For Release:August 15, 1996
CFTC FILES ANTI-FRAUD ACTION AGAINST A TURLOCK, CALIFORNIA, COMMODITY POOL OPERATOR, EVERETT SCOTT HOBBS dba COMMODITY FUTURES INVESTMENT
Court Issues Ex Parte Restraining Order Against Hobbs, Freezing His Assets; CFTC Charges that at Least 25 Customers Were Defrauded of More than $375,000
by Investing in Hobb's Unregistered Commodity Pool
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that on August 13, 1996, U.S. District Court Judge Oliver W. Wanger of the Eastern District of California entered an ex parte restraining order against Everett Scott Hobbs of Turlock, California, doing business as Commodity Futures Investment, as a result of a four-count civil injunctive complaint filed by the CFTC against Hobbs on August 13, 1996. The court's order freezes Hobb's assets and prohibits the destruction of his books and records.
The CFTC complaint charges that since at least January 1996, Hobbs, who has never been registered with the CFTC in any capacity, has violated the Commodity Exchange Act (CEA) by committing fraud in connection with operating an unregistered commodity pool. The complaint also charges that Hobbs commingled investors' pool funds with his own personal funds, failed to operate the pool as a separate legal entity, and failed to register with the CFTC as a commodity pool operator.
Specifically, the complaint alleges that Hobbs advertised the pool in a fraudulent or deceptive manner, and, as a result of his telephone and mail solicitations to the general public, illegally pooled more than $375,000 from at least 25 customers to trade commodity futures and options. Hobbs fraudently guaranteed pool participants' original investment capital and reported to investors that the pool had profits of at least 12 percent or more monthly, when, in fact, the pool account lost money overall -- with losses totalling over $200,000 of the $375,000 deposited into the pool account, according to court documents filed by the CFTC.
The CFTC is seeking a permanent injunction that would, among other things, require an accounting, disgorgement of ill-gotten gains, restitution to customers, and the payment of a civil monetary penalty of $100,000, or triple the monetary gains to Hobbs, whichever is greater, for each violation.
A hearing on a temporary restraining order, which would continue the earlier order and prohibit further violations of Federal commodities law and solicitation of new funds, is scheduled for 1:30 p.m. August 16, 1996.