For Release: February 21, 2008
Florida-Based Executive Commodity Corp. and Three Employees Ordered to Pay Approximately $24 Million in Restitution and Penalties in CFTC Anti-Fraud Action
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that it obtained approximately $24 million in restitution and penalties in a consent order that settles a commodity options fraud action against Executive Commodity Corp. (Executive) of Pompano Beach, Florida; Thomas C. Kennedy, of Tamarac, Florida; Don D. Campbell of Parkland, Florida; and Alberto J. Jimenez of Coral Gables, Florida.
Specifically, the orders require the defendants to pay approximately $17,760,000 in restitution and $6,150,000 in civil monetary penalties for violating the anti-fraud provisions of the Commodity Exchange Act and CFTC regulations. The orders also permanently bar the defendants from any commodity-related business activity, including commodity trading on behalf of others and soliciting customers to invest in commodity futures and options
The separate consent orders of permanent injunction were entered on February 21, 2008, by the Honorable William P. Dimitrouleas of the U.S. District Court for the Southern District of Florida.
The orders stem from a CFTC complaint filed on June 20, 2006, alleging that Executive, Kennedy, Campbell, and Jimenez misrepresented facts and failed to disclose critical information when soliciting customers to trade commodity options.
“In this instance, the systematic lack of supervision cost innocent investors millions. This settlement demonstrates that the CFTC will not only pursue those who actively defraud investors, but will hold accountable those who chose to remain stagnant when apprised of the misconduct,” said CFTC Director of Enforcement Gregory Mocek.
The orders find that, from at least January 2002 to November 2005, Executive, and its sales staff – including Campbell and Jimenez who were under the direct supervision of Kennedy, the president and a manager of Executive – fraudulently solicited members of the public to trade commodity options by exaggerating the magnitude and likelihood of potential profits while downplaying the risk of loss. For example, the orders find that Campbell told a customer that a 30 percent profit was possible in two days, and Jimenez informed a customer that he could turn an $80,000 profit in seven to ten days buying crude oil options. In addition, the orders find that while Executive misrepresented the profit potential, it never told customers that the majority of its customer accounts were closed at a loss. The consent orders reveal that, from January 1, 2003 through December 2004, over 93 percent of the approximately 793 customers solicited by Executive closed their accounts at a loss, with approximately two-thirds of those customers losing over 95 percent of their invested funds trading through Executive.
Kennedy’s order finds him liable as president, manager, and co-owner of Executive for failing to develop or implement an adequate supervision system to ensure that Executive’s employees did not make fraudulent statements when soliciting customers.
The following CFTC Division of Enforcement staff members are responsible for this case: Todd Kelly, Peter Haas, Paul Hayeck, and Joan Manley.
Last Updated: February 21, 2008