For Release: February 7, 2007
Texas Federal Court Orders Payment of More Than $123 Million in Fines and Restitution in Case Filed by the U.S. Commodity Futures Trading Commission against Seattle Firm and its Affiliates Involved in Fraudulent Foreign Currency (Forex) Swindle
Federal Cooperative Enforcement Utilized to Prosecute Defendants Premium Income Corp., Inforex, Ltd., and Tri-Forex International, Ltd. and their Principals
Washington, D.C.— The U.S. Commodity Futures Trading Commission (CFTC) announced today that the Honorable Jane Boyle of the United States District Court for the Northern District of Texas entered a final judgment order imposing monetary sanctions against Premium Income Corp. (PIC), and its affiliates, Inforex, Ltd., and Tri-Forex International, Ltd. totaling more than $123 million.
The court’s order stems from a cooperative enforcement effort conducted by the CFTC, the Securities and Exchange Commission, and the Department of Justice.
PIC, its affiliates and their principals – Gerald Leo Rogers and Alexander Ignor Shevchenko – were sued by the CFTC on March 2, 2005 for engaging in fraud in the sale and solicitation of illegal foreign currency (forex) covered call options and misappropriating customer funds (see CFTC News Release 5053-05, March 8, 2005).
The court’s order requires PIC and its affiliates to jointly individually make restitution to customers in the amount of $12,374,104 and imposes on each company a civil penalty of $37,122,312. Among other things, the order permanently prohibits each company from directly or indirectly engaging in any activity relating to trading in any commodity.
According to the order, from January 2004 to the date the CFTC filed its complaint, PIC and its affiliates solicited customers to send them funds by representing that the funds would be used to engage in foreign currency covered call transactions, and that customers would be guaranteed a profitable annual return on their funds of between 10% and 14.2% with no risk of loss to their principal. The companies represented that they made their “fixed income strategy of the decade” available exclusively in the United States under a special license agreement between them and a bank located in Switzerland. However, they did not disclose that customer funds were immediately transferred from PIC bank accounts to accounts controlled by Rogers that were in the name of Inforex. In addition to sustaining large losses through highly speculative forex trading, a portion of those funds were used to fund personal expenses and to pay undisclosed commissions to individuals who solicited customers.
“We continue to unveil actions against defendants who maintain a conscious ambivalence to the laws and regulations that are applicable to the retail forex sector. This case was part of a broader focus into forex fraud that started several years ago as a result of the clarification of our jurisdiction. Since then, through a combination of aggressive investigators and litigators, the Commission has filed actions against more than 350 defendants who scammed more than 25,000 retail customers,” noted Gregory Mocek, the CFTC’s Director of Enforcement.
Litigation Continues Against Principals Gerald Rogers and Alexander Shevchenko
In its continuing litigation against Rogers and Shevchenko, the CFTC is seeking permanent injunctive relief, return of funds to defrauded customers, repayment of ill-gotten gains, and an award of civil monetary penalties. Rogers was arrested at the time the CFTC initiated its action and is currently incarcerated at La Tuna Federal Penitentiary in Texas.
The CFTC’s Office of Cooperative Enforcement coordinated this action with a related emergency enforcement action filed by the Securities and Exchange Commission (SEC) against the same defendants, Civil Action No. 3-05-CV-0415-M (U.S.D.C./N.D. Texas, Dallas Division). The CFTC appreciates the cooperation of the SEC, the U.S. Attorney’s Office for the Western District of Washington, the United States Parole Commission, and the Texas State Securities Commission.
The CFTC encourages members of the public to bring to our attention any suspicious activities involving futures or commodity options, including matters involving foreign currency (forex) investments or suspicious internet websites. In addition, the CFTC publishes a series of Consumer Advisories at /cftc/cftccustomer.htm alerting the public to warning signs of possible fraudulent activity and offering precautions individuals should take before committing funds. For example, see Beware of Foreign Currency Trading Frauds at /opa/enf98/opaforexa15.htm and the Forex Fraud Brochure Advisory at /enf/enf-forex.htm.
You may contact the CFTC at 1-866-FON-CFTC (1-866-366-2382), visit us at our Customer Protection web page: /cftc/cftccustomer.htm, or fill out our Internet Report Form identifying your concerns at /enf/enfform.htm.
Last Updated: July 25, 2007