UNITED STATES OF AMERICA
Before the
COMMODITY FUTURES TRADING COMMISSION

__________________________________________________________
)
In the Matter of: ) CFTC Docket No. 00 - 34
)
�� CTS FINANCIAL PUBLISHING, INC., )
�� formerly COMMODITY TREND SERVICE, INC., )
�� DEARBORN FINANCIAL PUBLISHING, INC., ) COMPLAINT AND NOTICE OF HEARING
�� DENNIS BLITZ, and ) PURSUANT TO SECTIONS 6(c) AND 6(d)
�� NICK VAN NICE, ) OF THE COMMODITY EXCHANGE ACT,
) AS AMENDED

Respondents.

)
__________________________________________________________ )


The Commodity Futures Trading Commission ("Commission" or "CFTC") has received evidence from its staff which tends to show, and the Commission's Division of Enforcement ("Division") alleges that:

I.

SUMMARY

1. As more fully set forth below, CTS Financial Publishing, Inc., formerly Commodity Trend Service, Inc. ("CTS"), Dearborn Financial Publishing, Inc. ("Dearborn"), Dennis Blitz ("Blitz"), and Nick Van Nice ("Van Nice") (collectively, the "Respondents") have engaged in acts and practices which constitute violations of Sections 4b(a)(i) and (iii), 4c(b), and 4o(1) of the Commodity Exchange Act, as amended ("Act"), 7 U.S.C. �� 6b(a) (i) and (iii), 6c(b), 6o(1) (1994), and Sections 4.41(a) and (b) and 33.10 of the Commission's Regulations ("Regulations"), 17 C.F.R. �� 4.41(a) and (b), 33.10 (2000).

2. From at least 1994 through 1996, in the marketing of its products relating to the trading of commodity futures and option contracts, CTS sent to the public fraudulent advertisements in magazine and brochure format and placed fraudulent advertisements in Investor's Business Daily. Specifically, those advertisements solicited individuals to purchase the following CTS products: Futures Charts, The Million Dollar No-Risk Trading Course,Futures Options Weekly, and The Million Dollar Trading Adventure.

3. Throughout each of the advertisements, the following message is conveyed repeatedly: through the purchase and use of CTS products, significant profits will be easily and immediately realized, and the risk of loss is virtually eliminated or significantly minimized.

4. More specifically, through direct-mail advertising and other advertisements, Respondents: (a) misrepresented the potential for profit through commodity futures and options trading, which misrepresentations were accompanied with little or no risk disclosure; (b) omitted to disclose that the seasonal tendencies of underlying commodities are typically already factored into the respective commodity option prices; (c)�used testimonials related to one product to promote other products; (d)�falsely represented that CTS and Dearborn personnel featured in CTS advertisements were actively and successfully trading, including but not limited to, failing to disclose Van Nice's losing trading record; (e)�repeatedly presented profit examples without disclosing that those examples were hypothetical; and (f)�omitted to disclose that selling commodity options could involve unlimited risk. As a result, Respondents violated the antifraud provisions of the Act and the Commission's Regulations.

5. For some period in 2000, CTS's operated and maintained an Internet site which promoted a product called SwingTrader. Subscribers could use SwingTrader to trade commodity futures and option contracts. Swing Trader falsely presented hypothetical trading results as actual, and failed to provide a hypothetical disclosure that conformed to Regulation 4.41(b), 17 C.F.R. � 4.41(b) (2000). Moreover, CTS's disclaimer was not prominently displayed, as required by Regulation 4.41(b)(2), 17 C.F.R. � 4.41(b)(2) (2000).

II.

RESPONDENTS

6. Respondent CTS is a Florida corporation with offices at 1201 US Highway 1, Suite 350, North Palm Beach, Florida 33408. Dearborn owned CTS from 1991 through 1998. At all times relevant, CTS transacted business nationally as a commodity trading advisor ("CTA"). At all times relevant, CTS was a subsidiary of Dearborn. CTS has never been registered with the Commission in any capacity.

7. Respondent Dearborn is an Illinois corporation located at 155 N. Wacker Dr., Chicago, IL 60606. Dearborn has never been registered with the Commission in any capacity.

8. Respondent Blitz was, from 1991 through 1998, a vice president of Dearborn and the president of CTS. During that period, Blitz was responsible for all operations of CTS. From 1998 to the present, he has been the president of Dearborn and chairman of CTS's board of directors. Blitz resides at 1000 North Lake Shore Plaza, Apt. 36-C, Chicago, IL 60611. Blitz has never been registered with the Commission in any capacity.

9. Respondent Van Nice was an editor at CTS from 1991 through 1995. From 1992 through the present, he has served as CTS's technical analyst for futures products. In January 1996, he became the business manager of CTS and, from that time forward, ran CTS on a daily basis. Van Nice resides at 6054 Hollywood St., Jupiter, FL 33458. In 1990 and 1991, Van Nice was registered as an associated person of a CTA and commodity pool operator.

III.

FACTUAL BACKGROUND

A. CTS's Product Advertisements

(1) CTS's Direct-mail Marketing

10. The acts and practices of the Respondents detailed below occurred from at least 1994 through 1996 (the "time period"), during which time period CTS acted as a CTA.

11. During the time period, CTS, while acting as a CTA, though mass, direct-mail marketing sent to members of the public advertising materials soliciting their purchase of various CTS commodity trading advisory publications and commodity futures trading courses. Those advertising materials were in a lengthy, full-color magazine format or in a lengthy brochure format. During the relevant period, CTS published and distributed to the public the following direct-mail advertisements:

These CTS products and commodity futures trading courses were also offered for sale to the public though advertisements placed by CTS in Investor's Business Daily, a business-oriented newspaper of general circulation published on weekdays, and contained statements and representations similar and/or identical to those contained in CTS's direct-mail advertisements.

