Release: #4285-99 (99-Civ-1558-T-23F)
For Release: July 8, 1999
CFTC FILES CIVIL FRAUD COMPLAINT IN FLORIDA FEDERAL COURT AGAINST INTRODUCING BROKER R.J. FITZGERALD & CO., INC., RAYMOND AND LEIZA FITZGERALD, AL CORINGRATO, GREG BURNETT, AND CHUCK KOWALSKI
CFTC Action Charges that the Defendants Made False Representations and Engaged in Fraudulent Acts and Practices, Including Sales Solicitation Fraud and Account Churning
WASHINGTON – The Commodity Futures Trading Commission (CFTC) announced the filing today of a six-count civil injunctive complaint in the U.S. District Court for the Middle District of Florida (Tampa) against R. J. Fitzgerald & Co., Inc. (RJFCO), a Florida corporation with offices in Tampa and Key West, Florida; Raymond Fitzgerald, Jr., of Clearwater Beach, Florida; his wife Leiza Fitzgerald, also of Clearwater Beach; Al Coringrato of Tampa, Florida; Greg Burnett of New Port Richey, Florida; and Chuck Kowalski of Tampa, Florida, charging them with, among other things, running RJFCO in a systematically fraudulent manner.
RJFCO has been registered with the CFTC as an introducing broker (IB) since November 1992; Raymond Fitzgerald, Jr., is its president and sole shareholder. Raymond and Leiza Fitzgerald and Kowalski are registered as associated persons (APs) of RJFCO, and Coringrato and Burnett were registered as APs with RJFCO between January 1997 and August 1998 and between June 1997 and July 1998, respectively.
The CFTC's civil action, filed on July 6, 1999, alleges that the defendants violated the anti-fraud provisions of the Commodity Exchange Act (CEA) and CFTC regulations, specifically sections 4b(a) and 4c(b) of the CEA and regulations 32.9 (a) and (c) and 33.10 (a) and (c), in connection with the solicitation and offer or sale of commodity futures and options contracts to customers or prospective customers.
From January 1996 through July 1998, the complaint alleges, RJFCO and Raymond Fitzgerald made material misrepresentations and omissions of material fact to prospective customers through false advertising and misleading promotional materials. The complaint also alleges that all the defendants made oral misrepresentations to customers. The alleged misrepresentations and omissions included claims about the likelihood of high profits in the grain markets due to the effects of El Nino and about the limited risk of loss in trading commodity option contracts.
In addition, according to the complaint, Raymond Fitzgerald and Burnett allegedly churned customer accounts and with Kowalski are charged with operating an IB to cheat, defraud, or deceive customers. Raymond Fitzgerald is also charged with failing to provide customers with appropriate risk disclosure statements and -- along with Leiza Fitzgerald, Coringrato, and Burnett -- failing to properly supervise RJFCO and its employees. Additionally, the complaint charges Raymond Fitzgerald with liability for the various fraudulent acts as a controlling person of RJFCO.
Finally, the CFTC complaint charges each individual defendant with aiding and abetting certain of the fraudulent acts committed by other defendants, and RJFCO is charged with liability as a principal under section 2(a)(1)(A)(iii) of the CEA for fraudulent acts allegedly committed by others.
In its continuing litigation, the CFTC is seeking orders of permanent injunction against the defendants, disgorgement of ill-gotten gains, restitution to the defrauded investors, and civil monetary penalties not exceeding $100,000 or triple the monetary gain to the defendants, whichever is greater, for each violation of the CEA committed prior to November 27, 1996, and $110,000 or triple the monetary gain for violations committed after that date.
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