Release: #4115-98 (CFTC Docket No. 98-7)
For Release: March 6, 1998
CFTC FILES SIX-COUNT ADMINISTRATIVE COMPLAINT AGAINST ABRAHAM AND SONS CAPITAL, INC., AND BRETT G. BRUBAKER OF COLORADO, ALLEGING THAT THE RESPONDENTS DEFRAUDED COMMODITY POOL CUSTOMERS
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced the filing of a six-count anti-fraud administrative complaint against Abraham and Sons Capital, Inc. (ASC), an Illinois corporation located in Texas Creek, Colorado, and ASC's president and sole officer, Brett G. Brubaker (Brubaker), also of Texas Creek. Neither respondent has ever been registered with the CFTC.
The complaint, filed on March 5, 1998, alleges that ASC and Brubaker defrauded investors while acting as managing general partners of Abraham and Sons, Limited Partnership (Fund), a private commodity pool, which traded commodity futures contracts, among other things, and operated as a hedge fund.
Specifically, the complaint charges ASC and Brubaker with acting as commodity pool operators without being registered with the CFTC. From late 1994 through the end of 1995, the Fund's value declined from approximately $12 million to $6.7 million, according to the complaint. Although this decline occurred steadily throughout 1995, it was not reported to investors until January 1996, and concealed in these losses were $3.2 million of losses in futures trading, the complaint charges.
ASC and Brubaker allegedly violated the anti-fraud provisions of the Commodity Exchange Act, by, among other things:
misrepresenting to investors the nature and amount of futures trading they would engage in for the Fund;
misrepresenting to investors the amount of money Brubaker had personally invested in the Fund;
engaging in speculative futures trading not allowed by the Fund's partnership agreement; and
willfully issuing false statements to investors concerning the profitability of all the trading done for, and the value of each participant's share in, the Fund.
The CFTC complaint further alleges that ASC and Brubaker failed to provide proper reports to the Fund's participants, failed to make and keep books and records in an accurate and orderly manner at its main business office, failed to provide Fund records to CFTC representatives upon request, and acted as commodity pool operators without being registered with the CFTC.
A public hearing has been ordered to determine whether the allegations are true, and, if so, what remedial sanctions, if any, are appropriate and in the public interest. Possible sanctions include cease and desist orders against the respondents, trading prohibitions, the imposition of civil penalties of up to $100,000 or triple the monetary gain to each respondent for each violation, and restitution to customers of damages proximately caused by the violations of the respondents.