For Release: April 25, 2003
WALL STREET UNDERGROUND, INC. AND OTHERS CHARGED WITH FRAUDULENTLY PROMOTING COMMODITY TRADING SYSTEMS
CFTC Charges Kansas City Commodity Promoters With Making False Claims and Guarantees to Customers; At Least 1000 People Invested in the Multimillion-Dollar Scam
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced that on April 22, 2003, it filed a complaint in federal district court in Kansas City, Kansas, charging Wall Street Underground, Inc.; Web Fulfillment Centre, Inc.; Nicholas A. Guarino, Jr.; Derek Abrahams; and Frank Asaro, all of Kansas City, Kansas, with fraudulently promoting and selling to the public several commodity trading systems (CFTC v. Wall Street Underground, Inc., et al., Civil Action No. 032193-CM).
Judge Enters Order Freezing Defendants’ Assets and Protecting Books and Records
On April 23, 2003, the Honorable Carlos Murguia entered a restraining order against the defendants, freezing their assets and prohibiting the destruction of documents. The court set a hearing on the CFTC’s motion for preliminary injunction for May 9, 2003, at 9:30 a.m.
The complaint alleges that, from at least January 1999 to the present, the defendants actively promoted and marketed a variety of commodity futures and options trading systems to the public, including, among others, the Samurai Forecaster, Nick’s Guerilla Trading Hotline, and the Electronic Wall Street Underground.
As alleged, customers were charged $5,000 for each trading system and received one year’s worth of specific buy and sell signals. According to the complaint, the defendants fraudulently overstated the profit potential of the trading systems and failed to adequately warn customers about the risks of trading futures and options contracts. In addition, the complaint charges that the defendants: 1) guaranteed in promotional statements that customers would make $1 million when trading commodity futures or options; 2) made false money-back guarantees to customers who purchased the trading systems; and 3) received in excess of $5 million dollars from at least 1,000 customers in the United States, most of which has been transferred to off-shore bank accounts.
Defendant Nicholas A, Guarino, Jr., is the author of the Wall Street Underground newsletter, which offers political and investment commentary. The complaint alleges that Guarino neglected to disclose to the public that he was convicted of mail and wire fraud in connection with a scheme to sell gold and silver to the public in the 1980s. In connection with that case, he was sentenced to 24 months’ imprisonment and required to pay $1,250,678 in restitution. According to the CFTC complaint, although Guarino served time in prison, he never paid the restitution award.
In its continuing litigation the CFTC is seeking preliminary and permanent injunctive relief, restitution for defrauded customers, disgorgement of ill-gotten gains, and civil monetary penalties against each defendant of $120,000 per violation, or triple the monetary gain, whichever is greater.
The following CFTC Division of Enforcement staff members are responsible for this case: Rocell Winters, Donald G. Nash, Rosemary Hollinger, Robert Greenwald, and Cliff Histed.
A copy of the CFTC complaint and restraining order may be obtained at www. cftc.gov.
Enforcement Case Media Contact:
Rosemary Hollinger, Associate Director and Regional Counsel
CFTC Midwestern Regional Office
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