Release: #4083-97 (Civ 97-5691)
For Release: November 25, 1997
CFTC FILES CIVIL ACTION AGAINST JAMES M. ZOLLER AND TECH-COMM LIMITED PARTNERSHIPS FOR FRAUD: COURT ISSUES PRELIMINARY INJUNCTION
13-Year, $13 Million Commodity Pool Ponzi Scheme
By Apple Valley, Minnesota Man
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that it filed a six-count civil complaint on November 21, 1997 in the U.S. District Court for the District of Minnesota against James M. Zoller of Apple Valley, Minnesota and Tech-Comm Limited Partnerships, a series of 29 Minnesota Limited Partnerships operated by Zoller as commodity pools. The filing of the CFTC complaint follows a joint effort by the CFTC, the Federal Bureau of Investigation, and the U.S. Attorney for the District of Minnesota.
The complaint alleges that since 1984 Zoller and the Tech-Comm pools have accepted more than $13 million from at least 219 investors throughout the country and fraudulently misrepresented that they would use all of the investors' funds to trade commodity futures on the investors' behalf. The complaint states that, in fact, Zoller used less than ten percent of investors' funds to actually trade futures. The complaint alleges that Zoller further violated the antifraud provisions of the Commodity Exchange Act by misrepresenting to investors, both orally and in written statements, that they were earning profits from the futures trading he conducted when, in fact, Zoller consistently lost money in the small amount of trading that he did engage in over the last thirteen years.
In addition, the complaint alleges that Zoller misappropriated approximately $3.6 million of investors' funds, among other things, to pay personal living expenses, to purchase vehicles, and to purchase homes. According to the complaint, to facilitate his operation of the Tech-Comm pools, Zoller used some of the investors' funds to make returns of principal and purported profits to some of the other investors, in a manner akin to a Ponzi scheme. This was done, the complaint states, to deceive the investors into believing that their funds were being utilized to profitably trade commodity futures and to attract additional funds.
The CFTC's complaint also charges that Zoller acted as a commodity pool operator without proper registration with the CFTC and violated the CFTC's regulations by accepting funds in his own name and not in the name of the pools and by commingling investors' funds with his own.
On November 21, 1997, U.S. District Court Judge David S. Doty entered a preliminary injunction by consent against Zoller and the Tech-Comm pools. The order enjoins any further violations, freezes the defendants' assets, prohibits the destruction of books and records, requires the defendants to make an accounting to the Court, and bars them from the futures industry until further order of the Court. The Court's order also appoints Gregory L. Wilmes, Esq. of the law firm of Wilmes & Associates, Minneapolis, as the equity receiver to administer the terms of the order. As such, the receiver, among other things, will marshall remaining assets, accept claims and oversee the accounting to the court. The complaint filed by the CFTC in this matter also seeks a permanent injunction, restitution, disgorgement, and other equitable relief.