For Release: October 11, 2007
United States Commodity Futures Trading Commission Settles Foreign Currency (Forex) Fraud Action against Defendant Hao Jan Lu; Total Orders by the Court Exceed $13 Million
Washington, DC – The United States Commodity Futures Trading Commission (CFTC) announced today that Judge A. Howard Matz of the U.S. District Court for the Central District of California issued a consent order settling the CFTC’s action against Hao Jan Lu, of Rowland Heights, California.
The consent order stems from a First Amended Complaint filed by the CFTC on May 10, 2004, alleging that Lu, along with defendants Emerald Worldwide Holdings, Inc. (Emerald) of City of Industry, California, Jian Zhuang (Zhuang) of Japan, and City Trust and Investment Co. Inc. (City Trust) of Japan, fraudulently solicited customers in Japan and China to invest more than $5 million to trade illegal off-exchange foreign currency futures contracts in the United States (see CFTC News Release 4929-04, May 21, 2004).
The consent order against Lu follows the entry on July 5, 2005, of an order of summary judgment that found him liable, as charged in the First Amended Complaint. Specifically, the CFTC’s complaint alleged that Emerald’s promotional materials contained false statements regarding Emerald’s registration status and affiliation with entities that were legitimately registered with the CFTC. The complaint also alleged that, rather than trade the customers’ funds as promised, Emerald and City Trust transferred the funds to various bank accounts in the U.S., Japan, China, and Hong Kong in the names of Emerald, City Trust, and others.
The complaint charged that through the fraudulent solicitation of retail customers to deposit funds in United States bank accounts to trade illegal off-exchange foreign currency futures contracts in the United States, Emerald and City Trust violated the anti-fraud and other provisions of the Commodity Exchange Act (CEA). The complaint further charged that Emerald, City Trust, Zhuang, and Lu violated the CEA by misappropriating customer investment funds deposited into Emerald’s and the relief defendants’ United States bank accounts. A default judgment was entered against City Trust on April 19, 2005 (see CFTC Press Release 5072-05, April 27, 2005).
The consent order requires Lu to pay $1,092,925.38 in restitution and a civil monetary penalty of $65,000. The order also permanently enjoins Lu from, among other things, engaging in any commodity-related activity, including (but not limited to) commodity trading and soliciting customers to invest in commodity futures and options.
Previously, on November 30, 2006, the District Court issued consent orders settling the CFTC’s action against Emerald and Zhuang. One of those orders permanently enjoins Emerald and Zhuang from engaging in any commodity-related activity and the other order requires Emerald and Zhuang, collectively, to pay $3,433,722.61 in restitution and $9,250,000 in civil monetary penalties.
On May 17, 2007, the court issued an Order for Distribution of Restitution and Appointment of Fund Administrator, which appoints Robb Evans & Associates LLC as Fund Administrator (see CFTC Press Release 5362-07, July 27, 2007). As Fund Administrator, Robb Evans & Associates LLC is authorized to create and manage the administration of the claims procedures and distribution of approximately $1.5 million currently available for restitution to eligible claimants. Claimants may contact Robb Evans & Associates LLC via mail at 11450 Sheldon Street, Sun Valley, CA 91352-1121 or via email at firstname.lastname@example.org. Information about the distribution is available at http://www.robbevans.com/html/emerald.html.
The following CFTC Division of Enforcement staff members are responsible for this case: Christine Ryall, Patricia Gomersall, Paul Hayeck, and Joan Manley.
Last Updated: October 11, 2007