For Release: October 2, 2002
ST. LOUIS COMMODITY TRADER AND HIS COMPANY CHARGED WITH TAKING AS MUCH AS $494,000 FROM INVESTORS
CFTC Also Charges Defendants With Giving Investors False Account Statements Showing Profitable Trading When the Defendants Were Losing Money
WASHINGTON, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) announced today the filing of a complaint in federal court against defendants Kenneth J. Lee and KJL Financial Group, Inc., both of St. Louis, Missouri. The complaint, filed on September 30, 2002, charges Lee and KJL with misappropriating at least $52,000, and possibly as much as $494,000, of funds they solicited and accepted from investors for purposes of trading commodity futures contracts.
The CFTC complaint further charges that the defendants issued false account statements showing that investors’ accounts were profitable, when, in fact, the defendants’ trading was not profitable and the defendants did not even invest most of the funds in commodity futures trading.
Federal Court Preliminarily Enjoins Fraud, Freezes Assets, and Bars the Destruction of Books and Records
On October 1, 2002, the day after the complaint was filed, the Honorable Charles A. Shaw of the U.S. District Court for the Eastern District of Missouri entered a consent preliminary injunction against Lee and KJL, enjoining them from further fraudulent conduct, freezing their assets, preventing the destruction or alteration of their books and records, and granting the CFTC immediate access to those records.
Specifically, the CFTC alleges that, from at least October 1999 to the present, Lee and KJLmisappropriated at least $52,000, and possibly as much as $494,000, of funds solicited and accepted from customers for the purpose of commodity futures trading. The complaint further alleges that the defendants used the misappropriated funds to make payments to Lee’s girlfriend, to pay Lee’s personal credit card balances, and to make at least one mortgage payment. In addition, according to the complaint, the defendants 1) made false statements to investors and potential investors, and 2) issued false account statements that misrepresented investors’ profits, trading activity, or account balances. Finally, the complaint charges that Lee issued to at least one customer forged brokerage statements that contained false information regarding trading activity and balances in a KJL account.
In its continuing litigation against the defendants, the CFTC is seeking permanent injunctive relief, an accounting, restitution to investors, disgorgement of ill-gotten gains, and civil monetary penalties of up to $120,000 for each violation of the Commodity Exchange Act or triple the monetary gain to the defendants, whichever is greater, among other remedial relief.
The following CFTC Division of Enforcement staff members are responsible for the case: Rosemary Hollinger, Scott R. Williamson, William P. Janulis, David M. Cole, and Michael Tallarico.
Media Enforcement Contact:
Scott R. Williamson, Deputy Regional Counsel
CFTC Division of Enforcement (312) 596-0520
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