Release: #4151-98 (98 Civ. 2908)
For Release: June 8, 1998
NEW YORK FEDERAL COURT ENTERS PERMANENT INJUNCTION AGAINST S. DAVID FRIEDMAN, INTERCAP INTERNATIONAL, INC., AND THE WHITEHALL TRUST IN CFTC ANTI-FRAUD ENFORCEMENT ACTION;
CFTC Charges Defendants with Commodity Pool Fraud and Conversion of Customer Funds, in Addition to Recordkeeping Violations
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that on May 8, 1998, the U.S. District Court for the Southern District of New York entered, under seal, a consent order of permanent injunction against the following defendants in a CFTC anti-fraud enforcement action: S. David Friedman whose last known residential address was in Lyme, Connecticut; Intercap International, Inc., based in New York, New York; and The Whitehall Trust, which has a post office box address in the British Virgin Islands.
The order, which was unsealed on June 4, 1998, permanently enjoins the defendants from, among other things, accepting new investors' funds and engaging in violations of the Commodity Exchange Act (CEA) and CFTC regulations. The order also requires the defendants to make repatriation of all funds located outside of the United States. In addition, the court entered an ex parte order freezing the defendants' assets and property and prohibiting the defendants from destroying their books and records related to their commodities business.
Friedman is registered with the CFTC as an Associated Person of Intercap International, which is registered as a Commodity Trading Advisor. Whitehall Trust has never been registered with the CFTC.
CFTC's Complaint Charges the Defendants With Fraud and Conversion of Investor Funds in Connection with the Operation of a Commodity Pool, Among Other Violations
The court's injunctive order stems from a five-count CFTC complaint filed under seal on April 24, 1998. The CFTC's complaint charges the defendants with, among other things, fraud and conversion of investor funds in connection with the operation of a commodity pool, in violation of Sections 4(b), 4o, and 9a of the CEA. The complaint also charges Intercap with recordkeeping violations. The defendants allegedly committed these violations by failing to provide customers, when requested, with account statements of customers' allegedly profitable equity trading balances and with failing to return money to customers when demanded, according to the complaint.
The U.S. Attorneys Office for the Southern District of New York has filed a complaint against Friedman, alleging violations of the mail fraud statute, 18 U.S.C. § 1343.
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