For Release: September 3, 2002
GEORGIA CORPORATION AND TWO INDIVIDUALS CHARGED WITH FRAUDULENTLY OFFERING ILLEGAL FOREIGN CURRENCY (FOREX) FUTURES CONTRACTS
CFTC Obtains Federal Court Order Freezing Assets of Global Financial Consulting, Inc., Wook Hyun Kim, and Chang H. Lee
WASHINGTON, D.C. -- The Commodity Futures Trading Commission (CFTC) announced today that on August 28, 2002, a federal court in Georgia issued an order freezing the assets and preserving the books and records of defendants Global Financial Consulting, Inc. (Global), a Georgia corporation, Wook Hyun Kim (Kim), and Chang H. Lee (Lee), of Kennesaw and Duluth, Georgia, respectively. The court’s order followed the filing of a complaint by the CFTC charging the defendants with fraudulently soliciting members of the retail public to invest in illegal foreign currency (FOREX) futures contracts.
Defendants Allegedly Guaranteed Profits and Falsely Claimed Funds were FDIC-Insured
Specifically, the CFTC complaint, filed on August 28, 2002, alleges that, since at least June 2001, Global, Kim (Global’s owner), and Lee (Global’s financial consultant), solicited at least $118,000 from customers to invest in FOREX contracts by guaranteeing profits, ranging from 20 to 80 percent annually. Defendants also allegedly falsely claimed that Global was affiliated with a firm registered with the CFTC, and that customer funds are deposited with “triple-A rated financial institutions,” which are “FDIC insured” and are “legally protected and held in escrow so as to protect clients against bankruptcy.”
According to the complaint, the defendants solicited funds primarily from friends, colleagues, and acquaintances, including members of one of the defendant’s former church.
The complaint also alleges that, as part of the fraud, the defendants sent customers false account statements showing consistently profitable trading. One customer received monthly account statements showing profitable trading months before defendants actually opened a trading account. According to the complaint, however, the only trading known to have occurred was conducted in the personal trading account of Kim, where the trading was not in the name of customers and was not profitable.
Third FOREX Action Recently Filed by the CFTC
This is the third enforcement action the CFTC has taken in the past two weeks against firms and individuals engaged in the selling of illegal FOREX futures or options contracts. On Monday, August 19, 2002, the CFTC filed an action in federal court in Florida against eight defendants in the First Bristol Group, Inc. case charging them with fraud and illegally offering FOREX futures and options contracts (see CFTC News Release 4691-02, August 29, 2002). On August 20, 2002, the CFTC filed an action in Los Angeles against Nawab Ali Khan Ali, Mega Trend 2000, Inc., Sterling FX International and Roger Barreto, charging them with offering illegal FOREX futures contracts. (see CFTC News Release 4692-02, September 3, 2002). In both actions, the federal court issued restraining orders, freezing the assets of the defendants.
James E. Newsome, Chairman of the CFTC, commented:
With these enforcement actions, the CFTC continues its march to shut down FOREX firms that are illegally operating in the United States and preying upon the unsuspecting public.
In its continuing litigation against the defendants in this case, the CFTC is seeking preliminary and permanent injunctive relief, an accounting, restitution to customers, disgorgement of ill-gotten gains, and civil monetary penalties in amounts of $120,000 for each violation, or triple the monetary gain to the defendants, whichever is greater.
The Honorable Orinda D. Evans of the United States District Court for the Northern District of Georgia has ordered a hearing on the CFTC’s motion for preliminary injunction for September 12, 2002 at 2:00 p.m.
The Commission acknowledges the assistance in the investigation and filing of this matter of the Crime Unit of the Secretary of State of the State of Georgia, Cathy Cox.
The following CFTC Division of Enforcement staff are responsible for this case: Paul G. Hayeck, Katrina Poplawski, Mary Kaminski, and Michael Lee.
A copy of the CFTC complaint and restraining order may be obtained at www. cftc.gov.
Media Enforcement Contact:
Paul Hayeck, Acting Associate Director
CFTC Division of Enforcement, (202) 418- 5312
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Over the past year, the CFTC has brought, including today’s case, 18 enforcement actions alleging the sale of illegal foreign currency (FOREX) futures and options (see, e.g., CFTC News Releases 4692-02, September 3, 2002; 4691-02, August 29, 2002; 4675-02, July 22, 2002; 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).
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