Release: #4152-98 (3:98 Civ.0281AS)
For Release; June 8, 1998
CFTC FILES COMPLAINT AND OBTAINS AN ASSET FREEZE AGAINST DEFENDANTS IN INDIANA ACCUSED OF COMMODITY FRAUD; The CFTC's Anti-Fraud Complaint Names Steven D. Hudkins; Carmen J. Field; Mona L. Smith; Bart BeMiller; Robert J. Riethman, and Market Capital Growth, Inc.
WASHINGTON – The Commodity Futures Trading Commission (CFTC) announced today that on May 29, 1998, it filed an eight-count complaint in the U. S. District Court for the Northern District of Indiana, South Bend Division, seeking emergency relief against six defendants charged with violating the anti-fraud provisions of the Commodity Exchange Act (CEA) and CFTC regulations. The defendants named are: Steven D. Hudkins (of Elkhart, Indiana), Carmen J. Field (of South Bend, Indiana), Mona L. Smith (of South Bend, Indiana), Market Capital Growth, Inc. (of Elkhart, Indiana), Bart BeMiller (of Wakarusa, Indiana) and Robert J. Riethman (of Fishers, Indiana). Hudkins, Field, and Smith were also alleged to have done business under the name HFI.
On June 3, 1998, the Honorable Judge Allen Sharp entered a statutory restraining order freezing the assets of defendants Hudkins, Field, Smith, and Market Capital Growth, Inc. The court also entered an order prohibiting all of the defendants from destroying any of their books and records and requiring them to make their books and records available for inspection and copying by the CFTC. Judge Sharp referred this matter to the Honorable Robin D. Pierce, U.S. Magistrate Judge for the Northern District of Indiana for a hearing on a preliminary injunction. Judge Pierce set the hearing date for June 23, 1998, at 9:30 am.
CFTC Alleges that the Defendants Defrauded More than 135 Investors in Indiana
and Elsewhere Who Had Invested More Than $2.28 Million in Two Commodity Pools
In the complaint, the CFTC alleges that the defendants defrauded more than 135 investors in Indiana and elsewhere who had invested more than $2.28 million in two commodity pools during a six-year period. The complaint charges that in operating these pools, one from at least 1992 through the present, and the other from 1992 - 1995, the defendants violated the CEA by, among other things:
-- misappropriating funds received from investors;
-- representing to investors that their funds would be used only to trade commodities, when they were used for non-authorized expenses of the pools;
-- misrepresenting the trading experience of the individual who made the investment decisions for the pools and the trading record of the pools; and
-- issuing false account statements to investors, which showed that their investments were profitable, when they were not.
In addition, the complaint charges that the defendants violated CFTC regulations by not operating their commodity pools as entities separate from that of the pool operator, by commingling the assets of each of the pools with the assets of the defendants, and failing to provide proper disclosures to investors before they invested in one of the pools. Hudkins was charged with acting as a commodity trading advisor without being registered with the CFTC. Four defendants, Hudkins, Field, BeMiller and Market Capital Growth, were charged with operating a commodity pool without being registered with the CFTC, and Smith and Riethman were charged with operating as associated persons of commodity pool operators without being registered with the CFTC.
The complaint asks the court to enjoin each defendant from further violations of the CEA and CFTC regulations, and seeks disgorgement of all benefits received, restitution to the defrauded investors, and civil monetary penalties.
The CFTC appreciates the cooperation of the State of Indiana Department of Securities in this investigation.