For Release:April 11, 1996
CFTC FILES CIVIL ANTI-FRAUD ACTION AGAINST A
WASHINGTON STATE COMMODITY POOL OPERATOR, KEN WILLEY
Court Issues Preliminary Injunction Against Willey, Freezing His Assets
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that on April 9, 1996, it filed a three- count civil injunctive complaint in the U.S. District Court for the Eastern District of Washington against Ken Willey of Twisp, Washington, charging him with violating the anti-fraud provisions of Federal commodity law and acting as an unregistered commodity pool operator.
The CFTC complaint alleges that Willey is holding $17.5 million received from at least 274 customers for the purpose of trading commodity futures contracts, and that Willey refuses to account for approximately $12 million of funds collected on behalf of pool customers. The CFTC has frozen over $5 million of customer funds.
The complaint further alleges that the defendant received investor funds in a name other than that of the pool's and commingled pool property with assets of other persons. Furthermore, Willey allegedly engaged in a scheme to defraud pool participants by distributing account statements which misrepresented the changes in net asset value and income and loss realized by individual participants.
On the same day the complaint was filed, U.S. District Court Judge William F. Nielson entered a consent order of preliminary injunction against Willey, which freezes Willey's assets, and prohibits him from destroying his books and records and from denying CFTC representatives access to such records for the Commission's ongoing investigation. The order also enjoins Willey from further violating the provisions of the Commodity Exchange Act and CFTC regulations charged.
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 the defendant, whichever is greater, for each violation.
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