FEDERAL COURT FREEZES ASSETS OF FLORIDA FOREIGN CURRENCY FIRM AND OTHERS IN U.S. GOVERNMENT LAWSUIT CHARGING A COMMODITY OPTIONS SCAM
U.S. Commodity Futures Trading Commission Charges Mercury Partners, Inc.; Mercury Financial Partners, Inc.; Mercury Management, L.C.; Bruce N. Crown; Andrew Bartos; and Michael Morgan with Fraud and Misappropriation of Customer Funds
WASHINGTON, D.C. - The U.S. Commodity Futures Trading Commission (CFTC) announced today that U.S. District Court Judge Cecilia Altanoga entered a statutory restraining order freezing the assets of Mercury Partners, Inc., a Bahamian corporation with offices in Boca Raton, Florida, and one of its brokers, Bruce N. Crown, of Miramar, Florida; Mercury Financial Partners, Inc. of Pompano Beach, Florida, and its President, Andrew Bartos, of Sunny Isles Beach, Florida; and Mercury Management, L.C. of Lake Worth, Florida, and its manager, Michael Morgan, of West Palm Beach, Florida.
The order, entered on March 7, 2005, stems from a CFTC complaint filed on the same day in the United States District Court for the Southern District of Florida, charging defendants with fraudulent solicitation and misappropriation of customer funds in violation of the Commodity Exchange Act and CFTC regulations.
Specifically, the CFTC's complaint alleges that since at least August 2004, Mercury Partners and Crown solicited approximately $140,000 from customers to trade options on foreign currency (forex) futures contracts (foreign currency options) by combining high-pressure sales tactics with fraudulent misrepresentations about the likelihood of profits, the level of risk involved in trading options, and their purported success in options trading.
As alleged in the CFTC complaint, defendants did not use any of the funds to trade foreign currency options. Instead, according to the complaint, defendants Bartos and Morgan siphoned off customer funds to pay for personal items, such as private school tuition, automobile expenses, credit card purchases, homeowners’ association fees, a purchase at Cartier, and cash for themselves and their employees. As alleged, despite these expenditures, Mercury Partners issued false trading statements to its customers indicating that it had purchased foreign currency options for them, and that those options had expired worthless.
Further, the complaint alleges that Crown, after leaving Mercury Partners, fraudulently induced one customer to send him $50,000 under the guise of purchasing exchange-traded crude oil options that Crown claimed were held in a commodity trading account at a large, well-known brokerage firm. The complaint further alleges that no such commodity trading account existed and that Crown failed to purchase the options for the customer. Rather, as alleged, Crown deposited the money in his personal bank account and withdrew the money as cash.
In its continuing litigation against defendants, the CFTC is seeking preliminary and permanent injunctive relief, return of funds to defrauded customers, repayment of ill-gotten gains, and an award of civil monetary penalties for each violation of the Commodity Exchange Act.
Hearing is Scheduled for March 18, 2005
Judge Altanoga has scheduled a hearing for March 18, 2005, on the CFTC’s motion for a preliminary injunction.
The CFTC would like to thank the Boca Raton Police Department for its assistance in this matter.
The following CFTC Division of Enforcement staff members are responsible for this case: Jed M. Silversmith, Jan M. Folena, Lacey Dingman, Richard Glaser, and Richard Wagner.
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