FLORIDA FEDERAL COURT ISSUES PRELIMINARY ORDER ENJOINING TWO FLORIDA BUSINESSES AND FOUR EMPLOYEES FROM VIOLATING THE COMMODITY EXCHANGE ACT
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced that on December 6, 2004, the Honorable Joan A. Lenard of the United States District Court for the Southern District of Florida entered an order of preliminary injunction by consent against defendants Liberty Financial Trading Corp., Inc., Liberty Real Assets Investment Corporation, Ted Romeo, and Leslie Weiner, all of Pompano Beach, Florida, Nader Yazdani of Boca Raton, Florida, and Randy Burstein of Miami, Florida, enjoining them from violating certain antifraud sections of the Commodity Exchange Act and the CFTC’s regulations.
The court’s order stems from a CFTC complaint filed on September 21, 2004, charging defendants with fraudulently soliciting customers to trade options on commodity futures contracts. In consenting to the preliminary injunctive relief, the parties agreed that the order did not establish the factual allegations of the complaint.
The complaint alleged that since at least 2002, defendants misrepresented to prospective customers the likelihood that a customer would realize large profits from commodity options trading and the risks involved in trading commodity options. According to the complaint, one defendant guaranteed a customer a profit of $22,000 on a $5,000 investment in only a few weeks’ time.
Also as alleged in the complaint, defendants misrepresented to customers about the effect that current events, such as the war in Iraq, would have on options prices by citing well-known public information that was already factored into those prices. The complaint alleges that in making these fraudulent pitches, defendants also deliberately misrepresented the urgency of the investment opportunity with such statements, as “you will never have another opportunity like this again.” According to the complaint, while touting the profits to be made by trading through Liberty, defendants failed to disclose Liberty’s dismal trading record. The complaint alleges that the overwhelming majority of Liberty’s customers lost money trading in 2002 and 2003, with customer losses in 2003 exceeding $5 million.
In its continuing litigation, the CFTC is seeking the following sanctions against the defendants: a permanent injunction, repayment of defrauded customers, the return of ill-gotten gains, and monetary penalties for violating the Commodity Exchange Act.
The following CFTC Division of Enforcement staff members are responsible for this case: Alan Edelman, Erin Vespe, Gretchen Lowe, and Vincent McGonagle.
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