For Release: April 8, 2003
SAN FRANCISCO FOREIGN CURRENCY FIRM AND ITS PRESIDENT CHARGED WITH DEFRAUDING 200 CUSTOMERS
CFTC Obtains Federal Court Order Freezing Assets of Defendants DBS Capital Inc. and Douglas Stevens
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced today that a federal district court in California issued an order freezing the assets and preventing the destruction of the books and records of defendants DBS Capital, Inc., a foreign currency firm located in San Francisco, and Douglas Stevens, the founder and President of DBS, who resides in Daly City, California.
Defendants Allegedly Solicited at Least $5 Million from Customers, Misappropriated Funds and Lost Funds Trading, and Concealed The Fraud by Issuing False Account Statements
The order, entered on April 2, 2003, stems from a CFTC complaint filed on March 31, 2003, alleging that the defendants solicited at least $5 million, if not significantly more, from approximately 200 customers to trade foreign currency futures contracts (FOREX) using word of mouth and the Internet. Defendants allegedly defrauded customers by misappropriating customer funds for personal and business uses, including gambling. The complaint further alleges that the defendants used false written and oral account statements and reports to conceal the misappropriation and trading losses they allegedly sustained continuously since at least 1998. The complaint also charges that the defendants have been offering and selling illegal, off-exchange futures contracts to the retail public.
According to the complaint, defendant Stevens informed customers in writing on March 21st that DBS was shutting its doors and that it did not have funds available to pay customers in full. The complaint alleges that defendant Stevens has admitted the misappropriation of funds and the issuance of false statements and reports. For example, the complaint alleges that he admitted using customer funds to pay for personal and business-related expenses, including funding a gambling trip to the Peppermill casino in Reno, Nevada, and to pay for the business expenses of another commodity trading firm he owned and operated, Premier Trading Group, which is registered with the Commission as a commodity pool operator and a commodity trading advisor.
The CFTC is seeking an injunction against each of the defendants, the repayment of ill-gotten gains, a refund of customer losses, and civil penalties against each defendant.
Hearing on CFTC Motion for Preliminary Injunction Set for April 10
The Honorable Vaughn Walker of the United States District Court for the Northern District of California has set a hearing for the CFTC’s motion for preliminary injunction for April 10, 2003.
The National Futures Association (NFA) assisted the CFTC staff in this investigation and on March 31, the NFA issued a Membership Responsibility Action against defendant Douglas Stevens and Premier Trading Group.
The following CFTC Division of Enforcement staff members are responsible for this case: Elizabeth Chandler, Karen Kenmotsu, and Gretchen L. Lowe.
A copy of the CFTC complaint and restraining order may be obtained at www.cftc.gov.
Media Case Enforcement Contact:
Gretchen L. Lowe
CFTC Division of Enforcement
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A CFTC Consumer Advisory Warns the Public of the Risks of
Foreign Currency (FOREX) Trading and Foreign Currency Scams
The CFTC has issued a Consumer Advisory urging the public to scrutinize claims of high-return, low-risk investment opportunities in foreign currency (FOREX) trading. This Consumer Advisory provides "red flags" to look for, and cautionary steps to be taken, before making an investment. See Beware of Foreign Currency Trading Frauds, March 8, 2001 (www.cftc.gov/cftc/cftccustomer.htm).
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