For Release: September 26, 2002
SISTER OF A FORMER EMPLOYEE OF A CHICAGO COMMODITY FIRM AGREES TO TURN OVER MONEY HER BROTHER GAVE HER AS PART OF HIS FRAUDULENT SCHEME
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced today the settlement of an enforcement action against relief defendant Loren Hayes of Chicago, Illinois.
The CFTC alleged in an amended complaint that Hayes’ brother, Geoffrey Thompson, diverted to Hayes, $494,500 of proceeds from a fraudulent trade allocation scheme he and others perpetrated on customers of a Chicago futures commission merchant and that she immediately kicked back half of the funds to Thompson but kept the remaining $247,250. The federal consent order, entered on September 20, 2002, requires Hayes to pay back $247,500, plus interest, pursuant to a payment plan. In consenting to the entry of the order, Hayes admitted that she had no legitimate interest in or entitlement to the funds.
CFTC Also Obtains Default Judgment Against Other Remaining Relief Defendant
The court also entered an order of default judgment for disgorgement against relief defendant, Bernadette Thomas, a friend of Thompson. In the order, the court found that Thomas received $229,066 in fraudulent proceeds. The order requires her to pay back all of the $229,066 in ill-gotten gains she received from Thompson. Thomas never appeared in the case.
In a complaint and amended complaint filed in the United States District Court for the Northern District of Illinois, Eastern Division, the CFTC charged that Thompson and Martin Brown, aided and abetted by Ydiyell Howard, engaged in unauthorized trading and fraudulently allocated commodity interest trades by placing losing trades in customer accounts and winning trades in the accounts of various friends and relatives, including Hayes and Thomas. The scheme was carried out while the defendants were employed at F.C. Stone, a Chicago futures commission merchant (see CFTC News Releases 4476-00, November 22, 2000, and 4626-02, April 2, 2002).
The allocation scheme resulted in profits of approximately $2.3 million to the defendants, and their friends and relatives, and losses of about $1.3 million to victim-customer accounts. All but $200,000 of the ill-gotten gains were recovered due to an early asset freeze obtained by the CFTC.
In other consent orders entered March 27, 2002, Brown, Thompson, and Howard are required to pay restitution, disgorge personal gains made from the fraud, and pay contingent civil monetary penalties. The order also permanently bars Brown, Thompson, and Howard from further violations of the Commodity Exchange Act, from trading for themselves or others, and from seeking registration or claiming exemption from registration with the CFTC or acting as principals, agents, officers or employees of any person registered, required to be registered, or exempt from registration, except as provided in Commission regulation 4.14(a)(9). Martin Brown’s girlfriend, relief defendant Javette King, is required to disgorge $226,922 in fraudulent proceeds she received from the scheme, plus interest, pursuant to a payment plan.
Brown’s sister, Brenda Brown and her company, Prairie Garden Condos, Inc., also named as relief defendants, were dismissed after disgorging more than $700,000 of ill-gotten gains that were siphoned into their bank accounts.
The following CFTC Division of Enforcement staff were responsible for the case: Scott Williamson, Elizabeth Streit, and Ava Gould.
Complaint and Consent Orders:
Brown Thompson Complaint
Brown Thompson Attachment A
Howard Consent Order
King Consent Order
Thompson Consent Order
Brown Consent Order
Media Case Contact:
Scott Williamson, Deputy Regional Counsel
Central Regional Office
Division of Enforcement
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