#4320-99 (Civ 99-6425)
For Release: October 1, 1999
CFTC FILES COMPLAINT IN ILLINOIS FEDERAL COURT AGAINST CA-NI INDUSTRIES, LTD. AND NICHOLAS J. NICKOLAOU, CHARGING FRAUD IN SOLICITING CUSTOMERS FOR A COMMODITY TRADING PROGRAM AND MANAGED ACCOUNTS
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 today that it filed a four-count civil injunctive complaint in the U.S. District Court for the Northern District of Illinois against Ca-Ni Industries, Ltd. (Ca-Ni), and its owner and principal, Nicholas J. Nickolaou, both formerly of Lemont, Illinois and current residents of Lake Mary, Florida. Ca-Ni has been registered with the CFTC as a commodity trading advisor (CTA) since 1991. Nickolaou has never been registered with the CFTC in any capacity.
The complaint, filed on September 30, 1999, alleges that, from at least 1995 to the present, Ca-Ni and Nickolaou fraudulently solicited members of the public to purchase a computerized commodity trading program and methodology called Wisdom of the Ages and to allow their commodity accounts to be managed by Nickolaou.
Specifically, the complaint alleges that Ca-Ni and Nickolaou fraudulently solicited customers by falsely presenting a simulated track record as if it were based on real trading. In addition, the defendants fraudulently guaranteed the profits to be made using Wisdom of the Ages. It is alleged that, at the same time, the defendants downplayed the risks of commodity trading, falsely represented Nickolaou's trading experience, including suggesting that he used the program to trade, and included testimonials in their advertisements that falsely purported to be from customers who had purchased Wisdom of the Ages.
The CFTC complaint further alleges that, based on the same misrepresentations and omissions of material fact, Nickolaou fraudulently solicited Ca-Ni customers to allow him to direct trading for their commodity futures accounts and did so without the required registration and disclosures.
The complaint alleges that, by making these false and misleading statements, Ca-Ni and Nickolaou violated the anti-fraud provisions of the Commodity Exchange Act (CEA), specifically sections 4b(a) and 4o, as well as CFTC regulation 4.41. The CFTC also charges Nickolaou with violating section 4m of the CEA and CFTC regulations 1.31, 4.31 and 4.33 by failing to register with the CFTC and failing to provide required disclosures to clients before undertaking to manage their accounts.
In its continuing litigation against the defendants, the CFTC is seeking preliminary and permanent injunctions against Ca-Ni and Nickolaou, disgorgement of ill-gotten gains, restitution to defrauded customers, and civil monetary penalties of not more than $110,000 per violation or triple the monetary gain for each violation committed.