Release: 4109-98 (Civ-96-2185)
For Release: February 18, 1998
ARIZONA COURT ENTERS ORDER OF PERMANENT INJUNCTION AND
RESTITUTION IN CFTC AND STATE OF ARIZONA ENFORCEMENT ACTION AGAINST UNITED
METALS TRADING CORP., WESTERN NATIONAL TRADING, AND ANTHONY F. ANDREWS, OF
SCOTTSDALE, ARIZONA, AND MARVIN C. PENDERGRAFT, OF PHOENIX, ARIZONA,
Court Order Stems from a Ten-Count Anti-Fraud Enforcement Action Brought
Against the Defendants in 1996 by the CFTC and the
Arizona Corporation Commission
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that on January 22, 1998, the Honorable Roger G. Strand of the U.S. District Court for the District of Arizona entered a consent order of permanent injunction and restitution against United Metals Trading Corp. (UMTC) and Western National Trading (WNT), both of Scottsdale, Arizona, Anthony F. Andrews, also of Scottsdale, and Marvin C. Pendergraft of Phoenix, Arizona.
The order was entered to settle a ten-count injunctive complaint filed by the CFTC and the Arizona Corporation Commission on September 23, 1996, and an amended complaint filed on November 27, 1996, against UMTC, WNT, Andrews, and Pendergraft, charging that the defendants' activities, among other things, defrauded commodity investors in violation of the anti-fraud provisions of the Commodity Exchange Act (CEA) and the Arizona Securities Act (See CFTC News Release #3944-96, September 25, 1996). UMTC was alleged to be a commodity pool operator controlled by Andrews and Pendergraft.
The complaint charged that, from February 1992 through September 1996, the defendants cheated and defrauded approximately 60 commodity pool investors located throughout the United States, from whom they solicited more than $1,000,000, by falsely representing to investors and potential investors that they were operating a highly profitable commodity futures pool.
The complaint also alleged that defendants misappropriated investors'
money for their own use, invested only a small portion of the funds in
commodity futures, issued false reports to investors showing profits from
commodity trading when, in fact, virtually no trading was occurring, failed
to register with the CFTC, and violated Arizona law by selling unregistered
securities and committing fraud in connection therewith.
Order Effectively Bars Defendants from the U.S. Futures Industry and
Orders Restitution of Approximately $602,000
Under the terms of the consent order, defendants have agreed, among other things, to be permanently enjoined from committing further violations of sections 4b(a)(i), (ii) and (iii), 4d(1) and (2), 4m(1), and 4o(1) of the CEA, CFTC regulations 4.20(a)-(c) and 4.21, and provisions of the Arizona Securities Act (ASA) and to make restitution in the amount of $602,088.05 for the benefit of customers. Furthermore, the consent order prohibits the defendants from ever seeking registration with the CFTC in any capacity or engaging in conduct which requires registration under the CEA or the ASA. The order also prohibits the defendants from trading on or subject to the rules of any contract market, either for their own accounts or for the account of any other person, interest, or entity, and requires that all contract markets permanently refuse the defendants any trading privileges.
The Arizona Corporation Commission and the Arizona Attorney General have agreed to administer the settlement. The CFTC gratefully acknowledges their assistance in the investigation and litigation of this case.