For Release: May 7, 1999
NORTH CAROLINA COURT ISSUES ASSET FREEZE AND TEMPORARY
RESTRAINING ORDER IN CFTC ACTION CHARGING COMMODITY POOL FRAUD; CFTC
CHARGES DONALD TRIVETTE WITH DEFRAUDING CUSTOMERS BY MISREPRESENTATIONS AND
MISAPPROPRIATION OF INVESTOR FUNDS
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that on April 26, 1999, the Honorable Richard Voorhees of the U.S. District Court for the Western District of North Carolina issued a statutory restraining order against Donald Trivette of Union Grove, North Carolina, prohibiting Trivette from transferring, encumbering or dissipating his assets. Judge Voorhees also issued a temporary restraining order enjoining Trivette from any further violations of the Commodity Exchange Act (CEA) or CFTC regulations and ordered Trivette to show cause why a preliminary injunction should not be entered against him. A hearing date on the order to show cause is scheduled for May 25, 1999.
The orders arise out of an injunctive complaint filed on April 6, 1999, by the CFTC alleging that, from at least 1995 to the present, Trivette has violated anti-fraud provisions of the CEA (Sections 4b(a), 4c(b) and 4o(1)) and CFTC regulations (Section 33.10) by fraudulently soliciting and accepting in excess of $100,000 to participate in a commodity pool or, in the case of one investor, a joint account, to trade S&P 500 futures contacts and options on S&P futures. (See CFTC News Release #4255-99, April 16, 1999.)
The complaint also alleges that Trivette commingled investor funds with his own funds, failed to operate the commodity pool as an entity separate from himself, and accepted trading funds in his own name, all in violation of CFTC regulation 4.20.
Specifically, the complaint alleges that Trivette misrepresented to prospective investors the performance record and size of a pool he had been trading and later misappropriated at least part of the funds he had solicited by using them for his own trading and personal expenses. The complaint further alleges that Trivette continuously represented to investors that their investments were doing well and earning double-digit returns, when, in fact, both the commodity pool account and Trivette's other trading accounts all lost money in 1996, 1997 and 1998.
According to the complaint, when a number of investors recently asked Trivette to return their investments, Trivette failed to return any of the money. Instead, the complaint alleges, Trivette falsely represented to investors that their monies were seized or frozen by the Chicago Mercantile Exchange (CME), where he had been a registered floor broker from 1993 to 1998.
In its continuing litigation, the CFTC is seeking civil money penalties and other remedial relief, including restitution to customers.