Tennessee Foreign Currency Firm FxTrade Financial, LLC, and Jeffrey Mischler, its CEO and Managing Partner, Along with Seven Others, Agree to Order Finding that They Violated Court Orders Preventing Dissipation of Customer Funds
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced today that Judge Bernice Donald of the United States District Court for the Western District of Tennessee signed a consent order of contempt finding that six individuals and three companies violated the court’s March 17, 2004, statutory restraining order (SRO) and the April 22, 2004, consent order of preliminary injunction (PI Order). The SRO and PI Order, among other things, froze assets, required complete asset disclosure, and prevented defendants from soliciting customers to purchase foreign currency (forex) futures contracts.
The SRO and PI Order stemmed from a CFTC complaint filed on March 17, 2004, alleging that Jeffrey A. Mischler and FxTrade Financial, LLC (FxTrade) of Germantown, Tennessee, Mary Jo Sibbitt of Glen Ellyn, Illinois, and Lee N. Romano II of Union, Illinois fraudulently solicited FxTrade customers to open foreign currency trading accounts by making misrepresentations about the company’s profitability and guarantees of success, among other things, all in violation of the Commodity Exchange Act (see CFTC News Release 4904-04, March 23, 2004). Subsequently, the Commission filed an amended complaint alleging that, in addition to the original defendants, Ernst H. Behr of Reno, Nevada, Reverie LLC (Reverie) of Glen Ellyn, Illinois, and Gordon J. Vandeveld of Glenview, Illinois, also defrauded FxTrade’s customers by misrepresenting the investments, the ability to achieve profits, the amount of due diligence performed, and FxTrade's history (see CFTC News Release 4993-04, September 20, 2004). As alleged, defendants solicited a total of more than $1.1 million from a number of investors.
After entry of the SRO and PI Order, certain defendants and third parties engaged in various acts in violation of those orders, including, among other things, the removal or transfer of frozen assets and the failure to disclose assets fully. As specified in the subsequent contempt order, defendant Mischler, Catherine M. Mischler, and their companies, defendant FxTrade and TradeQuest Inc.; defendant Sibbitt, Steven P. Sibbitt, Sr. and their company, defendant Reverie; and Rodney W. Jefferson agreed that they had violated the SRO and PI Order by removing assets from frozen bank accounts. In addition, the contemnors, including defendant Behr, admitted in the contempt order to other various violations of the SRO and PI Order, including such violations as transferring money offshore, failing to provide accurate and complete asset disclosures, continuing to solicit customers to trade foreign currency futures contracts, and providing the Commission intentionally inaccurate information during the course of its investigation of the contemptuous conduct. Further, all contemnors, plus defendant, Vandeveld, agreed not to solicit customers with respect to any investment relating to foreign currency.
Finally, the parties now agree that the contemnors have purged their contemptuous behavior by, among other things, returning the funds to frozen accounts and providing complete asset disclosures.
The following CFTC Division of Enforcement staff are responsible for this case: Charles D.Marvine, Rachel A. Hayes, Lacey Dingman, and Richard Glaser.
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