U.S. COMMODITY FUTURES TRADING COMMISSION FILES FRAUD ACTION AGAINST HEDGE FUND OPERATED BY LAKE DOW CAPITAL
Federal Court Freezes Assets of Hedge Fund and its Operator
WASHINGTON, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that the United States District Court for the Northern District of Georgia entered a restraining order freezing the assets of Lake Dow Capital, LLC (Lake Dow) and Ty Edwards (Edwards) in a CFTC action alleging fraud committed by those parties. The order also froze the assets of hedge fund Aurora Investment Fund (Aurora Fund).
Specifically, the CFTC’s complaint alleges that Lake Dow, a registered commodity pool operator and commodity trading advisor, and Edwards, a principal and registered associated person of Lake Dow, falsely represented to actual and prospective participants in the Aurora Fund commodity pool, a hedge fund operated by Lake Dow and Edwards, that Aurora Fund had consistently generated annual profits without a single losing month. The complaint further alleges that Lake Dow and Edwards misrepresented to actual and prospective participants that they managed between $60 and $100 million, when funds in the Aurora Fund did not exceed $20 million. According to the complaint, Edwards also attributed to the Aurora Fund performance results that were not based upon any actual financial documents, actual performance, or any analysis thereof.
The complaint also alleges that Edwards failed to disclose to participants in the commodity pool the fact that he is a named defendant in a pending Commission civil injunctive action alleging fraud, CFTC v. Risk Capital Trading Group, Deron Baugh, Tyrone Edwards, et. al, Case No. 103 CV-2633 (N.D. GA 2003), and that he withheld material information from the National Futures Association (NFA) by willfully concealing the identity of certain participants in the pool.
The CFTC’s ongoing action seeks orders of preliminary and permanent injunction against the defendants, an accounting for all funds, disgorgement of benefits, repayment to injured participants, monetary penalties and other relief. The Commission would like to thank the National Futures Association for its invaluable assistance throughout the investigation of this matter.
The following Division of Enforcement staff members are responsible for this action: Lael Campbell, Tracey Wingate, John Dunfee, Paul Hayeck and Joan Manley.
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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 (forex) investments or suspicious Internet websites.
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 at http://www.cftc.gov/cftc/cftccustomer.htm#advisory alerting the public to warning signs of possible fraudulent activity and offering precautions individuals should take before committing funds.
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