Release: #4107-98 (C2-94-981)
For Release: February 17, 1998
OHIO COURT ISSUES PERMANENT INJUNCTION AGAINST JEFFREY A. SMITH OF
WESTERVILLE, OHIO, ORDERING HIM TO DISGORGE ILL-GOTTEN GAINS
Court Order Stems from a Six-Count Anti-Fraud Enforcement Action
Brought Against Smith and Two Other Defendants in 1994 by the CFTC and the
State of Ohio
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that on January 27, 1998, U.S. District Court Judge John Holschuh Sr. of the Southern District of Ohio issued a consent order of permanent injunction against Jeffrey A. Smith of Westerville, Ohio -- formerly an officer of Allied Financial Group, Inc. (AFG) of Powell, Ohio. A similar order was entered against Smith's co-defendants, Robert Bobo of Worthington, Ohio and AFG, on November 19, 1997 (See CFTC News Release #4086-97, December 11, 1997).
The orders were entered by consent to settle a six-count injunctive complaint which the CFTC and the Ohio Division of Securities filed on October 11, 1994, against AFG, Bobo and Smith in the U.S. District Court, charging that during the period from February 1993 through October 1994 the defendants cheated and defrauded commodity pool investors. According to the complaint, the defendants solicited $844,093 from approximately 60 Ohio residents by falsely representing to investors and potential investors that they were operating a highly profitable commodity futures pool. In reality, the complaint alleges, defendants misappropriated most of the money for their own use and only invested a small portion of the funds in commodity futures. According to the complaint, throughout this time period, the defendants issued false reports and monthly statements to investors showing increasing profits from commodity trading when, in fact, no trading was occurring. (See CFTC News Release 3793-94, October 14, 1994.)
Under the terms of the consent order, Smith, without admitting or denying the allegations of the complaint, has agreed to be permanently enjoined from committing further violations of sections 4b(a)(i), 4b(a)(ii), 4o(1), and 4n(3)(A) of the Commodity Exchange Act and CFTC regulations 4.20(c) and 4.23, as charged, and to pay $35,195.91, the amount he received from his participation in the enterprise (which includes pre-judgment interest), plus post-judgment interest, to A.C. Strip, a court-appointed administrator (tel: 614-228-6345), for the benefit of AFG investors. Smith's payment will be in addition to the $150,336 in restitution already paid by his co-defendants AFG and Bobo.
Among other things, under the consent order, Smith also agreed not to seek or become registered with the CFTC, not to act as a commodity pool operator, commodity trading advisor, and a securities dealer or salesman, among other capacities, and not to solicit money from the public for any investment in commodity futures or option contracts, securities, physical commodities, or financial instruments.