For Release: January 21, 2003
FLORIDA FEDERAL COURT REQUIRES CHIEF INVESTMENT OFFICER TO PAY $16 MILLION IN RESTITUTION TO DEFRAUDED SUNSTATE FX INC. INVESTORS IN CFTC ENFORCEMENT ACTION
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced today that a Florida federal district court entered an order of default judgment in its favor requiring defendant Ulrich Garbe, formerly the chief investment officer for SunState FX Inc. (SunState), to pay $16 million in restitution to defrauded investors and a civil monetary penalty of $580,000 as a result of his violations of federal commodity laws.
The court’s order, entered on January 10, 2003, stems from a complaint filed by the CFTC against SunState and Garbe in the United States District Court for the Southern District of Florida on April 18, 2001 (see CFTC Press Release 4508-01, April 19, 2001).
Defendant Garbe never responded to the CFTC’s allegations and the Court entered an order of default judgment for permanent injunction against him on November 27, 2001. In that order, the Court found that Garbe had defrauded SunState investors by misappropriating and transferring $1 million of investors’ commingled funds, which had been solicited to trade foreign currencies (FOREX), into a commodity trading account and then by trading commodity futures without investors’ knowledge and consent. The Court also found that Garbe offered illegal foreign currency options to SunState investors and that funds Garbe solicited for foreign currency options were, in fact, used to repay other SunState investors, in the manner of a Ponzi scheme. The Court’s order permanently enjoined Garbe from further fraudulent conduct and from trading commodity futures or options on commodity futures or foreign currency.
The Court’s current order of default judgment requires Garbe to pay restitution to injured investors in the amount of $16,436,213.02 and to pay a civil monetary penalty of $580,000, after he has paid to the Receiver for SunState the full restitution amount.
This litigation was part of a coordinated cooperative enforcement effort with the U.S. Securities and Exchange Commission (SEC), which also filed a civil injunctive action against SunState, Garbe, and two other SunState officers for violations of the federal securities laws arising out of the same underlying facts.
The following CFTC Division of Enforcement staff are responsible for this case: Rosemary Hollinger, Scott R. Williamson, Diane M. Romaniuk, William Janulis, Ava M. Gould, Michael Tallarico, and Frank Ferrara.
Media Enforcement Contact:
Rosemary Hollinger, Associate Director
CFTC Division of Enforcement
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