For Release: May 25, 2007
Nine Florida Defendants Charged with Selling Illegal Foreign Currency (Forex) Options and Defrauding Customers of More than $7 Million
CFTC Obtains Federal Court Order Freezing Assets and Preventing the Destruction of Books and Records
Washington, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a complaint in the U.S. District Court for the Southern District of Florida against The Liberty Mutual Group, Inc., Addison Financial Group, Inc., Addison Management Group, Inc., Hamlin Mercer Group, Inc., Colfax Management Group, Inc. (collectively, Addison Enterprise), Alan Lerner, Forefront Investment LP, Todd Guthrie, and Benji Dayan for, among other things, fraud in connection with the offer and sale of illegal off-exchange foreign currency (forex) options.
Specifically, the complaint alleges that, from at least February 2005 through at least June 2006, Lerner, as president of the Addison Enterprise, induced and/or caused its account executives to fraudulently solicit members of the retail public to engage in illegal off-exchange forex options transactions with Forefront Investments LP. The account executives failed to disclose the abysmal trading results in Addison Enterprise customers’ accounts.
The complaint further alleges that, while Addison Enterprise account executives touted the large profit potential and minimal risk of loss in trading foreign currency options, most, if not all, customers were losing money. During the relevant time period, Addison Enterprise customers suffered losses of more than $7 million―$3 million of which was paid to the Addison Enterprise as commissions.
Hearing Scheduled for May 29
On May 16, 2007, the Honorable Joan A. Lenard, U.S. District Judge, issued a restraining order freezing the defendants’ assets and prohibiting the defendants from destroying documents or denying CFTC staff access to books and records. A hearing on the CFTC’s motion for preliminary injunction is scheduled for May 29, 2007 before Magistrate Judge Edwin Torres.
In its ongoing litigation, the CFTC is seeking a permanent injunction, restitution to defrauded investors, disgorgement of ill-gotten gains, and civil monetary penalties.
The Commission appreciates the assistance of Michael Lipsitt, Andrea Appleman, Pablo Abril, and Robert Crespo, all of the Florida Office of Financial Regulations.
The following CFTC Division of Enforcement staff members are responsible for this case: Eugene Smith, Christine Ryall, Patricia Gomersall, Paul Hayeck, and Joan Manley.
Last Updated: December 9, 2008