Release:#4061-97 (Civ 92-6832)
For Release: October 2, 1997
PERMANENT INJUNCTION AND MULTIMILLION DOLLAR DISGORGEMENT ORDER ENTERED
AGAINST CARRINGTON FINANCIAL CORP., MARC S. WUENSCH, AND A. FRANCIS SIDOTI
IN CFTC ANTI-FRAUD ACTION
CARRINGTON FINANCIAL PLACED INTO RECEIVERSHIP
WASHINGTON The Commodity Futures Trading Commission (CFTC) announced today that on September 29, 1997, Judge Ursula Ungaro-Benages of the U.S. District Court for the Southern District of Florida entered an order of permanent injunction and disgorgement against Carrington Financial Corp. of Aventura, Florida, a registered Introducing Broker; its president Marc S. Wuensch of Pembroke Pines, Florida; and A. Francis Sidoti of Montauk, New York, who is not registered with the CFTC.
The court's order permanently enjoins defendants from anti-fraud, supervision, and reporting violations of the Commodity Exchange Act (CEA) and CFTC regulations, orders defendants to disgorge millions of dollars in unlawful gains, prohibits the transfer of defendants' assets, and orders the defendants to transfer all books and records to a court-appointed equity receiver, among other relief. The court appointed Frank P. Scruggs, Esq. of the law firm of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. as equity receiver (Tel:  765-0500).
The court's action stems from a CFTC complaint charging the defendants with misconduct violating the CEA and CFTC regulations dating from 1991.
The court found "systematic and willful" violations of the law and CFTC regulations and that "Sidoti, Wuensch, and Carrington willfully committed numerous violations of the Act in the past over a long period of time." The court found that "Carrington and Wuensch failed to establish and maintain meaningful procedures for deterring and detecting fraud by their employees, that Wuensch knew of specific incidents of misconduct and failed to take reasonable steps to correct the problems," and that "the improper sales practices . . . continued since the filing of this action with Wuensch's approval and active participation."
The court therefore ordered that Carrington, Wuensch, and Sidoti disgorge all of the profits made by Carrington and Trinity from their inception until the present, which CFTC staff estimates to be substantially more than $10 million.
In its 62-page Findings of Fact and Conclusions of Law, the court made
detailed findings of numerous instances in which associated persons at
Carrington and Wuensch violated the anti-fraud provisions of the CEA and
regulations by making misrepresentations and/or omitting material facts
while soliciting customers to purchase options on commodity futures
contracts concerning, among other things, the profit potential of commodity
options while minimizing the risks involved. Sidoti was found to have acted
as an undisclosed principal of Trinity Financial Group, Inc., the
introducing broker that became Carrington in 1992, and that Sidoti and
Trinity had made a false or misleading statement in a registration
application. Wuensch and Carrington were also found to have violated the
CFTC regulation requiring diligent supervision.
Geoffrey Aronow, CFTC Director of Enforcement, commented on the decision:
"We are gratified by the sweeping relief granted the Commission in this long-fought action. By placing the Carrington firm into receivership and requiring complete disgorgement of profits for almost seven years of operations, this decision should send a powerful message to those who would operate on the wrong side of the law. The Commission's tenacity in pursuing this matter should itself serve as a warning that we will do what it takes to vigorously investigate and prosecute fraud."