For Release: March 21, 2007
Virginia Man & His California Corporation Ordered to Pay Nearly $12 Million in Penalties for Fraudulent Commodity Trading System Sold to More than 15,000 Customers
Michael Hayes a/k/a Frank Richards and Coldwell Publishing, Inc. Found Liable for Fraud
Washington, D.C.— The U.S. Commodity Futures Trading Commission (CFTC) announced today the entry of a default judgment order against Michael Hayes of Poquoson, Virginia, and Coldwell Publishing, Inc., a California corporation that Hayes operated. Hayes operated Coldwell under the alias Frank Richards.
On March 13, 2007, the Honorable Rebecca Beach Smith of the U.S. District Court for the Eastern District of Virginia ordered civil monetary penalties of $8,725,862 for Coldwell Publishing and $240,000 for Hayes. In addition, the judge ordered both defendants to disgorge $2,908,620.69 in ill-gotten gains received as a result of their violations of the anti-fraud provisions of the Commodity Exchange Act.
“Rest assured, there will be other systems sold on the Internet and through various media outlets that will guarantee outrageous profits with limited risk. Each investor who uses a trading system must perform some level of due diligence before they invest. Otherwise, the investor’s experience may be akin to putting a blindfold on and throwing darts at an imaginary dartboard,” said Gregory Mocek, the CFTC’s Director of Enforcement.
In addition to ordering the payment of civil penalties and disgorgement, the default judgment permanently prohibits the defendants from soliciting or accepting funds from any person in connection with the purchase or sale of commodity futures or options contracts and from engaging in any business activities related to commodity futures or options on futures trading.
The order resolves CFTC charges against the defendants stemming from CFTC v. Michael Hayes and Coldwell Publishing, Inc., 4:06cv130 (E.D.Va.) (see CFTC News Release 5245-06, October 12, 2006). The CFTC charged Hayes and Coldwell with fraudulently promoting The Insider’s Profit Matrix (IPM), a commodity futures and options trading system, by falsely claiming in promotional material that IPM users could “make $50,000 in a single month,” and that the IPM system had turned “$200 to $2,136,000 in 2 years,” among other claims. Hayes sold at least 15,000 copies of his IPM system to the general public.
The following CFTC Division of Enforcement staff members are responsible for this case: Camille M. Arnold, Merle K. Hampton, Susan Gradman, Rosemary Hollinger, Scott Williamson, and Richard Wagner. The CFTC thanks the Office of the United States Attorney for the Eastern District of Virginia for its assistance in this matter.
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The CFTC encourages members of the public to bring to our attention any suspicious activities involving futures or commodity options, including suspicious trading systems and internet websites. The CFTC publishes a series of Consumer Advisories alerting the public to warning signs of possible fraudulent activity and offering precautions individuals should take before committing funds. You may contact the CFTC’s toll-free customer complaint line at 1-866-FON-CFTC (1-866-366-2382), visit us at our Consumer Protection web page, or fill out our Internet Report Form identifying your concerns.
Last Updated: December 26, 2017