JAPANESE FIRM CHARGED WITH PARTICIPATING IN FOREIGN CURRENCY SCAM THAT DEFRAUDED MORE THAN 300 CUSTOMERS OF OVER $5 MILLION
U.S. Commodity Futures Trading Commission Also Names Four Relief Defendants Who Received Ill-Gotten Gains
WASHINGTON, D.C. – The Commodity Futures Trading Commission (CFTC) announced today that on May 11, 2004, a federal district court judge in Los Angeles, California, acting on an amended complaint filed by the CFTC the previous day, issued an order freezing the assets and preventing the destruction of the books and records of Japanese defendant City Trust and Investment Co. Ltd. of Tokyo, Japan, and relief defendants ACE Capital Advisory Group, Inc., of Rosemead, California, and ACE Emerald W. Holding, Inc., of Las Vegas, Nevada. The order also prevents the destruction of the books and records of additional relief defendants Lynnwood Jen, of Anaheim, California, and Esther Pranolo, of San Marino, California.
The Amended Complaint Adds Additional Parties to Original Complaint
The amended complaint – announced today -- adds additional parties to the original complaint against Los Angeles County defendants Emerald Worldwide Holdings, Inc., Jian Zhuang, and Jan Lu Hao that was filed in November 2003 (see CFTC News Release 4871-03, December 8, 2003) and charges these three defendants with defrauding at least 300 retail customers by misappropriating more than $4.7 million solicited from customers for purported opportunities to speculate on the value of illegal, off-exchange foreign currencies futures contracts.
The amended complaint alleges that, since at least March 2002, City Trust and Investment Co. Ltd. (CTI) and defendants Emerald Worldwide Holdings, Inc., Jian Zhuang, and Jan Lu Hao defrauded at least 300 retail investors by misappropriating more than $5 million solicited from customers for purported opportunities to speculate on the value of foreign currency futures contracts. The defendants misappropriated the funds for their own benefit and did no trading on behalf of customers, the amended complaint alleges. Emerald and CTI, through solicitation materials and a website, falsely claimed to be affiliated with certain entities registered with the CFTC in an attempt to establish legitimacy and falsely claimed Emerald was registered with the CFTC, the amended complaint further alleges. Emerald was not registered with the CFTC and neither company was affiliated with any of the registered entities mentioned.
The amended complaint also charges that the relief defendants received funds, or otherwise benefited from funds, that are directly traceable to the funds obtained by the Emerald defendants from customers through fraud.
The CFTC, in its ongoing litigation, is seeking a permanent injunction against each defendant, repayment to defrauded customers, the return of all ill-gotten gains from the defendants and relief defendants, and monetary penalties for each violation of the Commodity Exchange Act.
The following CFTC Division of Enforcement staff members are responsible for this case: Jamie Brown, Christine Ryall, John Dunfee, Jack Barrett, Patricia Gomersall, Paul Hayeck, and Joan Manley.
The CFTC Has Issued A Consumer Advisory Warning the Public of the Risks of Foreign Currency Trading and Foreign Currency Scams
The CFTC has issued a Consumer Advisory (at www.cftc.gov/cftc/cftccustomer.htm) urging the public to scrutinize claims of high-return, low-risk investment opportunities in foreign currency trading. This Consumer Advisory provides "red flags" to look for, and cautionary steps to be taken before making an investment. The CFTC has also issued Advisories concerning the Commodity Futures Modernization Act of 2000, and how FOREX firms may lawfully offer foreign currency futures and options trading opportunities to the retail public (see CFTC Press Release 4625-02, March 21, 2002, CFTC Advisory, March 21, 2002, and CFTC Advisory 06-01, February 5, 2001).
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