UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

SOUTHERN DIVISION

________________________________________

                                        )

   COMMODITY FUTURES TRADING COMMISSION,)

                                        )

                              Plaintiff,)Case No: 97-1492

                                        )

                                      v.)

                                        )Complaint for

   MASS MEDIA MARKETING, INC., a Florida)Permanent Injunction

                            Corporation;)and Other Equitable

                                        )Relief and Civil 

 COMMODITY REFERRAL SERVICE, INC., a/k/a)Monetary Penalties

          Commodities Referral Service, )

            Inc., a Florida Corporation;)

                                        )

                                     and)

                                        )

 ROLANDO NANASCA, a/k/a Raleigh Nanasca,)

      individually and as an officer and)

        director of Mass Media Marketing)

            Inc. and Commodity Referral )

                          Service, Inc.,)

                                        )

                             Defendants.)

________________________________________)

Plaintiff, the Commodity Futures Trading Commission ("Commission") alleges:

I.

SUMMARY

This case involves the use of fraudulent advertisements and infomercials by defendants Mass Media Marketing, Inc. ("Mass Media"), Commodity Referral Service, Inc. ("CRS"), and Rolando Nanasca ("Nanasca") to solicit potential customers throughout the United States for investments in commodity options. The defendants collect the names and telephone numbers of potential customers who respond to a toll-free telephone number appearing in their advertisements and infomercials, and then sell these leads to entities engaged in the telemarketing of commodity options.

Since at least 1995, the defendants have conceived of, produced, and ordered the broadcast of numerous 60-second advertisements and 30-minute-long infomercials touting investments in options on commodity futures contracts ("commodity options"). These advertisements and infomercials contain fraudulent representations and omissions concerning the profitability and risks associated with these investments, thereby violating the anti-fraud provisions of the Commodity Exchange Act, as amended (the "Act"), 7 U.S.C. 6c(b) (1994), and the Commission's regulations, 17 C.F.R. 33.10 (1996). The defendants have also violated the registration provisions contained in the Act, 7 U.S.C. 6d, 6k (1994), and the Commission's regulations, 17 C.F.R. 33.3, 33.8 (1996).

Accordingly, pursuant to Section 6c of the Act, 7 U.S.C. 13a-1 (1994), the Commodity Futures Trading Commission ("Commission") brings this action to enjoin the defendants' unlawful acts and practices and to compel their compliance with the Act and the Regulations. In addition, the Commission seeks restitution, the disgorgement of the defendants' ill-gotten gains, civil monetary penalties, and such other relief as this Court may deem necessary or appropriate.

II.

JURISDICTION AND VENUE

This Court has jurisdiction over this action pursuant to Section 6c of the Act, 7 U.S.C. 13a-1, which provides that whenever it shall appear to the Commission that any person has engaged, is engaging, or is about to engage in any act or practice constituting a violation of any provision of the Act or any rule, regulation, or order promulgated thereunder, the Commission may bring an action against such person to enjoin such practice or to enforce compliance with the Act and the Commission's regulations.

Venue properly lies with this Court pursuant to Section 6c(e) of the Act, 7 U.S.C. 13a-1(e), because the defendants are found in, inhabit, or transact business in this District, and the acts and practices in violation of the Act and the Commission's violations have occurred, are occurring, or are about to occur within this District, among other places.

Unless restrained and enjoined by this Court, the defendants are likely to and will continue to engage in the acts and practices alleged in this Complaint or in similar acts and practices.

III.

THE PARTIES

Plaintiff Commission is an independent federal regulatory agency which is charged with the administration and enforcement of the Act, 7 U.S.C. 1 et seq. (1994), and the regulations promulgated thereunder, 17 C.F.R. 1.1 et seq. (1996).

Defendant Mass Media Marketing, Inc. ("Mass Media"), a Florida corporation, maintains its principal place of business at 12000 Biscayne Boulevard, Suite 504, Miami, FL 33181. Mass Media has never been registered in any capacity with either the Commission or the National Futures Association ("NFA"), the futures industry's self-regulatory organization.

