Release: 4050-97 (97 Civ 5255)
For Release: September 8, 1997
CFTC FILES ANTI-FRAUD ENFORCEMENT ACTION IN NEW YORK FEDERAL COURT AGAINST TEMPLER INTERNATIONAL, LTD., WORLDWIDE COMMODITIES LTD., WORLDWIDE'S PRESIDENT WILLIAM SANCHEZ, AND TEMPLER'S PRESIDENT BRIAN WILLIS
Defendants Allegedly Solicited Approximately $4 Million from More Than 300 Customers Nationwide and Misappropriated About $1 Million of Customer Funds
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced the filing of a five-count civil injunctive complaint in the U.S. District Court for the Southern District of New York against Templer International, Ltd. of New York, N.Y.; Worldwide Commodities Ltd. of Nassau, Bahamas; Worldwide's president William Sanchez of Staten Island, N.Y.; and Templer's president Brian Willis of New York, N.Y., charging them with violating the anti-fraud and registration provisions of the Commodity Exchange Act (CEA) and CFTC regulations.
The CFTC complaint, filed under seal on July 17, 1997, alleges that the defendants committed fraud by making false and misleading representations in soliciting customers purportedly to trade in the spot foreign currency market, when they, in fact, invested in part in the futures markets, and by converting customer funds to their own personal and business uses.
Specifically, the complaint charges that the defendants misappropriated approximately $1 million out of approximately $4 million solicited from more than 300 customers nationwide. The defendants allegedly embezzled customer funds and defrauded customers by diverting customer funds without authority, misreporting trading profits, failing to disclose the pooling of customer funds, and failing to disclose trading of commodity futures contracts in foreign currencies, T-Bonds, the S&P 500 Index, wheat, and crude oil, according to the complaint.
In addition, the complaint alleges that the defendants violated the CEA's registration provisions by acting as an unregistered commodity pool operator and commodity trading advisor.
The defendants' solicitation methods allegedly included "cold calling" individuals throughout the country, personally contacting family or friends, and mailing promotional literature to potential customers. Among other things, the defendants allegedly misrepresented that customers could expect a return of 2.5 to 2.8 percent per month, and that Templer's trading had a yield of between 40 and 50 percent from January through December 1995 when, in fact, the majority of customers lost their entire investments, according to the CFTC complaint.
In addition, the defendants allegedly made misrepresentations to prospective and existing customers regarding the risk of loss by stating, among other things, that customers' investments were insured, that the practice of day-trading limited investors' portfolio losses, that losses were usually no more than $50 per trade, and that a $10,000 investment would cease to trade if it fell below $9,000, according to the complaint.
The CFTC is seeking preliminary and permanent injunctions prohibiting further violations of the CEA. In addition, the CFTC is seeking, among other sanctions, disgorgement of ill-gotten gains, restitution to allegedly defrauded customers, rescission, and civil monetary penalties in an amount of not more than the higher of $100,000 or triple the monetary gain to each defendant for each violation of the CEA or CFTC regulation.