U.S. COMMODITY FUTURES TRADING COMMISSION CHARGES CALIFORNIA FIRM CHASE COMMODITIES CORPORATION AND TWO INDIVIDUALS WITH DEFRAUDING CUSTOMERS
Firm And Traders Lee Lagorio and Excel Obando Allegedly Made False Claims That Customers Would Make Large Profits With Little Risk
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 Central District of California in Los Angeles against Chase Commodities Corporation (Chase) of Woodland Hills, California, and current employees Lee Lagorio of Woodland Hills, California, and Excel Obando of Sun Valley, California, alleging that they fraudulently induced customers to trade options on commodity futures contracts.
The complaint alleges that defendants fraudulently solicited customers by exaggerating the profitability of trading commodity options. Defendants, and other Chase associated persons, according to the complaint, told customers that large profits would be made, such as doubling the customer’s money within short time periods. Defendants based these profit representations on well-known public information and their alleged previous trading successes, according to the complaint.
The complaint further alleges that defendants falsely represented to customers that the risks of loss from trading options were minimal, while failing to disclose that from August 2003 to March 2004 approximately 99 percent of the firm's 359 actively trading customers lost money trading commodity options -- for a total loss of more than $4 million -- while Chase charged more than $2 million in commissions and fees.
The CFTC also seeks to hold Universal Financial Holding Corporation of Aventura, Florida, Chase Commodities Corp's guaranteeing futures commission merchant, jointly and severally liable for Chase’s violations of the Commodity Exchange Act and Commission regulations.
Federal Court Freezes Assets and Bars Destruction of Books and Records
On August 5, 2004, the Honorable Percy Anderson entered a statutory restraining order against 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, return of funds to defrauded customers, repayment of ill-gotten gains, and an award of civil monetary penalties. Judge Anderson has scheduled a hearing for August 23, 2004, on the CFTC’s motion for a preliminary injunction.
The CFTC would also like to thank the National Futures Association for their assistance. A copy of the complaint is available at www.cftc.gov.
The following CFTC staff members are responsible for this case: Ken McCracken, Sandy McCarthy, Thomas Bloom, and Richard Glaser.
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