Commodity Futures Trading Commission
Office of External Affairs (202) 418-5080
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581

Release: 4943-04 (04 CV-60744)
For Release: June 21, 2004


First American President Steve Knowles and Employees Michael Savitsky, Adam Mills, Greg Allotta, and James Eulo Allegedly Lied When Pitching Commodity Options to Customers

WASHINGTON, D.C.—The U.S. Commodity Futures Trading Commission (CFTC) announced the filing of a complaint in the United States District Court for the Southern District of Florida charging First American Investment Services, Inc. (First American), a Florida corporation, and Florida residents Steve Knowles of Deerfield Beach, Michael Savitsky and Greg Allotta of Boca Raton, and Adam Mills and James Eulo of Delray Beach, with defrauding customers they solicited to trade heating oil, unleaded gas, and crude oil options on commodity futures.

On June 10, 2004, the Honorable Daniel T.K. Hurley, U.S. District Judge, issued a restraining order prohibiting the defendants from destroying documents or denying CFTC staff access to books and records.

The complaint, filed on June 7, 2004, alleges that, starting in December 2002, First American, Savitsky, Mills, Allotta, and Eulo solicited members of the retail public to trade options through First American. According to the complaint, First American used aggressive, high-pressure sales tactics, including: 1) misrepresentations exaggerating the likelihood of profit, 2) downplaying the risks inherent in trading option contracts, and 3) in light of the profit representations, failing to disclose First American’s losing trading record. As alleged in the complaint, First American’s customers collectively lost over $12 million trading commodity options in 2002 and 2003, including over $6 million reaped by First American in commissions.

The complaint alleges that these actions violated the antifraud provisions of the Commodity Exchange Act and Commission regulations.

The complaint also alleges that Knowles, who is President of First American, is liable for these violations as a controlling person of First American.

In the continuing litigation, the CFTC is seeking preliminary and permanent injunctive orders enjoining future violations, ordering repayment of funds to defrauded customers, and imposing civil penalties.

The following CFTC Division of Enforcement staff members are responsible for this case: Mark Bretscher, William Heitner, Robert Greenwald, Venice Bickham, Scott Williamson, and Rosemary Hollinger.

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CFTC Consumer Advisory Warns Customers to Protect Themselves from the Many Types of Fraudulent Commodity Scams Being Perpetrated in Today's Financial Markets, Including Claims of Profits Due to Well-Known Current Events

The CFTC has published several Consumer Advisories (posted on the CFTC website at alerting the general retail public to warning signs of possible fraudulent commodity scams and offering precautions customers should take before committing funds. The CFTC Consumer Advisory entitled, Beware of Promises of Profit from Commodity Futures and Options Trading Based on the Tragic Events of September 11, 2001, and Other Public Information Relating to the War on Terrorism, alerts customers to solicitations to trade commodity futures and option contracts based on claims that a lot of money with little risk can be made by trading commodities that are affected by well-known current world events, including the war on terrorism.

CFTC Consumer Advisories also warn customers to beware of similar claims of high-returns, low-risk due to the conflict in Iraq, seasonal demand for commodities, and other public information. The Advisories also urge the public to scrutinize solicitations to trade futures and options on foreign currencies (forex) and precious metals, and of similar claims made by internet websites and commodity pool investment solicitations (whether from persons you know or do not know). The CFTC has published a Spanish-language Advisory, Aviso al Consumidor en Espanol, entitled Be Careful, Someone Wants Your Money.

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Media Contacts
Alan Sobba
(202) 418-5080
Dennis Holden
(202) 418-5088
Office of External Affairs

Staff Contact
Rosemary Hollinger Associate Director
CFTC Division of Enforcement
(312) 596-0520

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