For Release: September 19, 2002
FLORIDA RESIDENT CHARGED WITH SWINDLING AT LEAST $10.6 MILLION FROM INVESTORS AND SPENDING MONEY ON LAS VEGAS JUNKETS, AIRPLANE CHARTERS, HOMES, AND AUTOMOBILES
CFTC Charges Donald C. O’Neill and His Companies with Fraudulent Solicitation and Misappropriation in Connection With Purported Foreign Currency Hedge Funds
WASHINGTON, D.C. - The U.S. Commodity Futures Trading Commission (CFTC) announced today the filing of an enforcement action in federal court in Florida against defendants Donald C. O’Neill, of City of Lighthouse Point, Florida, and eight interrelated companies he owned, controlled, or managed. The complaint, filed on September 17, 2002, charges the defendants with fraudulent solicitation and with misappropriating at least $10.6 million solicited from investors for the purpose of trading foreign currency futures contracts. The CFTC alleges that O’Neill used the investors’ money for business, personal, and luxury expenditures.
The companies named in the complaint are: Frecom Technology, a Delaware corporation, Shelaley Holdings, LLC, a Nevada Corporation, and Momentum Trading Group, Inc., NDT Fund, LLC, Orca Funds, Inc., Orca Capital Fund A, LLC of Florida, Orca Mohave A, LLC and Orca Hopi A, LLC, all Florida corporations.
The complaint also names as relief defendants the following persons, who allegedly received investor funds: Danielle O’Neill, O’Neill’s wife; Nancy Iagrossi, O’Neill’s mother-in-law; and Robert O’Neill, O’Neill’s brother.
Federal Court Issues Order Freezing Assets of O’Neill and His Companies
On September 18, 2002, the CFTC obtained a federal court order freezing the assets of the defendants and prohibiting the destruction of documents.
The CFTC complaint alleges that, starting in January 2001 and continuing through at least July 2002, O'Neill, operating through the series of companies he owned, controlled, or managed (the Orca Common Enterprise), solicited investments totaling at least $13 million from at least 29 customers for the ostensible purpose of trading primarily foreign currency futures contracts.
According to the complaint, through those companies, some of which he referred to as a "hedge fund" or an "alternative asset management" firm, O'Neill misappropriated a minimum of $10.6 million of investor funds and used the money for personal benefit. For example, the complaint alleges that O'Neill spent at least $5.75 million of the misappropriated funds to finance an extravagant lifestyle that included a nearly $3 million home for himself and two other houses for his wife and mother-in-law in an exclusive Florida coastal community; several high-end automobiles; more than $900,000 in airplane charters; and junkets to Las Vegas over a period of 45 days that resulted in gambling losses of over $800,000. According to the complaint, defendants traded some portion of investors’ funds and sustained an overall net trading loss of around $487,000.
The complaint further alleges that O'Neill and the Orca Common Enterprise made numerous false claims when soliciting the funds and attempting to lull investors who inquired about their investments. For example, the complaint alleges that O'Neill claimed to have hundreds of millions of dollars under management, although he never did; to have substantial trading experience with a financial firm that did not exist; and to have traded investors’ funds at two brokerage firms, when those firms, in fact, were only corporate accommodation addresses that O'Neill created, and never existed as going concerns.
Among the victims of the fraud were two groups of Native American investors -- the Fort Mojave tribe and the Hopi Tribal Housing Authority. Their investments represented nearly $10 million of the total money raised in the scheme.
In its continuing litigation, the CFTC is seeking preliminary and permanent injunctive relief, an accounting, restitution to customers, disgorgement of ill-gotten gains, and civil monetary penalties of $120,000 or triple the monetary gain, whichever is greater, for each violation of the Commodity Exchange Act.
The Honorable Alan Gold of the United States District Court for the Southern District of Florida has ordered a hearing on the CFTC’s motion for preliminary injunction for September 26, 2002.
The following CFTC Division of Enforcement staff are responsible for this case: Susan Bovee, Wendy Z. Woods, Ghassan Hitti, Patricia Gomersall, and Alan Edelman.
A copy of the CFTC complaint and restraining order may be obtained at www.cftc.gov.
Media Enforcement Contact:
CFTC Division of Enforcement
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Over the past 18 months, the CFTC has brought 19 enforcement actions, including today’s action, alleging the sale of illegal foreign currency (FOREX) futures and options (see, e.g., CFTC News Releases 4697-02, September 13, 2002; 4693-02, September 3, 2002; 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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