Defendant Commodity Referral Service, Inc. ("CRS"), a Florida corporation, also uses the name "Commodities Referral Service, Inc." CRS and Mass Media share the same business address, suite number and telephone number. CRS has never been registered in any capacity with either the Commission or the NFA. On April 8, 1997, however, CRS filed an application with the NFA to register as an Introducing Broker. In the application, CRS claims to be engaged in business under the name "Mass Media Marketing."

Rolando Nanasca a/k/a Raleigh Nanasca ("Nanasca") resides at 11950 N. Bayshore Drive, Apartment 8B, Miami, FL 33181. He is Mass Media's sole owner, president, chief executive officer and creative art director. He is also CRS' president and director. Nanasca has never been registered in any capacity with either the Commission or the NFA.

IV.

FACTUAL BACKGROUND

Since 1995, the defendants have produced and disseminated nationwide, directly or indirectly, 60-second television advertisements and 30-minute-long infomercials, soliciting members of the general public to invest in commodity options. The advertisements and infomercials urge viewers, with at least $5,000 to invest, to call a toll-free number for information on how to profit from investments in commodity options.

These advertisements and infomercials generally take two forms -- sponsored spots and blind spots. A sponsored spot is an advertisement or infomercial that the defendants have produced for a particular introducing broker ("IB") registered with the Commission whose name appears in the advertisement or infomercial. A blind spot is an advertisement or infomercial that does not include the name of any particular IB.

For sponsored spots, the defendants enter into a contract with a particular IB. The terms of the contract require the defendants to produce and arrange for the broadcasting of an advertisement or infomercial that includes the IB's name. The contract also requires the defendants to provide the IB with a certain number of leads generated by the advertisement or infomercial. The advertisement or infomercial instructs viewers to call a toll-free number for more information. Persons who call the toll-free number contained in the sponsored advertisement or infomercial reach an answering service retained by the defendants. The answering service obtains each caller's name, address, and telephone number, and then provides this information to the defendants. The defendants then provide the sponsoring IB with the number of leads delineated by the contract. If the sponsored advertisement or infomercial generates more leads than the number contained in the contract, the defendants sell these "excess leads" to other IBs.

For blind spots, the defendants produce an advertisement or infomercial and arrange for its broadcast. The blind advertisement or infomercial instructs viewers to call a toll-free number to obtain more information. Persons who call the toll-free number contained in the blind advertisement or infomercial reach an answering service retained by the defendants. The answering service obtains each caller's name, address, and telephone number, and then provides this information to the defendants. The defendants sell these leads to various IBs.

The defendants sell leads generated by an advertisement or infomercial that aired the previous day for approximately $38 per lead. This amount may vary, though, depending on the amount the television station charges the defendants for broadcast time. After IBs receive the leads from the defendants, they solicit the prospects to invest in commodity options.

The defendants have sold leads generated by their advertisements and infomercials to at least 15 IBs registered with the Commission, several of which have been the subjects of Commission enforcement actions or disciplinary actions by the NFA.

Defendant Nanasca and the defendants' agents or employees wrote significant portions of the text of the defendants' advertisements and infomercials. Nanasca also has directed and produced several of the defendants' advertisements and infomercials, and arranged for television stations to broadcast commodity option advertisements. Moreover, he deals directly with IBs, providing them with leads generated by the defendants' advertisements and infomercials.

Defendant Mass Media has failed to register with the Commission as an IB. On April 8, 1997 defendant CRS filed a registration application with the NFA. This application has not been approved. Defendant Nanasca has failed to register with the Commission as an associated person (an "AP") of Mass Media and CRS.

V.

THE DEFENDANTS' ADVERTISEMENTS AND INFOMERCIALS CONTAIN

FRAUDULENT REPRESENTATIONS AND OMISSIONS

Numerous blind and sponsored advertisements and infomercials produced by the defendants fraudulently claim that presently known market conditions and predictable trends that affect the cash price of a commodity increase the likelihood of profiting from options on that commodity's futures contracts and decrease the risks associated with such commodity options. The advertisements and infomercials also fail to disclose that the price of a futures contract and the premium price of an option on a futures contract reflect all available market information.

