For Release: December 12, 2002
COMMODITY FUTURES TRADER CHARGED WITH $1.5 MILLION FRAUD; U.S. GOVERNMENT AND UTAH ATTORNEY GENERAL ALLEGE FRAUD AND THEFT BY DECEPTION
Federal Court Freezes Assets and Bars the Destruction of Books and Records.
WASHINGTON, D.C.- The Commodity Futures Trading Commission (CFTC) announced today the filing of a complaint in federal court on December 11, 2002, against Stanley E. Varner of Salt Lake City, Utah. The complaint charges Varner with making material misrepresentations and omissions in connection with his solicitation of over $1.5 million for trading in commodity futures contracts, and with misappropriating at least $575,000 of the funds entrusted to him for trading purposes.
Also, on December 11, 2002, the Honorable J. Thomas Greene of the U.S. District Court for the District of Utah entered a consent order of preliminary injunction against Varner, freezing his assets, preventing the destruction or alteration of his books and records, granting CFTC staff immediate access to those records and enjoining the violation of provisions of the Commodity Exchange Act and CFTC regulations with which Varner is charged in the complaint.
According to the complaint, Varner misrepresented his ability to generate profits, falsely promising prospective investors an annual 20 percent return on their investments. Varner also, according to the complaint, misleadingly claimed that there was virtually no risk of financial loss associated with trading futures using his system. What Varner failed to disclose to prospective investors was that he regularly incurred substantial trading losses -- before, during and after his solicitation of their investments, the complaint charges. Varner lost approximately $925,000 of the investors’ funds trading futures, and misappropriated the remaining $575,000 to pay for his personal living expenses, according to the complaint, while he also provided a false account statement concerning his futures trading to at least one investor.
In its continuing litigation against the defendant, the CFTC is seeking permanent injunctive relief, an accounting, restitution to customers, disgorgement of ill-gotten gains, and civil monetary penalties of not more than the higher of $110,000 for each violation or triple the monetary gain to Varner, among other remedial relief.
The following Division of Enforcement staff are responsible for the case: Clifford Histed, Hugh Rooney, Charlotte Ohlmiller, Ralph Der Asadourian and Rosemary Hollinger.
Also on December 11, 2002, the Utah Attorney General’s Office charged Varner with four second-degree felony counts of fraud or theft by deception for the same conduct alleged in the CFTC complaint. The CFTC wishes to acknowledge the superb efforts of the Utah Division of Securities and the Utah Attorney General’s Office in investigating and prosecuting this matter.
Media Enforcement Case Contact:
Associate Director/Chicago Regional Counsel
CFTC Division of Enforcement (312) 596-0520
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