Release: ���������������� #4312-99 (99-Civ 9669)(RO)
For Release: ����������September 14, 1999

CFTC OBTAINS ASSET FREEZE AND APPOINTMENT OF A RECEIVER IN CIVIL INJUNCTIVE ACTION FILED AGAINST PRINCETON GLOBAL MANAGEMENT LTD., PRINCETON ECONOMICS INTERNATIONAL LTD., AND MARTIN A. ARMSTRONG

CFTC Complaint Alleges Fraud and Failure to Register Against Commodity Pool Operators and Commodity Trading Advisors

WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced the filing of an enforcement action in U.S. District Court for the Southern District of New York against Princeton Economics International Ltd. (PEI) of Princeton, New Jersey; its wholly owned subsidiary Princeton Global Management Ltd. (PGM), which has an address in the Turks and Caicos Island, British West Indies; and their chairman Martin A. Armstrong, who resides in Maple Shade, New Jersey.

The CFTC civil action, filed on September 13, 1999, alleges that the defendants defrauded customers by misrepresenting the value of customer interests in a commodity pool in connection with an investment scheme involving the trading of commodity futures and the operation and management of the commodity pool.

Shortly after the action was filed, the court entered an order freezing all of the defendants' assets pending a hearing on the request for a preliminary injunction. The court's order also appoints a temporary receiver with the power to, among other things, take immediate possession, custody, and control of all assets and property and the books and records of PEI and PGM and take all steps necessary to secure and protect the assets and property of PEI and PGM. A hearing on the CFTC's motion seeking a preliminary injunction is scheduled to be held before Judge Richard Owen on Tuesday, September 21, 1999.

Specifically, the CFTC complaint alleges that, from at least 1996 until the present, the defendants sold billions of dollars worth of fixed-term promissory notes issued by PEI and its subsidiaries to companies located in Japan. The principal amount of the notes has been used, according to the complaint, to fund the purchase of derivative instruments, bonds and/or currencies, including futures contracts and options (collectively, "the Fund"). Armstrong is the Fund's primary trading advisor. The assets of the Fund were held at a futures commission merchant (FCM) in sub-accounts for the purpose of trading futures contracts and options, according to the complaint. Since 1996, Armstrong allegedly arranged for the FCM to issue over 200 letters to PGM, which inflated the Net Asset Value of the assets held in those sub-accounts and which Armstrong and PGM then transmitted to customers in Japan. The complaint alleges that the current principal amount of outstanding notes is approximately one billion dollars, while the assets currently in the Fund total no more than approximately $46 million dollars.

The CFTC appreciates the assistance and coordination of the Office of the U.S. Attorney for the Southern District of New York and the Securities and Exchange Commission, both of which also filed related actions, and the Japanese Financial Supervisory Authority in this matter.

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