Release: 3951-96 (Civ 96-2185)
For Release: October 8, 1996
PRELIMINARY INJUNCTIONS ISSUED BY ARIZONA COURT IN CFTC ANTI-FRAUD ENFORCEMENT ACTION AGAINST UNITED METALS TRADING CORP.,
WESTERN NATIONAL TRADING AND TWO OF THE FIRMS' OFFICERS
Injunctions Stem from an Anti-Fraud Action Against the Defendants Filed Jointly in Late September by the CFTC and the Arizona Corporations Commission
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that on October 3, 1996, the Honorable Roger G. Strand of the U.S. District Court for the District of Arizona entered orders of preliminary injunction against United Metals Trading Corporation, Western National Trading, and Anthony F. Andrews, of Scottsdale, Arizona, and Marvin C. Pendergraft, of Phoenix, Arizona.
On September 23, 1996, Judge Rosenblatt entered ex parte and temporary restraining orders against the four defendants, stemming from a 10-count civil complaint filed jointly by the CFTC and the Arizona Corporations Commission (ACC). The complaint alleges, among other things, that the defendants violated the anti-fraud provisions of the Commodity Exchange Act (CEA) and the Arizona Securities Act (ASA), by, among other things, cheating and defrauding customers while acting as an unregistered commodity pool operator and a futures commission merchant, and engaging in a "Ponzi" scheme whereby they made false representations of profit to customers, issued false trading statements, and operated the pool in a fraudulent or deceptive manner, among other things. (See CFTC News Release #3944-96, September 25, 1996.)
Injunctions Continue the Court's Earlier Ex Parte Asset Freeze Against the Defendants
The court's preliminary injunctions 1) prohibit the defendants from violating the CEA, the ASA, and CFTC regulations, as charged, 2) prohibit further solicitation of funds, 3) require each defendant to make an accounting of their assets, and 4) continue the provisions of the court's September 23, 1996, ex parte order freezing the defendants' assets, prohibiting destruction of books and records, and granting the CFTC access to such books and records.
In the continuing litigation against the defendants, the CFTC and the ACC are seeking permanent civil injunctions prohibiting the defendants from violating federal commodities laws and state statutes, in addition to other remedial relief, including disgorgement and civil monetary penalties.
Defendant Marvin C. Pendergraft, a United Metals director and the corporate secretary, consented to the entry of the preliminary injunction and has been cooperating in the Commission's investigation. Defendant Andrews is a United Metals director and vice president. Both are general partners of Western National Trading.