Release: #3944-96 (Civ 96-2185)
For Release:September 25, 1996
EX PARTE ASSET FREEZE ORDER ISSUED BY ARIZONA COURT IN CFTC ANTI- FRAUD ENFORCEMENT ACTION AGAINST UNITED METALS TRADING CORP., WESTERN NATIONAL TRADING, ANTHONY F. ANDREWS, & MARVIN C. PENDERGRAFT
Arizona Joins CFTC as Co-plaintiff in the 10-Count Injunctive Action; Arizona Judge Issues Ex Parte Order in the Case, Freezing Defendants' Assets and Protecting Books and Records
WASHINGTON - The Commodity Futures Trading Commission (CFTC) announced today that on September 23, 1996, the Honorable Paul G. Rosenblatt of the U.S. District Court for the District of Arizona entered ex parte and temporary restraining orders against United Metals Trading Corporation, Western National Trading, and Anthony F. Andrews, of Scottsdale, Arizona, and Marvin C. Pendergraft, of Phoenix, Arizona.
None of the defendants has ever been registered with the CFTC, except Andrews, who, although not currently registered, was a registered associated person between November 1978 and January 1991. Andrews is a United Metals director and vice president and Pendergraft is its director and the corporate secretary; both are general partners of Western National Trading.
The court's order freezes the defendants' assets and prohibits the defendants from destroying books and records and from denying CFTC representatives access to such records. The temporary restraining order further prohibits the defendants from violating the Commodity Exchange Act (CEA), CFTC regulations, and the Arizona Securities Act and from soliciting new customers or new deposits.
CFTC Charges Defendants with Violating Anti-fraud Provisions of Federal Commodity Law by, Among Other Things, Cheating and Defrauding Customers While Acting as an Unregistered Commodity Pool Operator and Futures Commission Merchant
The court's action stems from a 10-count civil complaint filed jointly by the CFTC and the Arizona Corporations Commission alleging that the defendants violated Federal commodity law and CFTC regulations by committing fraud while acting as an unregistered commodity pool operator (CPO) and unregistered futures commission merchant (FCM). In addition, the complaint charges that the defendants violated Arizona law by selling unregistered instruments and committing fraud in connection with such sales.
Specifically, the complaint alleges that, among other things, defendants engaged in a "Ponzi" scheme whereby they:
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made false oral and written representations of profit;
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issued false trading statements to customers;
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failed to segregate customer funds;
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failed to register with the CFTC as a CPO;
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operated the pool in a fraudulent or deceptive manner;
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failed to operate the pool as a separate legal entity; and
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failed to provide customers with the required disclosure documents.
Hearing Scheduled for October 3rd
A hearing on a preliminary injunction is set before U.S. District Court Judge Roger G. Strand at 9:30 a.m. on October 3, 1996, in Phoenix.
In its litigation against the defendants, the CFTC is seeking preliminary and permanent civil injunctions, in addition to other remedial relief, including, cease and desist orders, an accounting, disgorgement of unlawfully obtained benefits, restitution to customers, and civil penalties of $100,000, or triple the monetary gain, against each defendant, whichever is greater, for each violation of the CEA.
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