For Release: June 16, 2003
CFTC SETTLES FOREIGN CURRENCY FRAUD CHARGES WITH TEXAS RESIDENT AND HIS TWO COMPANIES
Court Orders Defendants John A. Wheeler, Long Point Investments, LLC and CDM Technologies, LLC to Pay $23 Million to Investors.
WASHINGTON, D.C. . The U.S. Commodity Futures Trading Commission (CFTC) today announced that the United States District Court for the Eastern District of Texas, Tyler Division, issued an order imposing civil penalties, customer repayment obligations, and other sanctions on defendants John A. Wheeler of Nacogdoches, Texas, and his two limited liability companies, Long Point Investments and CDM Technologies.
The order, issued on June 9, 2003, to which the defendants consented, settles charges against Wheeler and his companies arising out of the CFTC.s complaint in CFTC v. John A. Wheeler, et al., 6:03 CV 42 (see CFTC News Release 4750-03, February 5, 2003).
The order makes findings, which the defendants admitted. Specifically, the order finds that, from December 2000 through May 2002, Wheeler fraudulently solicited, accepted, and pooled more than $35 million from 800-plus investors, purportedly to trade foreign currencies, among other claimed high-yield investment schemes. The order also finds that Wheeler, acting individually or through his companies, defrauded investors by misappropriating more than $8 million, and used those funds for personal and luxury expenditures.
The order also finds that Wheeler made misrepresentations about the profitability of his foreign currency investments, sent false written account statements to investors, and concealed various material facts -- including the fact that he could not repay investors the amounts of money reflected on customer account statements because he had suffered investment losses and had diverted investor funds for his personal use and benefit. In particular, the order finds that Wheeler concealed his losses by using funds received from .new. investors to repay .earlier. investors, in a manner akin to a Ponzi scheme.
The order requires Wheeler and his companies to repay defrauded customers $23 million and to pay a contingent civil penalty of $8.4 million, after they have repaid investors in full. The court enjoined the defendants from further violations of the Commodity Exchange Act, as alleged in the complaint, and permanently prohibits them from trading commodity futures contracts or options on commodity futures contracts and from seeking registration with the CFTC or acting in any capacity requiring CFTC registration.
The United States Attorney.s Office for the Eastern District of Texas, Lufkin Division, provided invaluable assistance to the CFTC in its investigation and litigation of this case. Wheeler was charged by Information with one count of wire fraud. He pleaded guilty to the Information on February 10, 2003, and is currently awaiting sentencing on that charge. United States v. John Allen Wheeler, Criminal No. 9:02-CR-34, Eastern District of Texas, Lufkin Division.
The following CFTC Division of Enforcement staff were responsible for this case: Rosemary Hollinger, Scott R. Williamson, Diane M. Romaniuk, Ava M. Gould, William Janulis, Frank Ferrara, and Thomas Koprowski.
A copy of the CFTC complaint and consent order may be obtained at www.cftc.gov.
Media Enforcement Contact:
Rosemary Hollinger, Associate Director
CFTC Division of Enforcement
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