City, Utah; Allen Andersen of Riverton, Utah; Robert Heninger of Draper, Utah; and Stephen Brockbank of Salt Lake City, Utah.
The CFTC charges that Gahma, Garrett, Anderson, and Heninger fraudulently operated a commodity pool and that Brockbank, the trading advisor to, and money manger of, the pool fraudulently misrepresented and issued false statements concerning his trading performance and failed to disclose that the CFTC had pending litigation against him also charging him with fraud.
Specifically, the CFTC complaint filed on August 13, 2002, alleges that, from at least August 2000 to March 2001, Gahma and its three principals – Garrett, Andersen, and Heninger – fraudulently solicited at least $700,000 in funds from eight pool participants. According to the complaint, the defendants raised funds to trade commodity futures contracts from pool participants by marketing corporate notes purporting to pay 32 percent interest. The complaint further alleges that the defendants placed customer funds into a pooled account and transferred the funds off-shore under the control of defendant Brockbank, the pool’s commodity trading advisor. As alleged, Brockbank never traded the funds and the pool participants have been unable to recover their money.
The CFTC complaint further alleges that Gahma, Garrett, Andersen, and Heninger used
false promotional materials, recklessly repeated Brockbank’s claims of past
trading success, and failed to disclose that the CFTC had filed an action against
Brockbank charging him with fraud. Moreover, according to the complaint, upon learning
of the pending action against Brockbank, they switched money managers and used
investors’ funds to trade off-exchange foreign currency contracts, a trading
strategy that was not authorized. The defendants never informed investors of the
change in money managers and in investment strategy. The Gahma defendants allegedly
also issued false statements to pool participants showing that the defendants’
trading activities were generating sufficient profits to meet the promised investment
returns of 32 percent.
Second Agency Action Against Brockbank
In August 2000, the CFTC filed a complaint alleging that Brockbank had engaged in commodity pool fraud in connection with another investment scheme. In that action, the Honorable Ted Stewart of the U.S. District Court for the District of Utah issued a restraining order and preliminary injunction freezing all funds under Brockbank’s control (see CFTC News Releases 4437-00 August 22, 2000 and 4459-00 October 5, 2000).
In the current action, the CFTC alleges that Brockbank misrepresented his past trading performance claiming he had made past profits of 48 percent annually, issued false statements showing profitable trading -- even though he was no longer trading, and failed to disclose his on-going litigation with the CFTC to Gahma and the company’s principals.
The CFTC complaint also charges the defendants with registration violations and with having failed to provide required Disclosure Documents to prospective pool participants.
In its continuing litigation with the defendants, the CFTC is seeking a restraining order freezing the assets of the defendants and prohibiting them from destroying any of their records and from denying representatives of the CFTC immediate access to such records. The CFTC is also seeking preliminary and permanent injunctive relief, an accounting, restitution to investors, disgorgement of ill-gotten gains, and civil monetary penalties of up to $120,000 or triple the monetary gain to the defendants, whichever is greater, among other remedial relief.
The State of Utah, Department of Commerce, Division of Securities assisted the CFTC staff in this investigation. The following Division of Enforcement staff are responsible for the case: Scott R. Williamson, Rosemary Hollinger, Camille M. Arnold, and Charlotte A. Ohlmiller.
A copy of the complaint may be obtained at www.cftc.gov.
Media Enforcement Contact:
Scott R. Williamson
Acting Regional Counsel
Division of Enforcement
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