Release: #4195-98 (Civ-PJM-98-3316)
For Release: October 6, 1998
CFTC Charges Bethesda, Maryland Firms And Their Principal With Fraud and Sale of Illegal Off-Exchange Foreign Currency Futures Contracts In International Foreign Currency Trading Scheme
Court Issues Ex Parte Order Freezing Assets of Defendants and Alleged Corporate Affiliates in the United Kingdom and Hong Kong
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that on October 1, 1998, it filed a four-count civil injunctive action in the U.S. District Court for the District of Maryland against Noble Wealth Data Information Services, Inc. (Noble Wealth), International Advanced Investment, Inc. (IAI) and Esfand Baragosh, who is a principal of both firms, charging them with fraudulently selling illegal off-exchange futures contracts in foreign currencies, such as Japanese Yen, Swiss Francs, German Deutschemarks, and British Pounds.
The CFTC's complaint alleges that, from August 1994 to the present, the defendants violated the anti-fraud 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, misappropriating customer funds, and bucketing orders.
On October 1, 1998, the Honorable Peter J. Messitte issued a statutory ex parte restraining order freezing the assets of the defendants, as well as the assets of Noble Wealth Development, Ltd. (Noble Wealth HK), a Hong Kong firm, and Bull & Bears, Ltd., a/k/a Bull & Bears International Investment, Ltd. (Bull & Bears UK), of the United Kingdom. The CFTC complaint alleges that the two foreign companies are affiliates of Noble Wealth, and that they have received funds directly traceable to the fraud.
The court's restraining order also prohibits Noble Wealth, IAI, and Baragosh from destroying any of their books and records, and requires them to make their books and records available for inspection and copying by the CFTC. Judge Messitte has also appointed a receiver to take control of Noble Wealth and IAI and marshal assets for potential redress to injured customers.
According to the CFTC's complaint, Noble Wealth, IAI, and Baragosh solicit funds from members of the general public through classified advertisements placed weekly in newspapers, such as The Washington Post. The complaint also alleges that so-called "traders," who respond to the advertisements, attend a brief training program during which Noble Wealth allegedly claims that over 30 percent profit can be achieved in just a few days
time by trading foreign currencies through Noble Wealth. According to the complaint, the defendants furnish traders with scripts and brochures that depict extraordinary profit projections, urge them to open their own accounts, and dispatch these traders to recruit family members and friends to open accounts with Noble Wealth. The complaint charges
that instead of using customer money to buy foreign currencies, defendants siphon off a substantial portion of the funds to pay personal expenses, operating expenses, and salaries and commissions, and divert other funds to overseas accounts.
Geoffrey Aronow, Director of the CFTC's Division of Enforcement, commented:
"This case is part of the Commission's continued crackdown on foreign currency schemes that offer slapdash training to inexperienced investors and urge them to market these investments to family, friends, and other members of the public. These schemes are part of a larger pattern of efforts to induce the public to trade foreign currencies by dangling the prospect of huge profits in little time. Individuals considering trading in foreign currencies or other futures should be skeptical of promises of quick riches with little risk and evaluate carefully whether such trading is appropriate for their needs."
In its continuing litigation against the defendants, the CFTC is seeking preliminary and permanent civil injunctions in addition to other remedial relief including restitution to customers.
The Maryland Division of Securities provided valuable assistance to the CFTC during the investigation of this matter.