For Release:January 18, 1996
CFTC FILES ENFORCEMENT ACTION AGAINST MARK STEPHEN SHANER AND SHANER TRADING PARTNERS IN IOWA, CHARGING COMMODITY POOL FRAUD
Iowa District Court Judge Enters Ex Parte Order Freezing Defendants' Assets and Preserving Their Books and Records
WASHINGTON - The Commodity Futures Trading Commission (CFTC) filed a four-count injunctive complaint in the U.S. District Court for the Southern District of Iowa against Mark S. Shaner and Shaner Trading Partners, Inc., a commodity pool, both of Fairfield, Iowa, alleging that the defendants defrauded commodity pool participants. Shaner, who is registered as an associated person (AP), is also president of Shaner Trading Partners, which is a registered commodity pool operator (CPO). Both Shaner and Shaner Trading Partners are general partners of Shaner Fund Limited Partnership, a commodity pool organized in early 1994.
On January 4, 1996, U.S. District Judge Harold D. Vietor entered an ex parte restraining order freezing the assets of Shaner and Shaner Trading Partners, except that pool funds held in a segregated account by a registered futures commission merchant may be used to margin trades. The order also prohibits the defendants from destroying books and records and from denying CFTC representatives access to such records.
CFTC Alleges that the Defendants Cheated and Defrauded Commodity Futures Customers, Misappropriated and Converted Customer Funds
The complaint charges that the defendants cheated and committed fraud against commodity customers and engaged in commodity pool fraud, in violation of the Commodity Exchange Act (CEA), by:
misappropriating and converting commodity pool funds to pay for personal and business expenses and as a security for the personal obligations of Shaner;
violating their duty to investors; and
misrepresenting to investors that their money would be used for the benefit of the commodity pool.
Specifically, the complaint alleges that in April 1995, Shaner misappropriated more than $675,000 of funds of the Shaner Fund commodity pool to secure a personal loan to Shaner and his wife, Jane F. Shaner, at Iowa State Bank and Trust Company in Fairfield, Iowa. The pool funds had been placed with the bank in a certificate of deposit in the pool's name. The complaint further alleges that in October 1995, the Shaners
defaulted on their $475,000 bank loan and used the commodity pool assets in the certificate of deposit to satisfy that debt and other personal and business obligations to the bank. Altogether, the complaint alleges, the bank paid itself approximately $521,000 out of commodity pool funds, and Shaner used $100,000 of the pool's money in July 1995 to pay for personal obligations.
Iowa State Bank and Trust Company and Jane F. Shaner are named in the CFTC's complaint as relief defendants. The CFTC seeks the imposition of a constructive trust on the assets of the bank and Jane Shaner that are traceable to the alleged fraud of Shaner and Shaner Trading.
CFTC Seeks Permanent Injunctions and Civil Monetary Fines, Among other Sanctions, Against the Defendants
In its continuing litigation against the defendants, the CFTC is seeking preliminary and permanent civil injunctions, in addition to other remedial relief, including an accounting, disgorgement, rescission, and restitution. The complaint also is seeking a civil monetary penalty against each defendant of $100,000, or triple the monetary gains to the defendant, whichever is greater, for each violation of the CEA.
# # #