For Release: August 12, 1998
CFTC FILES SEVEN-COUNT ENFORCEMENT ACTION AND OBTAINS AN ASSET FREEZE AGAINST NEW YORK CURRENCY EXCHANGE CORPORATION, NEW YORK CURRENCY RESEARCH CORPORATION, AND MICHAEL T. MATEJKA IN ILLEGAL CURRENCY FUTURES FRAUD CASE
CFTC Complaint Alleges that the Defendants Committed Fraud in the Offer and Sale of Illegal Foreign Currency Futures Contracts to the General Public, Among Other Violations; Customers Alleged Defrauded Out of Over $3.5 Million by Defendants
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that on August 6, 1998, it filed a seven-count civil injunctive complaint in the U. S. District Court for the Southern District of New York seeking emergency relief against New York Currency Exchange Corporation, New York Currency Research Corporation (both located in New York, New York) and Michael Thomas Matejka, president of both corporations.
The CFTC's complaint alleges that, from March 1995 through the present, the defendants violated the anti-fraud, registration, and various other provisions of the Commodity Exchange Act (CEA) and CFTC regulations by cheating and defrauding customers, offering and selling illegal futures contracts on foreign currencies, commingling and converting customer funds, bucketing orders, and operating as an unregistered futures commission merchant.
On August 6, 1998, the Honorable Judge John Koeltl issued a statutory ex parte restraining order freezing the assets of the defendants, prohibiting 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. In that order, Judge Koeltl granted the CFTC's request for a hearing on a motion for a preliminary injunction and set the hearing date for August 24, 1998, before the Honorable Judge Allen Schwartz.
The CFTC complaint charges the defendants with cheating and defrauding customers out of over $3.5 million by making misrepresentations of material fact to prospective customers -- including misrepresenting the likelihood of profit and the risk of loss in purchasing commodity futures contracts. For example, according to the complaint, the defendants made false promises of profits of $200,000 to $500,000 a month or of 30 to 40 percent per year when, in fact, none of the defendants' customers made such profits and most have been unable to recoup any of the money given to the defendants. The defendants were also charged with making false or misleading representations to customers that their money would be safeguarded and that their accounts faced very little risk of loss.
According to the CFTC complaint, the defendants allegedly solicited members of the public to become traders on the defendants' illegal currency futures exchange; induced customers to entrust money to the defendants with promises that customer funds would be segregated and available at any time; and commingled, misappropriated, and converted customer funds, wrongfully using customer funds for purposes other than trading on behalf of customers. Additionally, the defendants allegedly bucketed customer orders by not placing orders on a bona fide exchange and by taking the opposite side of most, if not all, customer orders.
CFTC Seeks Sanctions Against the Defendants Including Civil Fines, Disgorgement of Ill-Gotten Gains, and Restitution to Customers
In its continuing litigation against the defendants, the CFTC is seeking a cease and desist order prohibiting the defendants from violating federal commodity law, disgorgement of ill-gotten gains, restitution to the defrauded investors, and civil monetary penalties in an amount of not more than the higher of $110,000 ($100,000 for violations occurring before November 30, 1996) or triple the monetary gain to the each defendant for each violation of the CEA or CFTC regulations.
New York Currency Research Was Fined $110,000 in Previous CFTC Administrative Proceeding for Refusing to Produce Books and Records
In a previous administrative proceeding filed on December 17, 1997, the CFTC entered a cease and desist order against New York Currency Research Corporation and fined the company $110,000 for refusing to produce and allow CFTC representatives to review records it was required to keep and produce under the CEA and CFTC regulations. (See CFTC News Release #4089-97, December 18, 1997 [CFTC Docket #98-3].)
New York Currency Research was registered with the CFTC as a commodity trading advisor and commodity pool operator from January 16, 1996 until April 3, 1997. New York Currency Exchange has never been registered with the CFTC, and Matejka was registered during the period New York Currency Research was registered as its associated person and listed as its principal.