Release: #4215-98 (95Civ-279-A)
For Release: December 17, 1998
Kentucky District Court Enters Consent Order of Permanent Injunction Against Charles Nicholas Barth in Commodity Pool Fraud Case
Washington -- The Commodity Futures Trading Commission (CFTC) announced today that on December 1, 1998, Judge Charles M. Allen of the U.S. District Court for the Western District of Kentucky entered an order, by consent, barring Charles Nicholas Barth, defendant in CFTC v. Charles Nicholas Barth, Case No. 3:95CV-279-A (W.D. Ky. April 4, 1995), from violating the antifraud, segregation of customer funds, registration, and disclosure provisions of the Commodity Exchange Act (CEA) and requiring him to make restitution to defrauded investors.
In its consent order of permanent injunction, the court found that Barth committed all of the violations alleged in the CFTC’s seven-count complaint filed on April 4, 1995 (see CFTC News Release #3833-95, April 6, 1995). The court found that, from at least September 1986 to at least January 1995, Barth, among other things, fraudulently misrepresented he was profitably trading customer accounts, the risks associated with trading commodity futures and option contracts, the aggregate size of accounts he managed, and his success rate in trading commodity futures and option contracts.
The court also found that Barth distributed, or caused to be distributed, to customers account statements in which he misrepresented the changes in net asset value and income and/or losses realized in their accounts. In addition, the court found that Barth commingled customer funds with his own funds; failed to register with the CFTC as a commodity pool operator (CPO), futures commission merchant (FCM) and associated person of a CPO and FCM; failed to deliver or cause to be delivered disclosure documents to prospective participants; failed to furnish statements of account in a form and manner specified by the CFTC to all participants in his commodity pool operations; and failed to file certain reports in the form and manner prescribed by the CFTC.
Barth agreed to a permanent injunction barring him from violating the following provisions of the Act and the CFTC regulations: sections 4b(a) and 4o of the Act (antifraud provisions); regulation 4.20 (commingling funds); section 4m of the Act and regulation 4.13 (CPO registration requirements); section 4d(1) of the Act (FCM registration requirements); section 4k of the Act and regulation 3.12 (associated person registration requirements); and section 4n of the Act and regulation 4.21 (requirement to file with the CFTC and provide to prospective pool participants a disclosure document).
In addition, Barth consented to a permanent ban on seeking registration under the Act and a permanent prohibition on trading on any futures market on behalf of himself or others. Finally, Barth is required to pay $2,292,902.20, which represents restitution to all investors plus pre-judgment interest, by making annual payments based on a percentage of his future income.
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