For Release: September 8, 2003
U.S. COMMODITY FUTURES TRADING COMMISSION CHARGES ATLANTA TRADING FIRM, RISK CAPITAL TRADING GROUP, INC.WITH DEFRAUDING CUSTOMERS
Firm and Certain Traders Allegedly Made False Claims that Accounts Would Make Large Profits With Little Risk Due to Political Events, Such as the War in Iraq; Court Enters Restraining Order Freezing Risk Capital Trading Group's Assets and Protecting Books and Records
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) on September 3, 2003, filed a two-count enforcement action in the United States District Court for the Northern District of Georgia against Risk Capital Trading Group, Inc., of Atlanta, Georgia; former and current employees Deron Baugh (of North Lauderdale, Florida), Tyrone Edwards (of McDonough, Georgia), Steve Margol (of Hollywood, Florida), Rick Siegel (of Lawrenceville, Georgia), Richard Tillman (of Fort Lauderdale, Florida), and Juan Valentin (of Marietta, Georgia) alleging that they fraudulently induced customers to invest in commodity futures and options contracts.
Judge Enters Restraining Order Freezing Assets and Protecting Books and Records, Among Other Sanctions
On the same day the complaint was filed, the Honorable Orinda D. Evans entered a restraining order freezing Risk Capital Trading Group’s assets, prohibiting it from destroying books and records, requiring a financial accounting, and enjoining it from violating federal commodities law. The court ordered that a preliminary injunction hearing be held on September 16, 2003, at 3pm.
The CFTC complaint alleges that defendants committed fraud in their customer solicitation by exaggerating the likelihood of profiting from the purchase of commodity futures and options, including telling at least one customer that even in the worst case scenario the customer’s money would be doubled.
Also, the complaint alleges that the defendants told customers that events in the Middle East, including the (at that time) possibility of war with Iraq, made it likely that the customers’ investments would be profitable. The complaint also charges defendants with:
The CFTC complaint seeks to enjoin defendants from violating federal commodity laws, demands a return of funds for defrauded customers and repayment of ill-gotten gains, and an award of civil monetary penalties.
The following CFTC Division of Enforcement staff members are responsible for this case: Frank Rangoussis, Margaret Kanyan, and Richard Glaser.
In November 2002, the CFTC Issued a Consumer Advisory Warning the Public to Beware of Claims that Commodity Futures or Options Trading Will Be Profitable Because of a Possible Conflict with Iraq
The CFTC, in November 2002, issued a Consumer Advisory (see: http://www.cftc.gov/files/enf/02orders/enf-iraq-advisory.pdf) warning the public to beware of claims that commodity futures or options trading will be profitable because of a possible conflict with Iraq. For more information on other CFTC Customer Advisors, see the CFTC Customer Protection webpage at http://www.cftc.gov/cftc/cftccustomer.htm.
Media Enforcement Case Contact:
Richard Glaser, Associate Director
CFTC Division of Enforcement, Washington, D.C.
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