Release: 4020-97 (Civ ---)
For Release:May 8, 1997
CFTC CHARGES MASS MEDIA MARKETING INC., COMMODITY REFERRAL SERVICE INC., AND ROLANDO NANASCA, ALL OF FLORIDA, WITH RUNNING FRAUDULENT ADVERTISEMENTS AND INFOMERCIALS TO GENERATE SALES LEADS AND REFERRALS FOR COMMODITIES BROKERS
CFTC Seeks Preliminary Injunction Halting the Miami-Based
Defendants' Alleged Violations of Federal Commodity Law
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) today announced the filing of a three-count civil injunctive action in the U.S. District Court for the Southern District of Florida charging Mass Media Marketing, Inc. (Mass Media), Commodity Referral Service, Inc., and Rolando Nanasca -- all of Miami, Florida -- with violations of the anti-fraud and registration provisions of the Commodity Exchange Act (CEA) and CFTC regulations. Nanasca is president and principal of both firms, which are Florida corporations. None of the defendants has ever been registered in any capacity with the CFTC.
The First CFTC Action Filed to Halt Lead Generation and
Referrals Through Allegedly Fraudulent Infomercials
This is the first case filed by the CFTC to halt allegedly fraudulent advertisements and infomercials used to generate and refer sales leads to introducing brokers.
The CFTC complaint alleges that the defendants have generated telemarketing leads through fraudulent 60-second advertisements and 30-minute infomercials that tout heating oil, unleaded gasoline, and other commodity options as a high profit and low risk investment. These advertisements and infomercials have appeared on television stations throughout the United States and instruct viewers who desire more information to call a toll- free telephone number that appears on the television screen. The defendants collect the names and telephone numbers of viewers who call the toll-free number (leads) and then sell these leads to entities that telemarket commodity options.
The CFTC complaint further alleges that the defendants have engaged in fraud by claiming that presently known market conditions and predictable price trends that affect the spot market price of a commodity increase the likelihood of profiting from options on that commodity's futures contract and decrease the risks associated with such options. For example, the defendants' advertisements and infomercials frequently claim that predictable seasonal changes in demand that generally characterize the spot market for heating oil and unleaded gasoline increase the likelihood of profiting from the purchase of options on heating oil and unleaded gasoline futures contracts. Such claims are fraudulent, the CFTC alleges, because the premium price of a commodity option and the price of the option's underlying futures contract already take into account all presently known market conditions, such as predictable seasonal changes in the demand for a commodity.
CFTC Registration/Records Violations Also Alleged Against Defendants
The CFTC complaint also alleges that the defendants have violated the registration provisions of the CEA and the CFTC regulations and that defendant Nanasca has failed to register as an associated person of both firms.
Finally, the complaint alleges that Mass Media and Nanasca have failed to maintain records required by CFTC regulations.
CFTC Enforcement Director: Halting Fraud at its Source
According to CFTC Division of Enforcement Director Geoffrey Aronow: "This case is an effort to halt fraud at its source. These advertisements and infomercials are deceptive door-openers, luring unsophisticated investors through a false picture of the commodities markets, and then selling their names to brokerage firms."
In its litigation against the defendants, the CFTC is seeking preliminary and permanent civil injunctions in addition to other remedial relief, including restitution to investors. The complaint also seeks a civil monetary penalty against each defendant of $110,000 or triple the monetary gain to the defendant, whichever is greater, for each violation of the CEA.
# # #