Release: 4308-99 (3:99CV592)
For Release: August 26, 1999
VIRGINIA COURT ENTERS DOCUMENT AND ASSET FREEZE IN CFTC INJUNCTIVE ACTION AGAINST PETER BERZINS CHARGING COMMODITY POOL FRAUD
CFTC Alleges Berzins Defrauded Investors By Making Misrepresentations While Soliciting Funds And Operating a Commodity Pool
WASHINGTON — The Commodity Futures Trading Commission (CFTC) announced today that the Honorable Robert E. Payne of the U.S. District Court for the Eastern District of Virginia entered a statutory restraining order against Peter Berzins of Houston, Texas, prohibiting Berzins from altering or destroying books, records and documents, and transferring, encumbering, or dissipating his assets, in a CFTC injunctive action charging Berzins with fraudulently operating a commodity pool.
The orders arise out of an injunctive complaint filed by the CFTC on August 24, 1999, alleging that, since at least 1996, Berzins has violated anti-fraud provisions of the Commodity Exchange Act (CEA) (sections 4b(a), 4c(b) and 4o(1)) and CFTC regulations (section 33.10) by fraudulently soliciting and accepting from investors in excess of $500,000 to participate in a commodity pool to trade commodity futures contracts and options on futures contracts.
Specifically, the complaint alleges that, in order to induce additional investments, Berzins misrepresented to prospective investors the performance record of the pool he had been trading and provided investors with written statements which falsely represented that investors were making significant monthly profits. The complaint further alleges that Berzins continuously represented to investors that their investments were earning double-digit returns, when, in fact, Berzins' trading accounts all lost money in 1995, 1996, 1997 and 1998. The complaint alleges that Berzins minimized the risk of investing in the commodity pool when soliciting investors.
According to the complaint, in March 1998, Berzins represented to investors that their investments, and the profits purportedly earned earlier, had been lost in trading the previous month, and provided one or more investors with falsified documents, reflecting a purported margin call from a futures commission merchant to support the claim of recent large trading losses. As alleged, no such margin call was ever made.
The complaint also alleges that Berzins failed to register as a commodity pool operator, failed to provide investors with periodic account statements, 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 the CEA (sections 4m and 4n) and CFTC regulations (sections 4.20, 4.21 and 4.22).
In its continuing litigation, the CFTC is seeking a preliminary injunction, civil money penalties and other remedial relief, including restitution to investors. The CFTC's action against Peter Berzins arose from a referral by the State Securities Board of the State of Texas.
# # #