Release: #4245-99 (CV-98-N-1755-S)
For Release: March 17, 1999
U.S. District Court for the Northern District of Alabama Orders Payment of $45 Million and a Permanent Injunction By Default Against Dr. Richard E. Busch in Alabama Commodity Pool Fraud Case
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced that Dr. Richard E. Busch, defendant in CFTC v. The ChateauForte Consortium, Inc. et. al., has been ordered to pay over $45 million as part of an order of permanent injunction entered against him by default for his violations of the anti-fraud and registration provisions of the Commodity Exchange Act (CEA). The order directs Busch to make full restitution to investors of at least approximately $13 million, including prejudgment interest, and to pay a civil monetary penalty of over $32 million. Judge Edwin L. Nelson of the Northern District of Alabama signed the order on March 5, 1999.
In its order, the court finds that Busch failed to answer or otherwise plead to the complaint filed by the CFTC in the Northern District of Alabama on July 7, 1998 (see CFTC News Release #4166-98, July 13, 1998) and that all the allegations and facts contained in the CFTC's complaint and other pleadings are deemed admitted as true.
Based on the complaint and the court's order, the court finds that since approximately October 1996, Busch participated with other defendants in soliciting Alabama residents to invest at least $10.8 million in The Millennium Fund, an unregistered commodity pool. The court further finds that, Busch, acting through co-defendant The ChateauForte Consortium, Inc., misappropriated investor funds, acted as an unregistered commodity pool operator, and failed to comply with commodity pool reporting and disclosure requirements. Busch, according to the complaint, lives in Fort Wayne, Indiana,
The court's order enjoins Busch from violating the anti-fraud and registration provisions of the CEA, as well as certain reporting and disclosure provisions, and from engaging in any commodity futures-related activity, including entering into any commodity futures transactions or accepting funds from investors for the purpose of trading commodity futures contracts. Furthermore, the order leaves in place the court's July 7, 1998 order freezing assets, preserving records, and appointing a receiver over all named defendants, including Busch.
Previously, on August 24, 1998, the court entered a consent order of preliminary injunction against defendants James Michael Hanks and Financial Planning Alliance International (see CFTC News Release # 4184-98, August 27, 1998). In the pending litigation, the CFTC seeks a court order permanently enjoining The ChateauForte Consortium, Inc., WorldEx, S.A., John La Tourette, and William E. Amos from violations of the CEA and requiring the defendants to make an accounting, to disgorge profits, to make restitution to defrauded customers, and to pay civil fines not exceeding $110,000 per violation or triple the defendants' monetary gain.
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