For Release: July 20, 2006
Federal Court Issues Preliminary Injunction in CFTC Hedge Fund Fraud Case
Michigan Firms, Aurifex Commodity Research Company and Aurifex Research, LLC, and Michigan Residents Ty and Monette Klotz are Enjoined as Part of Ponzi Scheme
Washington, D.C.— The U.S. Commodity Futures Trading Commission (CFTC) announced today that the Honorable Robert Holmes Bell of the United States District Court for the Western District of Michigan issued an order of preliminary injunction against Aurifex Commodity Research Company, a Michigan corporation; Aurifex Research L.L.C., a Michigan limited liability company; and Ty and Monette Klotz, both residents of Mason, Michigan, in connection with a complaint filed by the CFTC on March 7, 2006, charging the defendants with hedge fund fraud (see CFTC News Release 5169-06, March 17, 2006).
The court’s order, entered on June 1, 2006, bars the defendants from engaging in fraudulent acts during the CFTC’s ongoing litigation of the case and requires each defendant to account for their assets. The order further maintains the court’s March 7, 2006 ex parte restraining order that froze defendants’ assets, prohibited destruction of defendants’ books and records, and granted the CFTC access to those books and records.
According to the CFTC’s complaint, the defendants allegedly engaged in a Ponzi scheme, while doing business as Aurifex Investments. After an evidentiary hearing, the court concluded there was sufficient evidence “to indicate that the defendants had committed fraud in connection with soliciting funds to be traded in commodity futures” and that defendants had improperly acted as Commodity Pool Operators without registering with the CFTC. In addition, the court found that the evidence of fraud and unaccounted Aurifex Investments customer funds of at least $1.25 million justified freezing defendants’ assets, pending a permanent injunction decision.
In its ongoing litigation, the CFTC is seeking a permanent injunction against the defendants, a return of funds to defrauded customers, repayment of ill-gotten gains, and an award of civil money penalties.
Temporary Receiver in the Case Is Appointed by the Court
The CFTC also announces that Rodger D. Young, of Southfield, Michigan, has been appointed as a Temporary Receiver in this case. Mr. Young’s office will be responsible for identifying and providing notice to Aurifex Investments’ customers. Customers are encouraged to contact CFTC investigator Ken Hampton at 312-596-0528 for further information.
The CFTC would like to thank the Mason, Michigan, Police Department for its assistance.
The following CFTC staff members are responsible for this case: Susan Padove, Ken Hampton, Robert Greenwald, Rosemary Hollinger, and Richard Wagner.
Last Updated: July 26, 2007