U.S. COMMODITY FUTURES TRADING COMMISSION BRINGS FRAUD ACTION AGAINST TENNESSEE FOREIGN CURRENCY (FOREX) FIRM AND CERTAIN EMPLOYEES
Federal Agency Charges FxTrade Financial, LLC, Jeffrey A. Mischler, Lee N. Romano II, and Mary Jo Sibbitt With Fraud When Soliciting Customers
Washington, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of an enforcement action in the United States District Court for the Western District of Tennessee against FxTrade Financial, LLC, a Tennessee corporation; Jeffrey A. Mischler of Germantown, Tennessee; Lee N. Romano II of Union, Illinois; and Mary Jo Sibbitt of Glen Ellyn, Illinois (CFTC v. FxTrade Financial LLC, Jeffrey A. Mischler, Lee N. Romano, and Mary Jo Sibbitt, Civil Action No.: CV: 04-2181-DAN).
The CFTC complaint, filed March 17, 2004, alleges that the defendants engaged in the fraudulent solicitation of FxTrade customers to open foreign currency (forex) trading accounts by making misrepresentations about the company’s profitability, guarantees of success, and date of inception.
As alleged in the complaint, defendants solicited potential customers to trade contracts that were actually commodity futures contracts by claiming that they could make large profits in short periods of time. According to the complaint, one example of a false solicitation claimed that one defendant turned $20,000 into $70,000 in only three weeks of trading with FxTrade. The complaint further alleges that certain potential customers were told that FxTrade’s trades were “100 percent guaranteed.” According to the complaint, defendants solicited and accepted at least $125,000 from customers.
Federal Court Freezes Assets and Bars Destruction of Books and Records
On March 17, 2004, Judge Bernice B. Donald entered a statutory restraining order against the defendants, freezing their assets and preventing the destruction or alteration of their books and records.
In its continuing litigation against defendants, the CFTC is seeking preliminary and permanent injunctive relief, refunds to customers, repayment of ill-gotten gains, and monetary penalties. Judge Donald has scheduled a hearing on March 29, 2004, on the CFTC’s motion for a preliminary injunction.
This case is the first action filed by the Commission’s new Kansas City enforcement office, which opened January 12, 2004, to increase the agency resources devoted to the investigation and prosecution of commodity wrongdoing in the central and southern regions of the United States. (See CFTC News Release 4875-04, January 9, 2004.)
The following CFTC Division of Enforcement staff are responsible for this case: Charles D. Marvine, Rachel A. Hayes, Lacey Dingman, and Richard Glaser.
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