For Release: July 23, 2007
New Jersey Court Order Imposes More Than $30 Million in Sanctions against Coyt E. Murray, Tech Traders, Inc., Tech Traders, Ltd., Magnum Investments, Ltd., and Magnum Capital Investments, Ltd. 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 June 28, 2007, U.S. District Court Judge Robert B. Kugler of the District of New Jersey entered a consent order of permanent injunction against defendants Coyt E. Murray, of Tega Cay, South Carolina, and four Gastonia, North Carolina companies he controlled: Tech Traders, Inc. and Tech Traders, Ltd. (collectively, Tech Traders), and Magnum Investments, Ltd. and Magnum Capital Investments, Ltd. (collectively, Magnum).
The order requires the defendants to pay more than $30.4 million in sanctions for fraudulently soliciting millions of dollars from investors for a commodity pool that purportedly generated double-digit gains for 23 out of 33 months trading commodity futures, when it was actually losing millions of dollars.
The order stems from a CFTC complaint filed April 1, 2004, and amended on August 12, 2004, which alleged, in part, that Murray operated a multi-million dollar Ponzi scheme through a “super fund” known as Tech Traders (see CFTC Press Release, 4908-04, April 6, 2004).
According to the order, entered on June 28, 2007, from 1998 through April 1, 2004, Murray, Tech Traders, and Magnum solicited more than $47 million from customers to trade commodity interests using a supposedly successful “portfolio” trading system, when, in reality, Tech Traders and Magnum lost over $10 million trading commodity interests.
Moreover, in 2001, Murray and Tech Traders engaged a purportedly independent certified public accountant, defendant J. Vernon Abernethy, to verify Tech Traders’ trading results. However, Murray and Tech Traders supplied Abernethy with selective and incomplete rate of return information. Accordingly, Abernethy falsely reported to investors that Tech Traders was consistently profitable from June 2001 onward.
The order imposes a restitution award totaling $17,871,012 and a civil monetary penalty of $11,378,735 against Murray and his companies. The two Tech Traders entities are jointly and severally liable for $15,117,523 in restitution and $7,558,761 in civil monetary penalties; the two Magnum entities are jointly and severally liable for $2,753,489 in restitution and $1,376,744 in penalties; and Murray is jointly and severally liable with the companies for the total $17,871,012 restitution award. Additionally, Murray is ordered to pay $2,443,230 in civil monetary penalties and disgorge an additional $1,221,615 in ill-gotten gains. The order permanently prohibits all defendants from engaging in any commodity-related activity.
Murray Is Awaiting Sentencing in a Related Criminal Action
In a related criminal action, Murray pled guilty to criminal charges brought by the United States Attorney for the Western District of North Carolina in a Bill of Information alleging commodities fraud, mail fraud, and wire fraud. He is awaiting sentencing.
Earlier Order Entered Against Defendant J. Vernon Abernethy
On July 7, 2006, the court entered an order requiring Abernethy to pay restitution totaling $5 million to Tech Traders’ customers and to pay a $300,000 civil monetary penalty. That order also prohibits Abernethy from: 1) practicing before the CFTC as an accountant for a 10-year period; 2) accepting any engagement that involves the review or analysis of commodity pool statements; 3) accepting any engagement that involves the analysis of futures or options statements; and 4) engaging in any other commodity-related activity. (See CFTC consent order of permanent injunction against J. Vernon Abernethy, July 7, 2006.)
Case Continues Against Remaining Defendants
The CFTC received partial summary judgment against remaining defendants Equity Financial Group LLC, Robert W. Shimer, and Vincent J. Firth, in separate rulings on December 18, 2006, and March 30, 2007, on all the counts of the amended complaint.
The CFTC wishes to thank the United States Attorney’s Office for the Western District of North Carolina for their cooperation in this matter. The following CFTC Division of Enforcement staff were responsible for this case: Elizabeth M. Streit, Joy McCormack, Scott R. Williamson, Rosemary Hollinger, and Richard Wagner.
Last Updated: July 31, 2007