For instance, numerous blind and sponsored advertisements and infomercials produced by the defendants fraudulently claim that predictable seasonal changes in demand (and the corresponding price changes) that generally characterize the cash markets for heating oil and unleaded gasoline increase the likelihood of profiting from the purchase of options on heating oil and unleaded gasoline futures contracts and decrease the risks associated with such options. The advertisements and infomercials also fail to disclose that predictable changes in demand (and the corresponding price changes) that generally characterize the cash markets for heating oil and unleaded gasoline have no affect on the likelihood of profiting from the purchase of heating oil or unleaded gasoline options or the risks associated with such options.

The defendants have made the following fraudulent profit claims, among others:

a.In the winter, a ten cent increase in the premium price for a heating oil option would return $21,000 on a $5,000 investment, and that such an increase is not unusual;

b.Logically, year after year, the price of heating oil consistently increases during the winter, which allows a purchaser of an option in this commodity to make substantial profits.

The defendants have made the following fraudulent risk claims, among others:

a.Predictable seasonal price increases in the heating oil and unleaded gasoline markets make options on these commodities less risky than stocks and bonds;

b.Predictable seasonal price increases in the heating oil and unleaded gasoline markets make options on these commodities less risky than options on commodities that do not experience predictable seasonal price increases in the cash market.

VI.

RELEVANT STATUTORY AND REGULATORY REQUIREMENTS

Section 4c(b) of the Act, 7 U.S.C. 6c(b), provides that no person shall offer to enter into, enter into, or confirm the execution of, a commodity option contrary to any rule, regulation, or order of the Commission prohibiting any such transaction or allowing any such transaction under such terms and conditions as the Commission shall prescribe.

Section 33.10 of the Regulations, 17 C.F.R. 33.10, makes it unlawful for any person directly or indirectly to cheat or defraud or attempt to cheat or defraud any other person; to make or cause to be made to any other person any false report or statement thereof or cause to be entered for any person any false record thereof; or to deceive or attempt to deceive any other person by any means whatsoever in or in connection with an offer to enter into, the entry into, the confirmation of the execution of, or the maintenance of, any commodity option transaction.

Section 33.2(a)(2) of the Regulations, 17 C.F.R. 33.2(a)(2) (1996), provides that Sections 1a, 4d and 4k of the Act, 7 U.S.C. 1a, 6d, 6k, apply to commodity option transactions as though these provisions included specific references to commodity option transactions.

Section 1a(14) of the Act, 7 U.S.C. 1a(14) (1994), provides that an IB is a person (except an individual who elects to be and is registered as an associated person of a futures commission merchant) engaged in soliciting or in accepting orders for the purchase or sale of any commodity for future delivery on or subject to the rules of any contract market who does not accept any money, securities, or property (or extend credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result or may result therefrom.

Section 33.3(b) of the Regulations, 17 C.F.R. 33.3(b), makes it unlawful for any person to solicit or accept orders from an option customer (other than in a clerical capacity) for any commodity option transaction, or to supervise any persons so engaged unless such person is, among other things, registered as a futures commission merchant ("FCM"), an IB, or an associated person of an FCM or an IB.

Section 4d of the Act, 7 U.S.C. 6d, makes it unlawful for any person to engage as an IB in soliciting orders or accepting orders for the purchase or sale of any commodity for future delivery, or involving contracts of sale of any commodity for future delivery, on or subject to the rules of any contract market, unless such person shall have registered, under the Act, with the Commission as an IB and such registration shall not have expired nor been suspended nor revoked.

