Release: #3914-96 (Civ. H-96-1213)
For Release: June 5, 1996
TEXAS COURT ISSUES PRELIMINARY INJUNCTIONS AGAINST
CHRISTOPHER C. SCHAFER, A.R.S. FINANCIAL SERVICES, PETER J. URBANI, AND ALCHEMY FINANCIAL GROUP, ALL CHARGED IN CFTC ENFORCEMENT ACTION
Injunctions Continue and Expand the Court's Earlier Ex Parte Asset Freeze Order
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced that the Honorable Ewing Werlein, Jr., U.S. District Judge for the Southern District of Texas in Houston, entered orders of preliminary injunction against Christopher C. Schafer and A.R.S. Financial Services, both of Alpharetta, Georgia, Alchemy Financial Group, Inc., a Texas corporation, and Peter J. Urbani of Cypress, Texas.
The court's action stems from a CFTC complaint filed on April 17, 1996, charging that the defendants engaged in violations of the Commodity Exchange Act and CFTC regulations, including providing false statements to commodity pool investors and commingling funds, among other alleged violations.
The court's preliminary injunctions prohibit the defendants from violating the Commodity Exchange Act and CFTC regulations, as charged, and require each defendant to make an accounting of their assets. The orders also continue the provisions of the court's April 17, 1996 statutory ex parte restraining order, which froze the defendants' assets, prohibited the destruction of defendants' books and records, and granted the CFTC access to such books and records.
The complaint alleges that Urbani is the president of Alchemy, a commodity pool operator (CPO) for Genesis Limited Partnership, a commodity pool organized in Texas. Alchemy received and disbursed funds, and issued statements to Genesis' customers. Schafer is a shareholder of Alchemy, sole proprietor of A.R.S. Financial, and a CPO and commodity trading advisor for Genesis. None of the defendants has ever been registered with the CFTC in any capacity. Genesis is allegedly comprised of 15 limited partners who made capital contributions totalling approximately $107,000.
Specifically, the CFTC complaint charges Schafer with defrauding investors in his capacity as a CPO and trading advisor for Genesis by making false oral and written statements about the commodity futures transactions completed for Genesis and the profitability of futures investments for the pool. Schafer allegedly caused Urbani and Alchemy, also acting as commodity pool operators for Genesis, to provide the false reports and statements to investors.
Among the false statements that the defendants allegedly made to investors was a statement to the effect that pool assets totalled $162,000, including profits of $74,000, when, at the time the statement was made, the futures trading had resulted in almost total losses for the pool.
In addition, the defendants are charged with failing to comply with CFTC regulatory requirements related to their commodity pool and futures trading activities, including:
failing to provide required disclosure statements to investors;
failing to file disclosure statements with the CFTC and the National Futures Association;
commingling investors' funds with their own;
failing to provide proper account statements to investors; and
failing to provide the CFTC access to their books and records.
Defendant Schafer is separately charged with fraud in connection with trading for an individual customer, who is not an investor in Genesis, between 1993 and 1994. Schafer allegedly received at least $26,000 from this customer without being registered as a futures commission merchant and allegedly commingled the funds with his own and with that of other customers. Schafer is charged with making false statements to the customer about the futures transactions completed on the customer's behalf and falsely reporting that profits were made in the customer's account.
In its continuing litigation against the defendants, the CFTC is seeking permanent civil injunctions prohibiting the defendants from violating the federal commodity laws and regulations charged, in addition to other remedial relief, including disgorgement and civil monetary penalties. Significantly, defendants Schafer, A.R.S., and Alchemy agreed to make restitution to customers in the preliminary injunction. The amount of restitution will be determined by the court. The preliminary injunction against Urbani reserves the CFTC's right to seek restitution from him, as well.
The CFTC has been assisted in the filing of this matter by the United States Attorney's Office for the Southern District of Texas.
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