Release:December 12, 1996
CFTC'S DIVISION OF ENFORCEMENT ESTABLISHES VIRTUAL OPEN HOUSE ON WORLDWIDE WEB; DEFENDANT DONALD CHANCEY'S PROPERTY TO BE AUCTIONED TO RECOVER FUNDS ALLEGEDLY EMBEZZLED IN COMMODITIES SCHEME
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that it has established pages on its Worldwide Web site that display the personal property of Donald B. Chancey, a defendant in a CFTC civil injunctive action, whose assets will be auctioned on December 14, 1996. Chancey, who disappeared this past May, allegedly embezzled $3 million from investors through his operation of an unregistered commodity pool called the Southeastern Venture Partners Group (SVPG).
The web pages provide potential bidders who were unable to inspect Chancey's property at a December 7 pre-auction open house with a "virtual open house" where they can view photographs of the defendant's belongings, including oriental rugs, computer equipment, furniture, and appliances. The auction will be held at Chancey's house located in Valdosta, Georgia's Fairview Historic District. The auction will be conducted under the auspices of a court-appointed receiver, who obtained approval for the auction from the Court. The receiver has taken control of Chancey's business and property pending final disposition of the CFTC's suit.
The virtual open house is the CFTC's latest use of the Internet in its case against Chancey and the SVPG. Previously, the CFTC posted a photograph of Chancey on the Worldwide Web in an effort to obtain information as to his whereabouts. Visitors to the CFTC's Worldwide Web site can report a sighting of Chancey by completing a form included on the special Chancey web page and e- mailing the form to the CFTC's Division of Enforcement.
In its six-count civil injunctive complaint filed in the U.S. District Court for the Middle District of Georgia, the CFTC has charged that the Chancey and SVPG -- both of Valdosta, Georgia -- violated the anti-fraud provisions of the Commodity Exchange Act (CEA) and CFTC regulations. The complaint alleges that the defendants fraudulently solicited customers to invest in an unregistered commodity pool; misappropriated funds by using them for personal and unrelated business expenses; and violated numerous disclosure, reporting, and recordkeeping requirements of federal commodity law and CFTC regulations. Neither of the defendants is registered with the CFTC in any capacity.
The CFTC complaint charges that since at least 1991, Chancey and SVPG fraudulently solicited customers to invest in a commodity pool, furnished customers with a promissory note guaranteeing a 23 percent annual return, pocketed some of the funds received from pool investors, and perpetuated their fraud by furnishing customers with phony account statements and reports, among other alleged violations.
On the same day the complaint was filed, the court entered an ex parte order against Chancey and SVPG, freezing their assets, appointing a receiver to take charge of the business operations and assets, and protecting books and records. The Court also issued a Writ of Ne Exeat, ordering Chancey to surrender himself to the United States Marshals because he posed a risk of flight from the United States.
In its continuing litigation against the defendants, the CFTC is seeking preliminary and permanent civil injunctions, in addition to other remedial relief, including restitution to defrauded customers. The complaint also seeks a civil monetary penalty against each defendant in the amount of $100,00, or triple the monetary gain to the defendants, whichever is greater, for each violation.