For Release: October 10, 1997
PRELIMINARY INJUNCTION ENTERED AGAINST FTI FINANCIAL GROUP OF TOLEDO, OHIO, AND THREE OF ITS PARTNERS IN CFTC ANTI-FRAUD ENFORCEMENT ACTION
The Defendants Allegedly Acted as Unregistered Pool Operators and Received More than $1.2 Million from Approximately 30 Investors in Three Commodity Pools
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that on October 9, 1997, Judge Harry D. Leinenweber of the U.S. District Court for the Northern District of Illinois (Eastern Division) entered a consent order of preliminary injunction against FTI Financial Group (FTI) of Toledo, Ohio, a general partnership, and its three partners: Samuel H. Foreman of Maumee, Ohio; Mark G. Stevens of Grand Rapids, Ohio; and Carolyn F. Munn of Swanton, Ohio. None of these defendants has ever been registered with the CFTC.
The court's order requires the defendants to distribute more than $271,400 to commodity pool investors, freezes the defendants' assets, requires them to make an accounting, and bars them from the futures industry until further order of the court. The court's order also prohibits them from violating the Commodity Exchange Act's anti-fraud and registration provisions until further order of the court.
The court's order stems from a five-count civil complaint filed on October 9, 1997, alleging that the defendants -- FTI Financial Group, Foreman, Stevens, and Munn -- cheated and defrauded commodity pool participants, misappropriated money solicited from FTI participants, and acted as commodity pool operators (CPOs) or as associated persons of a CPO without being registered with the CFTC.
Specifically, the CFTC complaint alleges that the defendants misrepresented to pool participants that their investments had minimum risk and were secured, misrepresented the actual value of participants' investments, and issued false reports, among other charges. According to the complaint, since May 1996, the defendants received more than $1.2 million from approximately 30 investors in three commodity pools: CMS Partners I L.P., CMS Partners II L.P., and the FTI pool. Allegedly, the pools lost a total of more than $717,000 in commodity interest trading and the defendants used approximately $200,000 of investors' money to pay FTI's expenses and fees.
The immediate distribution of $271,400 ordered by the court will pay back the investors' pro-rated shares of the money remaining from their investments in the three commodity pools. The funds have been held in escrow by the defendants' attorneys since June 1997.
In its continuing litigation, the CFTC is seeking a permanent injunction against the defendants prohibiting them from violating federal commodity law as charged, requiring them to make restitution to customers, requiring disgorgement of unlawfully obtained benefits, and imposing civil penalties to be assessed by the court separately against each defendant in amounts not to exceed the higher of $110,000 or triple the monetary gain to defendants for each violation of the CEA and CFTC regulations.
The CFTC's investigation in this matter is continuing.