For Release: April 29, 1999
TENNESSEE DISTRICT COURT ENTERS ASSET FREEZE ORDER AGAINST EDWIN JAY SHELDON, APPLIED CAPITAL MANAGEMENT, LLC., AND CHARLES EDWARD POWELL IN CFTC ENFORCEMENT ACTION ALLEGING COMMODITY POOL FRAUD;CFTC Alleges that the Fraud Netted More than $500,000 from at Least 30 Individuals
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today the filing of a five-count complaint on April 28, 1999, in the U.S. District Court for the Eastern District of Tennessee seeking emergency relief against Edwin Jay Sheldon, of Little Falls, New Jersey; Applied Capital Management, LLC. (ACM), a New Jersey limited liability company registered with the CFTC as a commodity pool operator and a commodity trading advisor; and Charles Edward Powell, of Birmingham, Alabama. Sheldon is registered with the CFTC as an associated person and a principal of ACM, and Powell has never been registered with the CFTC.
On the same day the complaint was filed, the Honorable R. Allan Edgar entered a statutory restraining order against Sheldon, ACM, and Powell, freezing the defendants' assets, prohibiting the destruction of books and records, and requiring that books and records be made available to the CFTC for inspection. The court's restraining order remains in effect until further order of the court.
The CFTC's complaint alleges that Sheldon, ACM, and Powell fraudulently solicited at least 30 individuals in Tennessee to invest more than $500,000 in Fair Haven Futures Fund, LLC. (FHFF), a commodity pool operated by ACM. The complaint alleges that the defendants violated the antifraud, registration, and disclosure and reporting requirements of the Commodity Exchange Act (CEA) and CFTC regulations.
Specifically, the complaint charges that the defendants violated the CEA by, among other things:
-- Misrepresenting the profit potential of commodity futures transactions;
-- Misrepresenting the amount of investor funds that would be invested in commodity futures contracts;
-- Sending false account statements and reports to investors that reported profits when, in fact, defendants lost almost all investor money;
-- Violating the disclosure and reporting provisions of the CEA applicable to commodity pools; and
-- Making false statements in reports filed under the CEA.
In its continuing litigation against the defendants, the CFTC is seeking an order of permanent injunction, an accounting, disgorgement of all ill-gotten gains, restitution to the defrauded investors, and civil monetary penalties of not more than $110,000 per violation or triple the defendants' monetary gain.
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