For Release: May 14, 2003
PORTLAND FOREIGN CURRENCY FIRM, ITS PRESIDENT, AND OTHERS CHARGED WITH STEALING MORE THAN $9 MILLION IN CUSTOMER FUNDS
CFTC Obtains Federal Court Order Freezing Assets of Orion International, Inc. and Several Individuals
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) today announced that on May 8, 2003, U.S. District Judge Garr King of the federal district court in Portland, Oregon issued an order freezing the assets and preventing the destruction of the books and records of defendant Orion International, Inc. (Orion), its President, Russell Cline (Cline), and other defendants -- Bagone Vorachith, April Duffy, and Nancy Hoyt -- in an action filed by the CFTC on May 7th.
The CFTC’s complaint charges each of the defendants with stealing customer funds, making fraudulent sales solicitations, and issuing false account statements in connection with their work for Orion. The complaint also charges defendants Orion and Cline with engaging in a business that solicited retail customers to invest in illegal foreign currency (forex) futures contracts.
The State of Oregon Department of Consumer and Business Services joined the CFTC’s action as a named plaintiff, and charges the defendants with violations of the state anti-fraud and securities laws based on the same alleged conduct.
Defendants Allegedly Fraudulently Solicited at Least $27 Million
The CFTC complaint alleges that, from at least December 1998 through the present, defendants have fraudulently solicited at least $27 million from over 600 individuals to participate in a purported foreign currency fund (the Orion Fund). In soliciting customers, defendants falsely represented that trading in the fund had produced annual profits in excess of 150 percent and monthly profits from December 1998 through May 2002. As alleged, defendants stole at least $9 million in customer funds and used that money for personal purposes, such as to purchase eight large homes in Portland and at least 24 luxury automobiles.
The complaint also alleges that, to the extent the defendants actually used customer funds for trading, they traded those funds in the name of Orion, not in the name of the Orion Fund or the individual customers. As charged, that trading resulted in net losses for customers. The complaint alleges that to hide their theft of funds and the poor trading results, defendants issued
false written reports and made oral misrepresentations to customers
showing consistently profitable trading.
The complaint further alleges that in August 2002, defendants falsely informed investors that “unrealized long term positions” in the market had to be closed out causing losses in excess of 90 percent of the total pool of funds. At that time, defendants allegedly notified investors that all requests for withdrawals from accounts would be cancelled and all accounts would be frozen. As a result, investors have been unable to secure a return of their funds from the Orion Fund, according to the complaint.
Also, according to the complaint, defendants have represented to customers that they are continuing to trade foreign currency contracts for the purpose of restoring lost customer funds. In March 2003, defendants informed customers that the Orion Fund had a balance of over $6.5 million in December 2002 that was attributable to a 210 percent trading gain between July and November 2002. Contrary to these representations, the complaint alleges that Orion Fund trading accounts had a balance of only approximately $240,000 in December 2002 and had sustained losses of almost $400,000 between July and November 2002.
The CFTC is seeking an injunction against each of the defendants, the repayment of ill-gotten gains, a refund of customer losses, and civil monetary penalties against each defendant.
Gregory Mocek, CFTC Director of Enforcement, said:
“Forex prosecutions such as this should send a clear message to scam artists that sell illegal foreign currency investments: If you operate a forex boiler room and steal from investors, we will use all of our internal and cooperative enforcement resources to find you, freeze your assets, close your business, and prosecute you to the fullest extent of the law.”
The following CFTC Division of Enforcement staff members are
responsible for this case: Elizabeth Padgett, Alan Edelman, Todd
Kelly, and Richard Foelber. A copy of the CFTC complaint and
restraining order may be obtained at www.cftc.gov.
Media Case Enforcement Contact:
Gretchen L. Lowe, Associate Director,
CFTC Division of Enforcement, (202) 418-5379
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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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