Release: #4244-99 (CV-99-02412)
For Release: March 17, 1999
CFTC FILES COMPLAINT AND OBTAINS STATUTORY AND TEMPORARY RESTRAINING ORDER AGAINST MARK E. CHULIK IN ANTI-FRAUD ACTION; CHULIK, OF MANHATTAN BEACH, CA., IS ACCUSED OF COMMODITY FRAUD
The CFTC Complaint Alleges that Chulik Committed Fraud By Misrepresenting the Profitability of a Commodity Pool that He Controlled and by Commingling and Misappropriating the Pool's Funds
WASHINGTON – The Commodity Futures Trading Commission (CFTC) announced that on March 11, 1999, U.S. District Judge George H. King of the Central District of California issued a statutory and temporary restraining order against Mark E. Chulik of Manhattan Beach, California. The order freezes Chulik's assets, prohibits him from destroying records, restrains him from further violating the Commodity Exchange Act (CEA), and prohibits him from further soliciting clients or customers or accepting funds from them.
The order also requires the defendant to show cause why a preliminary injunction should not be granted to prohibit further violations of the CEA and the regulations thereunder, and to show cause why he should not be ordered to file an accounting. A hearing has been scheduled for March 25, 1999.
The court issued the temporary restraining order as a result of a six-count civil complaint filed by the CFTC on March 9, 1999, against Chulik, individually and doing business as Westgate Partners, MEC Management, and MEC Capital Management. The complaint alleges that Chulik violated the anti-fraud provisions of the CEA, acted as an unregistered commodity pool operator (CPO), misappropriated pool participants' funds, commingled their funds with his own, and failed to provide required CPO disclosure documents and reports to pool participants
The complaint alleges that since May 1997, Chulik, who is registered with the CFTC as a commodity trading advisor (CTA), obtained in excess of $750,000 from at least seven investors and pooled these funds for the purpose of trading commodity futures contracts. The complaint further alleges that Chulik transferred substantial portions of the pool's funds and commingled them with funds in his own personal futures trading account. The complaint alleges that Chulik lost in excess of $500,000 trading futures contracts in that account in 1998 and that Chulik reported fictitious profits to pool participants when, in fact, his trading resulted in significant losses, not profits. Finally, the complaint alleges that in individual customer accounts, where Chulik directed trading as a CTA, he fraudulently exaggerated the actual balance in such accounts.
The complaint seeks orders of preliminary and permanent injunction to prohibit Chulik from, among other things, cheating and defrauding members of the public, soliciting new funds, and operating his business in any manner which would violate the CEA. The CFTC also seeks an order requiring Chulik to disgorge his ill-gotten gains, to make restitution, and imposing civil monetary penalties of up to $110,000 or triple the monetary gain for each violation of the CEA of CFTC regulations.
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