For Release: December 19, 2006
U.S. Commodity Futures Trading Commission Settles Foreign Currency (Forex) Fraud Action against Emerald Worldwide Holdings, Inc. and Jian Zhuang
Emerald Worldwide Holdings, Inc. Ordered to Pay Over $12 Million in Restitution and Civil Penalties
Washington, D.C.— The U.S. Commodity Futures Trading Commission (CFTC) announced today that on November 30, 2006, Judge A. Howard Matz of the United States District Court for the Central District of California issued a consent order of permanent injunction settling the CFTC’s action against Emerald Worldwide Holdings, Inc. (Emerald), of City of Industry, California, and Jian Zhuang (Zhuang), of Japan.
The consent order stems from a first amended complaint filed by the CFTC on May 10, 2004, alleging that defendants Emerald and Zhuang, along with co-defendants Hao Jan Lu (Lu), of Rowland Heights, California, and City Trust and Investment Co. Inc. (City Trust) of Japan, fraudulently solicited customers in Japan and China to invest more than $5 million to trade illegal off-exchange foreign currency (forex) futures contracts in the United States. (See CFTC News Releases 4929-04, May 21, 2004 and 5003-04, October 4, 2004.)
The CFTC’s complaint alleged that Emerald’s promotional materials, which were disseminated by employees of City Trust, contained false statements regarding Emerald’s registration status and affiliation with entities that were legitimately registered with the CFTC. The complaint also alleged that, rather than trade the customers’ funds, as promised, Emerald and CTI transferred the funds to various bank accounts in the United States, Japan, China, and Hong Kong in the names of Emerald, City Trust, and others.
The complaint charged that, through the fraudulent solicitation of retail customers to deposit funds in United States bank accounts to trade illegal off-exchange foreign currency futures contracts in the United States, Emerald and City Trust violated the anti-fraud and other provisions of the Commodity Exchange Act (CEA) and CFTC regulations. The complaint further charged that Emerald, City Trust, Zhuang, and Lu violated the CEA and CFTC regulations by misappropriating customer investment funds deposited into Emerald’s and the relief defendants’ United States bank accounts. Default judgment was entered against City Trust on April 19, 2005 (See CFTC News Release 5072-05, April 27, 2005).
The consent order provides for remedies against Emerald and Zhuang following the entry on July 5, 2005, of an order of summary judgment, which found them liable on all counts of the complaint. The consent order permanently bans Emerald and Zhuang from, among other things, engaging in any commodity-related activity, including but not limited to commodity trading and soliciting customers to invest in commodity futures and options. The order requires Emerald to pay $3,433,722.61 in restitution and a civil monetary penalty of $9 million. Zhuang is jointly and severally liable for the restitution in the amount $2,264,879.94, and individually liable for a $250,000 civil monetary penalty.
Relief Defendants Ordered to Disgorge Ill-Gotten Gains
On November 29, 2006, the district court entered a consent order of disgorgement against relief defendants Lynnwood Jen, Esther Pranolo, and ACE Capital Advisory Group, Inc. This order requires Jen to disgorge $10,000, Pranolo to disgorge $55,897.79, and ACE Capital to disgorge $39,194.96. Default judgment was previously entered against another relief defendant, ACE Emerald W. Holding, Inc., on April 19, 2005, requiring the disgorgement of $1,299.80.
The district court retained jurisdiction to approve a restitution distribution plan. The action is still pending against defendant Lu.
The following CFTC Division of Enforcement staff members are responsible for this case: Christine Ryall, Patricia Gomersall, Paul Hayeck, and Joan Manley.
Last Updated: April 22, 2010