Section 4k of the Act, 7 U.S.C. 6k, makes it unlawful for any person to be associated with an IB as a partner, officer, employee, or agent (or any person occupying a similar status or performing similar functions), in any capacity that involves (i) the solicitation or acceptance of customers' orders (other than in a clerical capacity) or (ii) the supervision of any person or persons so engaged, unless such person is registered with the Commission as an associated person ("AP") of such IB and such registration has not expired, been suspended, or been revoked. Section 4k of the Act and Section 33.3(b)(2) of the Regulations, 17 C.F.R. 33.3(b)(2), also make it unlawful for an IB to permit such a person to become or remain associated with the IB in any such capacity if the IB knew or should have known that the person was not so registered or that the person's registration had expired, been suspended, or been revoked.

Section 33.8 of the Regulations, 17 C.F.R. 33.8, requires each IB to retain all promotional materials it provides, directly or indirectly, to option customers as well as the true source of authority for the information contained therein.

VII.

VIOLATIONS OF THE COMMODITY EXCHANGE ACT

Count One

VIOLATION OF SECTION 4c(b) OF THE ACT, 7 U.S.C. 6c(b), AND SECTION 33.10 OF THE REGULATIONS, 17 C.F.R. 33.10: FRAUD IN CONNECTION WITH COMMODITY OPTION TRANSACTIONS

Paragraphs 1 through 30 are realleged and incorporated herein by reference.

From on or around 1995 to the present, the defendants, in or in connection with an offer to enter into, the entry into, the confirmation of the execution of, or the maintenance of commodity option transactions, have cheated, defrauded, or deceived, or attempted to cheat, defraud, or deceive, other persons by making false, deceptive, or misleading representations of material fact during the course of soliciting prospective customers, or by omitting or failing to disclose material facts during the course of soliciting prospective customers. The defendants have fraudulently claimed that presently known market conditions and predictable trends that affect the cash price of a commodity increase the likelihood of profiting from options on that commodity's futures contracts and decrease the risks associated with such commodity options. For instance, the defendants have fraudulently:

a.represented, directly or by implication, that predictable seasonal changes in demand (and the corresponding price changes) that generally characterize the cash markets for heating oil and unleaded gasoline increase the likelihood of profiting from the purchase of options on heating oil and unleaded gasoline futures contracts, while knowing this claim to be false or failing to have a reasonable basis for the representation at the time they made it;

b.omitted or failed to disclose that predictable changes in demand (and the corresponding price changes) that generally characterize the cash markets for heating oil and unleaded gasoline have no affect on the likelihood of profiting from the purchase of heating oil or unleaded gasoline options;

c.represented, directly or by implication, that predictable seasonal changes in demand (and the corresponding price changes) that generally characterize the cash markets for heating oil and unleaded gasoline decrease the risks involved in trading commodity options, while knowing this claim to be false or failing to have a reasonable basis for the representation at the time they made it;

d.omitted or failed to disclose that predictable changes in demand (and the corresponding price changes) that generally characterize the cash markets for heating oil and unleaded gasoline have no affect on the risks associated with heating oil or unleaded gasoline options.

Based on the foregoing acts and omissions, the defendants have cheated, defrauded, or deceived other persons, in violation of Section 4c(b) of the Act and Section 33.10 of the Regulations.

From on or around 1995 to the present, defendant Nanasca, as principal, officer and shareholder of Mass Media and CRS, directly or indirectly controlled Mass Media and CRS; and he did not act in good faith or knowingly induced, directly or indirectly, the acts constituting the violations described in this Count One. Pursuant to Section 13(b) of the Act, 7 U.S.C. 13c(b), therefore, defendant Nanasca is liable for the violations of Section 4c(b) of the Act and Section 33.10 of the Regulations, as described in this Count One, to the same extent as Mass Media and CRS.

Count Two

VIOLATIONS OF SECTIONS 4d and 4k OF THE ACT, 7 U.S.C. 6d, 6k, AND SECTION 33.3 OF THE REGULATIONS, 17 C.F.R. 33.3: ACTING AS AN IB OR AN AP WITHOUT BENEFIT OF REGISTRATION

Paragraphs 1 through 34 are realleged and incorporated herein by reference.

