Release: 4283-99 (SA99-CA0684)
For Release: June 29, 1999
CFTC FILES COMPLAINT AGAINST KENT C. CALHOUN OF HUNT, TEXAS, ALLEGING THAT HE COMMITTED FRAUD IN USING THE CFTC's NAME TO SOLICIT CUSTOMERS TO PURCHASE HIS COMMODITY TRADING SYSTEMS AND ATTEND HIS COMMODITY TRADING SEMINARS
CFTC Seeks Injunctive and Other Equitable Relief, Including Disgorgement of Ill-Gotten Gains, Restitution to Defrauded Customers, and Civil Monetary Penalties
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced the filing of a four-count civil injunctive complaint against Kent C. Calhoun of Hunt, Texas, alleging that Calhoun committed fraud by, among other things, implying in his solicitations to customers that the CFTC has in some manner recommended or approved him as a commodity trading advisor (CTA) or otherwise passed on his abilities or qualifications as a CTA. Calhoun has not been registered with the CFTC in any capacity since July 1983, when he was registered as a CTA.
Specifically, the complaint, filed in the U.S. District Court for the Western District of Texas, San Antonio Division, on June 29, 1999, alleges that from at least June 1995 to the present, Calhoun, individually, as an agent of, or doing business as KCI seminars, solicited customers to purchase his commodity trading systems and attend his KCI commodity trading seminars through national advertisements that included false and misleading statements representing or implying that the CFTC has documented, verified, or otherwise passed upon the success of his KCI trading systems and/or the accuracy of his advertisements for such trading systems.
The CFTC civil complaint further alleges that by making those false and misleading statements and other misrepresentations, and by failing to disclose material facts, Calhoun violated the CEA's anti-fraud provisions (sections 4b(a)(i) and 4o) and CFTC regulations 4.16 and 4.41. Commission regulation 4.16 specifically prohibits CTAs from representing or implying that the CFTC has recommended or approved them or otherwise passed upon their abilities or qualifications as CTAs.
Furthermore, the complaint alleges that Calhoun placed advertisements that would lead a reasonable person to believe, among other things, that:
-- Calhoun had "legally documented" or substantiated to the CFTC or a federal district court that he is the most accurate time and price projection technical analyst who has ever lived, when, in fact, he had not done so;
-- Calhoun's advertisements included facts about, among other things, the success and profitability of his commodity trading systems, the accuracy of which was either documented or verified by the CFTC, when they were not;
-- The CFTC had verified the profitability of individuals who allegedly used Calhoun's systems to trade commodity futures, when it did not;
-- The CFTC had documented, verified, validated, or substantiated the truthfulness of Calhoun's advertisements, the expenditures Calhoun allegedly incurred in testing and/or developing his commodity trading systems, or the authenticity of Calhoun's guarantee or refund policy, when it had not; and
-- The CFTC otherwise passed upon Calhoun's trading advice, trading systems, or advertisements and/or recommended or approved Calhoun or otherwise passed upon his abilities and qualifications as a CTA, when it had not.
The CFTC is seeking preliminary and permanent injunctions to prevent Calhoun from further violating the CEA and CFTC regulations, an accounting, disgorgement of ill-gotten gains, restitution to defrauded customers, and civil monetary penalties of not more than $100,000 per violation or triple the monetary gain to Calhoun for each violation of the CEA committed prior to November 27, 1996, or $110,000 or triple the monetary gain for each violation committed after that date.
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