U.S. COMMODITY FUTURES TRADING COMMISSION SETTLES TRADING FRAUD CASE WITH INDIVIDUALS FOUND TO HAVE DEFRAUDED THE FORMER COASTAL CORPORATION
WASHINGTON, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) announced today the issuance of two orders which together find that Steven G. Soule, formerly of Houston, Texas, Kyler F. Lunman II (Lunman) of Rumson, New Jersey, and Lunman's company, Hold Trade, Inc. (or Ltd.), a Delaware corporation, participated in a trade allocation scheme to defraud Coastal Corporation (now part of El Paso Corporation).
The order against Soule, a former Coastal employee, finds that from November 1993 through November 1994, he engaged in a scheme with Lunman, Hold Trade and others to defraud Coastal of profits from its trading of commodity futures contracts on the New York Mercantile Exchange (NYMEX). According to the order, Soule and a floor clerk working for another participant in the scheme misappropriated numerous Coastal futures transactions and then wrongfully allocated the misappropriated trades to brokerage accounts controlled by other scheme participants. The order also finds that Soule made false internal reports to Coastal regarding its trading activity, and willfully deceived Coastal regarding the handling of its commodity futures orders.
The order against Lunman and Hold Trade finds that from November 1993 through November 1994, they knowingly aided and abetted Soule in the fraudulent trade allocation scheme by allowing profits from the scheme to be deposited into commodity futures trading accounts in Lunman's and Hold Trade's names. According to the order, Lunman and Hold Trade then distributed those profits among the scheme’s participants, including themselves.
According to the two orders, the fraudulent scheme generated at least $276,557 in profits for Soule, Lunman, Hold Trade and other scheme participants. (See CFTC News Release 4217-98, December 22, 1998.)
Without admitting or denying the allegations in the amended complaint or the findings in the order:
All respondents also agreed never to seek registration with the CFTC or act in a registered capacity.
These settlements arise from an amended enforcement complaint filed before the CFTC in February 1999. In April 2000, in a separate criminal action based on the same underlying fraudulent scheme Soule and Lunman pleaded guilty to federal wire fraud charges, and each served various terms as a result.
A copy of the CFTC orders and amended complaint may be found at http://www.cftc.gov.
The following Division of Enforcement members are responsible for the case: W. Derek Shakabpa, Patricia Gomersall, and Susan B. Bovee.
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