U.S. COMMODITY FUTURES TRADING COMMISSION AND STATE OF CALIFORNIA CHARGE SAN FRANCISCO FOREIGN CURRENCY FIRM NATIONAL INVESTMENT CONSULTANTS, INC. AND OTHER COMPANIES AND INDIVIDUALS WITH FRAUD
Federal Court Freezes Assets of National Investment Consultants, Inc.; South China Investments, Inc.; Pacific Best Group Limited, a.k.a. Pacific Best Company Ltd.; Run Ping Zhou, a.k.a Flora Zhou; Yi Kerry Xu; and Wei M. Tse, a.k.a. Raymond Tse
WASHINGTON, D.C. - The U.S. Commodity Futures Trading Commission (CFTC) announced today that a federal court in San Francisco entered a restraining order against defendants National Investment Consultants, Inc. and South China Investments, Inc., both located in San Francisco, Pacific Best Group Limited, a.k.a. Pacific Best Company Ltd., doing business in San Francisco, and individuals Run Ping Zhou, a.k.a Flora Zhou, Yi Kerry Xu, and Wei M. Tse, a.k.a. Raymond Tse, all residing in the Bay area.
The court’s order freezes the defendants’ assets, prohibits the destruction or alteration of their books and records, and requires defendants to provide an accounting of all funds and assets under their control.
The order stems from a joint action filed by the CFTC and the Commissioner of Corporations of the State of California (State) on June 28, 2005, charging the defendants with fraudulent solicitation and offering illegal foreign currency futures contracts in violation of the Commodity Exchange Act and California law.
The complaint alleges that defendants solicited and accepted approximately $182,500, from at least five members of the general public in the San Francisco area to participate in purported foreign currency (forex) futures contracts. According to the complaint, defendants misrepresented the potential profits and the risks associated with the futures contracts. The complaint specifically alleges that defendants told potential customers that their funds were FDIC-insured, that profits on investments made in cash would not be taxed, and that customers would not lose their initial investment. All of the known customers lost most, if not all, of their initial investment, as alleged in the complaint.
The complaint further alleges that defendants failed to disclose the lack of trading experience of account executives at NICI and South China, and also failed to inform customers that defendant Run Ping Zhou had previously been subject to a permanent injunction for fraudulent solicitation in a similar case brought by the State.
Theresa C. Wong is named as a relief defendant, which is a person who allegedly received funds from fraudulent activities to which they are not entitled. The complaint seeks the return of those funds from Wong; she is not charged with wrongdoing.
The Honorable Jeffrey S. White of the U.S. District Court for the Northern District of California, San Francisco Division, has set a hearing on Plaintiffs’ Motion for a Preliminary Injunction for August 26, 2005.
In the ongoing litigation, the CFTC and the State seek a permanent injunction against defendants, repayment of ill-gotten gains and customer losses, and monetary penalties.
The CFTC appreciates the cooperation of the California Department of Corporations in bringing this matter.
The following CFTC Division of Enforcement staff members are responsible for this
case: Kevin K. Batteh, James Holl, III, Erin Vespe, and Gretchen L. Lowe.
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The CFTC encourages members of the public to bring to our attention any suspicious activities involving futures or commodity options, including matters involving foreign currency investments or suspicious Internet web sites.
You may contact the CFTC at 1-866-FON-CFTC (1-866-366-2382), visit us at our Customer Protection web page (www.cftc.gov/cftc/cftccustomer.htm), or fill out our Internet Report Form identifying your concerns (www.cftc.gov/enf/enfform.htm). In addition, the CFTC publishes a series of Consumer Advisories alerting the public to warning signs of possible fraudulent activity and offering precautions individuals should take before committing funds.
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