FEDERAL COURT ORDERS PORTLAND RESIDENTS TO PAY MORE THAN $1.3 MILLION TO SETTLE FOREIGN CURRENCY FUTURES AND OPTIONS FRAUD CHARGES
Court Orders Nancy Hoyt, April Duffy, and Samantha Vorachith to Repay a Total of $596,337 to Investors and to Pay Contingent Civil Penalties Totaling $720,000
WASHINGTON, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) today announced that on September 7, 2004, the U.S. District Court for the District of Oregon issued consent orders of permanent injunction (orders) imposing civil penalties, customer repayment obligations, and other sanctions against defendants Nancy Hoyt, April Duffy, and Samantha Vorachith of Portland, Oregon.
The orders settle charges against three of five defendants charged with violations of the anti-fraud provisions of federal commodity laws and Oregon securities laws an action brought by the CFTC and the State of Oregon on May 7, 2003 against Orion International, Inc., its President Russell Cline, and defendants Hoyt, Duffy, and Vorachith (see CFTC News Release 4787-03, May 14, 2003). Hoyt, Duffy, and Vorachith consented to the entry of the orders without admitting or denying the allegations of the complaint.
The orders require Hoyt, Duffy, and Vorachith to pay restitution to defrauded customers based on the dollar amount of benefits each received from their illegal conduct. The orders require Duffy to pay $347,937, Vorachith to pay $128,400, and Hoyt to pay $120,000. The orders also require each to pay a contingent civil penalty of $240,000 after they have satisfied their restitution obligations. The court’s orders also enjoin them from further violations of federal commodity laws and state securities laws alleged in the complaint, and permanently prohibit them from trading commodity futures contracts or securities.
In ongoing litigation, the allegations of the original complaint remain pending against defendant Orion International and the main defendant, Cline. According to the complaint, defendants allegedly orchestrated a scheme starting in December 1998 in which they solicited at least $27 million from over 600 individuals to participate in a purported foreign currency fund.
According to the complaint, defendants fraudulently solicited customers to purchase illegal off-exchange foreign currency options and futures contracts by misrepresenting the profits and risks involved in foreign currency trading. The complaint also alleges that defendants misappropriated millions of dollars in customer funds and used that money for personal purposes, such as to purchase eight homes in Portland and at least 24 luxury automobiles.
As alleged, defendants then provided customers with false account statements to hide their fraud. The complaint further alleges that to the extent defendants actually used customer funds for trading, they sustained net trading losses for customers.
In May 2004, a federal grand jury issued a criminal indictment against defendant Cline, charging him with 39 counts of mail fraud, wire fraud, and money laundering based on the conduct alleged in the civil action filed by the CFTC and the State of Oregon. As a result, the court has stayed the civil action against Cline until Cline’s criminal trial is concluded. Cline’s criminal trial is scheduled for November 2004.
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