Release: 4327-99 (Civ99-00653)
For Release: October 21, 1999
CFTC FILES COMPLAINT IN HAWAII FEDERAL COURT AGAINST DAVID T. MARANTETTE, III AND TROUBADOUR, INC. , CHARGING FRAUD IN SOLICITING CUSTOMERS TO INVEST IN COMMODITY POOLS AND PURCHASE COMMODITY TRADING ADVISORY SERVICES
Federal Court Enters a Consent Order of Preliminary Injunction Prohibiting Marantette and Troubadour from Engaging In Fraudulent Activities, Barring the Destruction of Documents, and Freezing the Defendants' Assets
WASHINGTON – The Commodity Futures Trading Commission (CFTC) announced the filing on September 22, 1999, of a five-count civil injunctive complaint in the U.S. District Court for the District of Hawaii against David T. Marantette, III and Troubadour, Inc.,both of Princeville, Hawaii.
The CFTC complaint alleges that Marantette and Troubadour fraudulently solicited members of the public to invest in commodity pools and/or to use their commodity trading advisory services and products by making material misrepresentations about profitable trading and failing to disclose the material fact that Marantette had been barred from the securities industry. The complaint also alleges that Marantette and Troubadour operated the pools without being registered as commodity pool operators. As alleged, Marantette appears to be president, treasurer, director, and primary shareholder of Troubadour, Inc.
On October 14, 1999, the Honorable Susan Oki Mollway of the U.S. District Court for the District of Hawaii entered a consent order of preliminary injunction against Marantette and Troubadour, Inc., enjoining them from violating the Commodity Exchange Act (CEA) or and CFTC regulations, prohibiting them from destroying their books and records, imposing a freeze on their assets, and requiring them to provide an accounting of investor funds and their assets to the CFTC.
The CFTC's complaint alleges that the defendants violated the anti-fraud provisions of the CEA, specifically sections 4b(a), 4c(b) and 4o of the CEA, and CFTC regulations 4.41 and 33.10. The complaint also alleges that Marantette and Troubadour, Inc. violated section 4m of the CEA by failing to register as commodity pool operators.
The CFTC alleges that:
-- Marantette and Troubadour, Inc., through private offering memoranda and over the internet, fraudulently solicited members of the public to purchase commodity trading advisory products, including the defendants' weekly commodity trading advisory newsletters, the Goldstock Letter and Dear Dow Letter;
-- Marantette and Troubadour, Inc. fraudulently solicited customers to invest in two commodity pools, Troubadour I, and Troubadour II; and
-- Marantette fraudulently solicited customers to invest in the commodity pool, Cycles in Gold, by falsely representing that Marantette and Troubadour, Inc. had made substantial profits over the past 12 years using a cyclic analysis program, when, in fact, the profits were based on hypothetical trading results or were false, and by failing to disclose that Marantette had been permanently barred from the securities industry in 1992.
In its continuing litigation against the defendants, the CFTC is seeking a permanent injunction against further violations of the CEA and CFTC regulations, 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. A trial date has not been set.
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