From on or about 1995 to the present, defendants Mass Media and CRS have solicited orders from options customers (other than in a clerical capacity) for commodity option transactions, or have supervised persons engaged in the solicitation of orders from options customers, by engaging in the compensated referral of options customers to entities that sell commodity options, without being registered as IBs, in violation of Section 4d of the Act, 7 U.S.C. 6d, and Section 33.3(b)(1)(ii) of the Regulations, 17 C.F.R. 33.3(b)(1)(ii).

From on or about 1995 to the present, defendant Nanasca has been associated with Mass Media and CRS as their partner, officer or employee, or agent, in a capacity involving (i) the solicitation or acceptance of customers' orders (other than in a clerical capacity) or (ii) the supervision of any person or persons so engaged. At all relevant times, defendant Nanasca has acted in such capacity without the benefit of registration, in violation of Section 4k of the Act, 7 U.S.C. 6k, and Section 33.3(b)(1)(iii) of the Regulations, 17 C.F.R. 33.3(b)(1)(iii). Defendants Mass Media and CRS have permitted Nanasca to become or remain associated with them, when they knew or should have known that he was not so registered, in violation of Section 4k of the Act, 7 U.S.C. 6k, and Section 33.3(b)(2) of the Regulations, 17 C.F.R. 33.3(b)(2).

From on or around 1995 to the present, defendant Nanasca, as principal, officer and shareholder of Mass Media and CRS, directly or indirectly controlled Mass Media and CRS; and he did not act in good faith or knowingly induced, directly or indirectly, the acts constituting the violations described in this Count Two. Pursuant to Section 13(b) of the Act, 7 U.S.C. 13c(b), therefore, defendant Nanasca is liable for the violations of Sections 4d and 4k of the Act and Section 33.3 of the Regulations, as described in this Count Two, to the same extent as Mass Media and CRS.

Count Three

VIOLATION OF SECTION 33.8 OF THE REGULATIONS, 17 C.F.R. 33.8: FAILURE TO MAINTAIN PROMOTIONAL MATERIALS

Paragraphs 1 through 38 are realleged and incorporated herein by reference.

At all relevant times, defendant Mass Media has failed to retain all promotional materials it provided, directly or indirectly, to option customers as well as the true source of authority for the information contained therein, in violation of Section 33.8 of the Regulations, 17 C.F.R. 33.8 (1995).

From on or around 1995 to the present, defendant Nanasca, as principal, officer and shareholder of Mass Media, directly or indirectly controlled Mass Media; and he did not act in good faith or knowingly induced, directly or indirectly, the acts constituting the violations described in this Count Three. Pursuant to Section 13(b) of the Act, 7 U.S.C. 13c(b), therefore, defendant Nanasca is liable for the violation of Section 33.8 of the Regulations, as described in this Count Three, to the same extent as Mass Media.

VIII.

RELIEF

WHEREFORE, plaintiff respectfully requests that this Court, as authorized by Section 6c of the Act, 7 U.S.C. 13a-1, and pursuant to its own equitable powers:

1.enter a permanent injunction enjoining the defendants from violating the Act and Regulations, as alleged herein;

2.require the defendants to pay restitution;

3.require the defendants to disgorge their ill-gotten gains;

4.order the defendants to pay civil penalties, to be assessed by the Court, in amounts not to exceed the higher of $100,000 or triple the monetary gain to them for each violation of the Act, as described herein;

5.award the plaintiff the costs of bringing this action and prejudgment and post-judgment interest; and

6.provide for such other and further relief as this Court deems necessary and appropriate under the circumstances.

Respectfully submitted,

___________________________________

Daniel R. Salsburg, Esq. (202-418-5349)

Gary J. Dernelle, Esq. (202-418-5411)

Attorneys for Plaintiff

Commodity Futures Trading Commission

Lawrence H. Norton,

Associate Director

Three Lafayette Centre

1155 21st Street, N.W.

Washington, D.C. 20581

(202) 418-5538 (fax)

Date: May 7, 1997