HAWAIIAN RESIDENT BARRY SCHOTZ CHARGED WITH DEFRAUDING CALIFORNIA PARTICIPANTS IN $3 MILLION COMMODITY POOL SCHEME
Schotz, Previously Convicted of Fraud, Allegedly Bilked Los Angeles Investors in the Bear Invest Fund
Randolph Gale Charged with Registration Violations
WASHINGTON, D.C.---The U.S. Commodity Futures Trading Commission (CFTC) announced that on October 27, 2004, the Honorable S. James Otero of the United States District Court for the Central District of California, acting on a CFTC complaint filed on the same day, issued a statutory restraining order freezing the assets of defendant Barry Schotz of Kilauea, Hawaii, and prohibiting both Schotz and defendant Randolph Gale of Hidden Hills, California, from destroying books and records. The order also enjoins the defendants from committing further violations of the Commodity Exchange Act.
Schotz, who previously was convicted of fraud in 1994 and served five years in federal prison as a result, is charged with violations of the antifraud provisions of the Commodity Exchange Act (CEA) in connection with his operation of Bear Invest Fund, a commodity pool. Gale is charged solely with soliciting pool participants without being registered with the CFTC.
The CFTC complaint alleges that, from about August 2003 to the present, Schotz and Gale solicited and accepted approximately $3 million in the name of Bear Invest Fund (Bear pool) from at least 34 pool participants, most of whom resided in and around Los Angeles County, California.
According to the complaint, the funds were pooled to trade commodity futures through at least two accounts at two different futures brokers. As alleged, Schotz’s trading in the Bear pool trading accounts consistently lost money, although Schotz falsely reported to Gale and others that Schotz’s futures trading in the Bear pool accounts was highly profitable and that the Bear pool was consistently making money. According to the complaint, Gale then reported this false information both verbally and by e-mail to pool participants.
Schotz is also charged with commingling customer funds with his personal funds and failing to provide pool disclosure documents to pool participants.
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 are responsible for this case: Louis Traeger, Michael Tallarico, William Janulis, Cynthia Cannon, Scott Williamson, and Rosemary Hollinger.
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