U.S. COMMODITY FUTURES TRADING COMMISSION FILES $2.4 MILLION ENFORCEMENT ACTION AGAINST CHICAGO RESIDENT EDWARD VELAZQUEZ AND HIS HEDGE FUND
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced that on September 10, 2004, Judge Blanche Manning of the United States District Court for the Northern District of Illinois issued an order freezing assets in an enforcement action filed on September 8, 2004, that charges Edward R. Velazquez of Chicago, Illinois, and his companies V-Tek Trading Group, Inc. (V-Tek Trading Group), and V-Tek Capital, Inc. (V-Tek Capital) with fraud. CFTC v. Edward R. Velazquez et al, Civil Action No. 04-C-5853 (N.D. Ill., filed September 8, 2004).
Specifically, the complaint alleges that defendants defrauded at least 43 customers of at least $2.4 million by fraudulently misrepresenting the profit potential, and failing to adequately disclose the risks, of trading commodity futures. According to the complaint, until July 2004, Velazquez, V-Tek Capital, and V-Tek Trading Group touted their collective operations, which they referred to as "V-Tek," as a hedge fund, and promoted investments in managed commodity futures trading accounts on a website that displayed a V-Tek Capital banner proclaiming “rated in the top 1% of capital management firms worldwide.”
The complaint also alleges that defendants falsified Velazquez’s trading performance track record and distributed it to customers, falsely stating on an Internet website and in printed promotional material that V-Tek Capital is registered with the CFTC. The complaint further charges defendants with commingling investor funds with Velazquez’s personal funds.
The complaint names two additional entities allegedly owned or managed by defendant Velazquez -- FX 500, Inc. and V-Tek FX Fund -- as relief defendants, alleging they received funds as a result of the defendants’ fraudulent conduct. The relief defendants are not charged with wrongdoing, but are named as a source of potentially recoverable funds from the alleged scheme. The relief defendants are included in Judge Manning’s September 10, 2004 order freezing assets.
In the ongoing action, the CFTC seeks orders of preliminary and permanent injunction against the defendants and relief defendants, a return of alleged ill-gotten gains, repayments to defrauded investors, monetary penalties, and other relief.
The following CFTC Division of Enforcement staff are responsible for this action: Judy McCorkle, Cynthia Cannon, and Venice Bickham, Susan Gradman, William Janulis, Scott Williamson, and Rosemary Hollinger.
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