For Release: June 4, 2007
Dallas Court Order Imposes More than $4.9 Million in Monetary and Other Sanctions against Carl W. King and Carl W. King Investments, LLP in Anti-Fraud Action Brought by the U.S. Commodity Futures Trading Commission
Washington, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced today that on May 22, 2007, U.S. District Court Judge Barbara M.G. Lynn of the Northern District of Texas entered a judgment order imposing monetary sanctions and a permanent injunction against defendants Carl W. King and Carl W. King Investments, LLP (King Investments) formerly of Dallas, Texas, for violating the anti-fraud provisions of the Commodity Exchange Act by operating a Ponzi scheme and issuing false reports to customers.
The order enters final judgment on the previous memorandum opinion and order entered by the court on May 7, 2007, granting the CFTC’s motion for summary judgment against King and King Investments.
The judgment order holds King Investments jointly and severally liable for the $4,499,146.51 award of restitution entered against King in a related criminal action against him. The judgment order imposes a civil monetary penalty in the amount of $449,914.65. King and King Investments are jointly and severally liable for the payments of the civil monetary penalty upon fulfillment of the restitution ordered. Finally, the order permanently prohibits King and King Investments from engaging in any commodity-related activity.
The order stems from a CFTC complaint filed August 30, 2006, alleging that, since at least 1995 and continuing through February 2003, King, individually and as the agent of King Investments, engaged in a scheme to defraud customers of more than $4.5 million (see CFTC Press Release, 5226-06, September 5, 2006).
According to the May 7 order, King solicited approximately $9 million from customers, fraudulently advising them that commodity futures trading was taking place on their behalf and that they had earned approximately 20% annual interest on their investments. King issued fictitious account statements to customers that reflected purported account balances and interest earnings, despite the fact that the investments did not yield any annual profits. In fact, King withdrew customers’ funds and used them for personal expenses and for operating expenses of King Investments.
In a related criminal action, King pled guilty in the United States District Court for the Eastern District of Texas to one count of mail fraud, in violation of Title 18, United States Code, Section 1341, as a result of his fraudulent activities. King is currently serving an 87 month prison term in Federal prison.
The CFTC wishes to thank the United States Securities and Exchange Commission, the Texas State Securities Board, and the United States Attorney’s Office for the Eastern District of Texas for their cooperation in this matter.
The following Division of Enforcement staff were responsible for this case: Timothy J. Mulreany, David Reed, Paul Hayeck, and Joan Manley.
Last Updated: July 2, 2007