Release: #3923-96 (Civ 95C 0285)
For Release: July 11, 1996
ILLINOIS COURT ISSUES PERMANENT INJUNCTION IN CFTC ANTI-FRAUD ACTION AGAINST ZEBEDEE McLAURIN, V., OF CHICAGO REQUIRING RESTITUTION OF CUSTOMER FUNDS, AMONG OTHER SANCTIONS
The CFTC Charged that McLaurin Committed Fraud by Misrepresentation, Misappropriation of Customer Funds, and Issuing False Statements to Customers
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that on July 1, 1996, U.S. District Court Judge George M. Marovich for the Northern District of Illinois entered an order granting the CFTC's motion for summary judgment and issuing a permanent injunction against Zebedee McLaurin, V., of Chicago, Illinois, who was charged with violating the anti- fraud provisions of the Commodity Exchange Act (CEA) in a two- count civil injunctive complaint filed by the CFTC on January 17, 1995, (see CFTC Release #3808-95, January 18, 1995). McLaurin, who does business as ZMV Capital (ZMV), is not registered with the Commission in any capacity.
In its complaint, the CFTC alleged that McLaurin committed fraud by making false representations to customers, issuing false statements to customers, and misappropriating customer funds in connection with a commodity futures investment scheme he operated from at least October 1992 until the present.
Specifically, McLaurin allegedly solicited approximately $70,000 from at least four customers to invest in commodity futures through ZMV by making false representations to them concerning his performance record and the nature of the investment risk, and by providing customers with account statements from ZMV that showed that profits were made for their accounts, when, in fact, no profits were ever earned. McLaurin also was charged in the complaint with misappropriating most of the customer funds solicited.
In granting the CFTC's motion for summary judgment, the court found "undisputed evidence that McLaurin misappropriated" customer monies. Additionally, the court found that "no reasonable jury could conclude other than that McLaurin prepared and distributed false reports or statements to customers" about the status of their accounts. The court found that this conduct violates the anti-fraud provisions of section 4b of the CEA.
The court's permanent injunction
enjoins McLaurin from defrauding customers and making false statements to customers,
rescinds all of McLaurin's contracts with existing customers, and
prohibits McLaurin from soliciting or accepting any new customers or new deposits of funds for commodity futures trading.
Restitution and Civil Monetary Penalty to be Determined Separately
The court also found that given McLaurin's fraud, "it is only appropriate that this court order McLaurin to pay restitution" to the injured customers. The court ordered the CFTC to submit a statement to the court detailing the amounts of customer restitution to be paid by McLaurin. In addition, the court ordered the CFTC to submit a statement recommending the proper amount of the civil penalty for each of McLaurin's violations of the CEA. The complaint requested a civil monetary penalty of $100,000, or triple the monetary gains to the defendant, whichever is greater, for each violation.
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