U.S. COMMODITY FUTURES TRADING COMMISSION CHARGES FLORIDA COMPANY WORLDWIDE COMMODITY CORPORATION AND FOUR INDIVIDUALS WITH DEFRAUDING CUSTOMERS
Firm And Certain Traders Allegedly Made False Claims That Accounts Would Make Large Profits With Little Risk Due To Seasonal Events
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced today the filing of a one-count enforcement action in the United States District Court for the Eastern District of Pennsylvania against defendants Worldwide Commodity Corporation (Worldwide) of Pembroke Pines, Florida, and current employees Steven Labell and Joseph L. Allen both of Plantation, Florida, Bruce N. Crown of Pembroke Pines, Florida, and Phil Ferrini of Sunrise, Florida (defendants), alleging that they fraudulently induced customers to trade options on commodity futures contracts. The complaint also charges that Universal Financial Holding Corporation of Aventura, Florida, a futures commission merchant that guarantees Worldwide's liabilities, is also liable for any violations of the Commodity Exchange Act and CFTC regulations for which Worldwide is found liable. The complaint was brought in a Pennsylvania federal court because many of the customers who allegedly received defendants' fraudulent solicitations were located there.
The CFTC's complaint alleges that defendants fraudulently solicited customers by exaggerating the profitability of trading commodity options, including statements that customers could double or triple their money within short time periods. According to the complaint, defendants based these profit representations on seasonal trends, well-known public information, and their alleged previous trading successes, statements that the complaint alleges misrepresented the profitability of trading commodity options. The complaint further charges that defendants falsely represented to customers that the risks of loss from trading options were minimal, while failing to disclose the fact that, during 2002 and 2003, more than 99 percent of the firm's 368 customers lost money trading commodity options, for total customer losses of more than $4 million.
The complaint seeks injunctions against the defendants from violating the CEA and regulations, demands a return of funds for defrauded customers, repayment of ill-gotten gains, and an award of civil penalties. A copy of the complaint is available at www.cftc.gov.
Complaint Also Names Relief Defendant
The complaint also names Larry Kahn, a director and shareholder of Worldwide Commodity, as a relief defendant in the action. Relief defendants are persons who are alleged to have received funds from an illegal scheme, but who are not charged with legal liability for the scheme itself, and may not have had any knowledge of it.
The CFTC also announced today that on July 31, 2004, it filed a Notice of Intent to revoke the CFTC registration of defendant Crown as an Associated Person for failing to disclose that he was suspended and subsequently disbarred from the practice of law by the Florida Supreme Court.
The CFTC would also like to thank the National Futures Association for its assistance.
The following CFTC Division of Enforcement staff members are responsible for this case: Jan Folena, Jed Silversmith, Lacey Dingman, and Richard Glaser.
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