For Release: October 4, 2007
New York Federal Court Orders Brokerage Firm, Clearing Firm, and Principals in CFTC Anti-Fraud Action to Pay More Than $2 Million in Restitution and Civil Penalties
Defrauded Customers Lost More Than $1.1 Million Trading Off-Exchange Options on Foreign Currency (Forex)
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that the Honorable Richard M. Berman of the United States District Court for the Southern District of New York issued two consent orders of permanent injunction against International Currency Exchange, Inc. (ICEX) of Ft. Lauderdale, Florida; John Aucella of Pompano Beach, Florida; Eugene Aucella of Fort Lauderdale, Florida; Michael Cottec of Pompano Beach, Florida; and Worldwide Clearing, LLC (Worldwide) of Ft. Lauderdale, Florida. The consent orders impose restitution and civil monetary penalties totaling $2,280,000.
The consent orders stem from a CFTC complaint filed on September 30, 2005, alleging that ICEX, an introducing broker to registered futures commission merchant Worldwide, misrepresented facts and omitted pertinent information when soliciting customers to trade off-exchange forex options in violation of the Commodity Exchange Act and CFTC regulations. (See CFTC News Release 5131-05, October 18, 2005.)
According to the consent orders, from about November 2004 to July 2005, ICEX misrepresented the likelihood of profits from trading off-exchange options on forex and minimized the risk of loss during sales solicitation telephone calls. For example, ICEX employees told a customer that ICEX was making upward of 100 percent returns for its customers, and told another customer that the customer could “at least make $7,000 to $8,000 in profits by investing $10,000 with [ICEX].” Going one step further in the fraud, in light of the profit representations they made, ICEX employees failed to disclose that all but one of ICEX’s approximately 117 customers lost money trading forex options. Indeed, from November 2004 through July 2005, ICEX customers lost more than $1.1 million.
The consent orders find John Aucella, Eugene Aucella, and Michael Cottec liable for ICEX’s violations as controlling persons who failed to act in good faith to prevent the misconduct. John Aucella and Eugene Aucella are also liable for aiding and abetting ICEX’s misconduct in that they directed the daily activities of the ICEX brokers, orchestrating and actively participating in the fraudulent scheme. Worldwide is liable as a principal for ICEX’s fraudulent solicitations made to induce customers to open accounts with Worldwide.
The consent orders, among other things, permanently enjoin ICEX, Worldwide, John Aucella, Eugene Aucella, and Cottec from engaging in any commodity-related activity, including soliciting funds or engaging in trading in any market regulated by the CFTC. The consent orders also require ICEX to pay $1,100,000 in restitution to its customers. Of this amount, Worldwide is jointly and severally liable for $670,000, John Aucella is jointly and severally liable for $250,000, Eugene Aucella is jointly and severally liable for $250,000, and Cottec is jointly and severally liable for $200,000. The consent orders further assess civil monetary penalties of $550,000 against ICEX, $180,000 against John Aucella, $180,000 against Eugene Aucella, $140,000 against Cottec, and $130,000 against Worldwide.
The following CFTC Division of Enforcement staff members are responsible for this case: Eliud Ramirez, Nathan Ploener, Manal Sultan, Lenel Hickson, Jr., Stephen J. Obie, Richard Wagner, and Vincent McGonagle.
Last Updated: October 3, 2007