For Release: September 30, 2009
Federal Court Freezes Assets of Texas Trading Firms M25 Investments, Inc. and M37 Investments, LLC, and Scott Kear, Sr., Jeffrey Lyon and David Seaman, Charged by the CFTC with an $8 Million Forex Fraud
Court appoints a receiver to indentify assets and funds owed customers
Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today announced it obtained an emergency court order freezing assets held by defendants M25 Investments, Inc., M37 Investments, LLC, Scott P. Kear, Sr., Jeffrey L. Lyon, all of Waxahachie, Tex., and David G. Seaman, of Arlington, Tex. The court’s order also prohibits the destruction of records and appoints a receiver to identify assets, customers and amounts owed customers.
The court’s order stems from a CFTC anti-fraud enforcement action filed on September 29, 2009, in the U.S. District Court in Dallas, charging the defendants with fraudulently soliciting at least $8 million from approximately 224 customers in connection with the trading of foreign currency (forex), forex options and commodity futures contracts. The defendants ran their alleged scheme out of their offices in Texas, West Virginia and Mississippi. Many of the defendants’ customers were elderly and knew each other through churches in West Virginia, Mississippi, Texas, Maryland and other states, according to the CFTC complaint.
The CFTC complaint further alleges that defendants fraudulently guaranteed monthly returns of 2 percent and annual returns of 24 percent and falsely claimed to be successful forex traders. Defendants did not disclose to prospective and existing customers that a significant portion of their funds would not be used for trading. The defendants also did not disclose that as of at least March 31, 2009, they did not have sufficient assets to pay the promised monthly profits or return principal.
The complaint also alleges that the defendants overall lost funds trading forex, forex options and commodity futures and subsequently concealed their trading losses, lack of trading and other uses of customer funds by sending monthly statements to their customers that falsely assured customers that they were earning two percent every month.
The CFTC also charges M25 and the individual defendants with registration violations in connection with the operation of a pool for purposes of trading on-exchange commodity futures contracts without being properly registered with the CFTC.
The Honorable Barbara M.G. Lynn ordered defendants to appear at a hearing on December 22, 2009, at 10:00 a.m. to show cause why a preliminary injunction should not be issued.
Customers should contact the Receiver Kelly Crawford at (214) 706-4200 or visit www.solidcounsel.com.
In its continuing litigation, the CFTC seeks a permanent injunction, restitution, disgorgement of ill-gotten gains, civil monetary penalties and permanent trading bans.
The CFTC thanks the office of the United States Attorney for the Northern District of Texas and the National Futures Association for assistance in this matter.
The following CFTC Division of Enforcement staff are responsible for this case: Glenn I. Chernigoff, Kara Mucha, Michelle Bougas, Luke B. Marsh, Gretchen L. Lowe and Phyllis J. Cela.
Last Updated: September 30, 2009