For Release: August 9, 2007
New York Federal Court Enters Orders Granting Judgments in Four Cases against Nine Entities for International Commodity Futures and Options Scam
Defendants Ordered to Pay More than $15.5 Million in Restitution and Civil Penalties
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that the U.S. District Court for the Southern District of New York entered four default orders against nine defendants: New York Options Exchange (NYOEX), Tahoe Futures (Tahoe), International Energy Exchange (INTENX), Vitol Capital Management (Vitol),New York Petroleum Option Exchange (NYPOE), HPR Commodities (HPR), American Futures and Options Exchange (AFOEX), Metro Financials (Metro), and American Futures and Options Trading Commission (AFOTC). The orders require that the defendants pay a total of $13,834,957.21 in restitution to victims of their fraud and impose civil monetary penalties totaling $1,690,000. The orders find that the defendants, through misrepresentations on their websites, defrauded customers out of millions of dollars.
The four orders for default judgment resolve charges against the nine defendants arising from the CFTC’s complaints in CFTC v. New York Options Exchange, et al., 07 CV 2376 (S.D.N.Y.), CFTC v. American and Futures Options Exchange, et al., 07 CV 2377 (S.D.N.Y.), CFTC v. International Energy Exchange et al., 07 CV 2378 and CFTC v. New York Option Exchange et. al., 07 CV 2379 (S.D.N.Y.) (see CFTC News Release 5309-07, March 22, 2007).
Specifically, the orders find that in each of the cases, customers were solicited to trade commodity futures and/or options in commodities, such as energy and currency. Customers were duped into believing that: (1) NYOEX, INTENX, NYPOE, and AFOEX were futures exchanges; (2) Tahoe, Vitol, HPR, and Metro were their respective brokers; and (3) all these entities were located in the United States. Customers were promised substantial profits when, in fact, customers lost nearly all of the money they invested – a total of more than $13,834,957.21, according to the orders.
The Creation of a Fictitious Regulator was Part of the Scam
Metro fraudulently solicited customers to purchase options on futures contracts purportedly traded on AFOEX, an exchange which claimed to be regulated by AFOTC — the purported sole regulator in the United States for the commodity futures and option markets when, in fact, AFOTC, like Metro and AFOEX, is a fictitious entity with its own fraudulent website.
In addition to imposing restitution and civil monetary penalties, the orders enter permanent injunctions against all defendants that prohibit them from engaging in any business activities related to commodity futures and options trading.
The CFTC wishes to thank the Australian Securities and Investments Commission, the German Bundesanstalt für Finanzdienstleistungsaufsicht, the Hong Kong Securities and Futures Commission, the Swiss Federal Banking Commission, the Malaysian Securities Commission, the Monetary Authority of Singapore, the Czech National Bank, the Securities and Exchange Board of India, the Italian Commissione Nazionale per le Società e la Borsa, the Autoriteit Financiële Markten of the Netherlands, the New York Mercantile Exchange, and the Office of Investor Education and Assistance, and the U.S. Securities and Exchange Commission for their assistance.
The following CFTC Division of Enforcement staff members are responsible for this case: David Oakland, Philip Rix, Nathan Ploener, Manal Sultan, Lenel Hickson, and Stephen J. Obie.
Note to Media: Defendants Tahoe, Vitol, and HPR are unrelated to Tahoe Futures LLC located in New York, New York; Vitol Capital Management Ltd. located in Houston, Texas; and HPR Commodities LLC located in New York, New York.
Last Updated: September 5, 2007