For Release: September 16, 2008
U.S District Court Imposes Sanctions of More Than $2.9 Million Against Foreign Fund, Two Individuals, and a Tennessee Corporation in CFTC Anti-Fraud Action
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that it obtained orders imposing more than $2.9 million in sanctions against defendants Foreign Fund (a/k/a First Bank), Wolfgang J. Fastian of Troy, Pennsylvania, Ron Mealing of Nashville, Tennessee, and MW First Trustees Inc. (MW First), also of Nashville for their violations of the anti-fraud provisions of the Commodity Exchange Act. Foreign Fund was an Internet entity that maintained bank accounts in Nashville, Tennessee.
The orders also permanently bar defendants Foreign Fund, Fastian, and Mealing from any commodity related activity. MW First is required to disgorge all funds and assets remaining in its custody.
Specifically, the orders require Foreign Fund to pay restitution of $1,216,463 and a $1,216,463 civil monetary penalty; Fastian to pay $28,500 in restitution, turn over $187,000 of ill-gotten gains, and a $240,000 civil penalty; and Mealing to pay $13,425 in restitution and a $40,275 civil penalty.
Foreign Fund Operated through a Ukraine-based Website
The orders of permanent injunction were entered between February and June 2008 by the Honorable Robert L. Echols of the U.S. District Court for the Middle District of Tennessee and resolve a CFTC enforcement action filed on October 5, 2004. The CFTC action alleged that Foreign Fund, operating exclusively from a website in Ukraine, defrauded thousands of customers worldwide out of more than $3 million by offering illegal off-exchange futures contracts. Fastian and Mealing were charged with misappropriation in connection with their handling of customer funds. (See CFTC News Release 5005-04, October 12, 2004.)
Foreign Fund attracted customers by falsely representing that it was generating monthly profits of up to 100 percent through foreign currency futures trading. In fact, Foreign Fund did not buy or sell foreign currency futures contracts. Rather, it engaged in a Ponzi scheme whereby it used funds from new customers to pay previous customers, while misappropriating other customer funds and falsely representing that the customer payments were made from trading profits.
Relief Defendants Ordered to Turn Over More than $900,000 in Ill-Gotten Foreign Fund Customer Money
In February 2008, relief defendants Deana Whitely of Olds, Alberta, and Star Connection Inc. of Tortola, British Virgin Islands were ordered to turn over $245,424.24 and $658,000, respectively, in Foreign Fund customer funds to which they were not entitled.
The following CFTC Division of Enforcement staff members are responsible for this case: Michael Amakor, Patricia Gomersall, Lael Campbell, Todd Kelly, Peter Haas, Paul Hayeck, and Joan Manley.
Last Updated: September 16, 2008