12. Blitz and Van Nice caused to be created and/or gave final approval to all the CTS direct-mail and Investor's Business Daily advertisements.

13. During the time period, CTS caused a total of approximately 1.4 million mailings of Futures Traders' Profit Guide, New Wealth, Futures Traders Special "Options" Issue, and The Million Dollar Trading Adventure to be sent to members of the public, and caused advertisements for its products to be placed in Investor's Business Daily. As a result of those mailings and advertisements, CTS received at least 9,800 orders for the purchase of Futures Charts, The Million Dollar No-Risk Trading Course, Futures Options Weekly, or The Million Dollar Trading Adventure.

(2) CTS's Internet Website

14. For some period in January 2000, CTS's operated and maintained an Internet site, which promoted a product called SwingTrader. Subscribers could use SwingTrader to trade commodity futures and option contracts. Swing Trader falsely presented hypothetical trading results as actual, and failed to provide a hypothetical disclosure that conformed to Regulation 4.41(b), 17 C.F.R. � 4.41(b) (2000).

15. During that period, Van Nice exercised final review of all of CTS's advertisements, including the Swing Trader, and therefore knowingly induced CTS's violations relating to the Swing Trader. During that period, Blitz failed to put or have in place any system of internal control to detect and prevent violations of the Act and the Regulations. He, therefore, did not act in good faith and is liable for CTS's violations relating to the Swing Trader.

B. Fraudulent Representations1

(1) Profit Potential and Limited Risk Representations

16. Futures Traders' Profit Guide, New Wealth, and Futures Traders Special "Options" Issue all have the same basic format. They each have a core text in narrative form ("core text(s)") that is interspersed with numerous independent, boldface profit potential statements that in many instances are in a font size considerably larger than the size of the text font. They also each have interspersed throughout boxed texts, sidebars, and graphs that are related to but contain commentary separate from the core text. Like the core texts, the boxed texts, sidebars and graphs have numerous boldface profit statements in a large font size.

17. These boldface profit statements are used to fraudulently and repeatedly convey the following message to prospective purchasers: through the purchase and use of CTS products, significant profits will be easily and immediately realized, and the risk of loss is virtually eliminated or significantly minimized.

18. The following are examples of the boldface profit potential statements used to convey that message:

19. The core texts of Futures Traders' Profit Guide, New Wealth, and Futures Traders Special "Options" Issue also make numerous misrepresentations regarding the potential profitability and the risk of loss through the use of CTS products in commodity futures and options trading. Those core texts also repeatedly convey to prospective purchasers the false and misleading message that through the purchase and use of CTS products, significant profits will be easily and immediately realized, and the risk of loss is virtually eliminated or significantly minimized. For example:

20. The brochure for The Million Dollar Trading Adventure also contains numerous misrepresentations regarding the profit potential and risk of loss from purchasing the advertised trading course. The brochure for this product conveys to prospective purchasers, in specific representations and in its overall theme, the false and misleading message that through the purchase and use of the trading course, significant profits will be easily and immediately realized, and the risk of loss is virtually eliminated or significantly minimized. For example:

21. Many of the boldface and core text statements set forth above were used, in abbreviated form, in advertisements for Futures Charts, The Million Dollar No-Risk Trading Course, Futures Options Weekly, and The Million Dollar Trading Adventure placed by CTS in Investor's Business Daily.

22. The risk statements in all of the advertisements are few and in many instances in a font size smaller than the rest of the text. The ratio of profit potential statements to risk statements in all of CTS's advertisements is significantly disproportionate in favor of profit statements. As a result, they do not fairly and adequately present the possibility of loss in connection with trading commodity futures or option contracts, and, taken as a whole, do not contain a meaningful discussion or disclosure of the risks involved in trading commodity futures or option contracts.

23. On CTS's Internet site, the text at the top of the main page promoting the SwingTrader reads:

Now You Can Seek Profits Like These On A Daily Basis

Live Cattle � $632 in only 3 days

Bean Meal � $450 in a mere 2 days

Feeder Cattle � $475 in just 1 day

Sugar � $269 in a few short hours

24. Further down, CTS states that it has realized "100% winners and $1,826 in profits with only a $2,400 margin requirement."

25. CTS's Internet site provided the following disclaimer in very fine print at the bottom of the SwingTrader page:

NO REPRESENTATION IS BEING MADE THAT EVERY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS SIMILAR TO THOSE SHOWN, OR IN ANY AMOUNT. THE EXPERIENCE OF THE SUBSCRIBERS QUOTED HEREIN MAY HAVE LIMITED APPLICABILITY TO THE EXPERIENCE OF THE AVERAGE SUBSCRIBER. SOME OF THE EXAMPLES PROVIDED ARE SIMULATED OR HYPOTHETICAL, WHICH MEANS THEY ARE DONE ON PAPER BASED ON MARKET PRICES BUT WITHOUT ACTUAL MONEY BEING INVESTED. RESULTS MAY NOT REFLECT ACTUAL RESULTS. IN AN ACTUAL TRADING ENVIRONMENT THERE IS RISK OF LOSS AND PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

26. Since the disclaimer does not disclose which profit claims are based on hypothetical results and which ones are based on actual results, the reader has no way of knowing that the results for Live Cattle, Bean Meal, Feeder Cattle, or Sugar are hypothetical.

27. As a result, the Internet site promoting Swing Trader falsely presented hypothetical trading results as actual, and failed to provide a hypothetical disclosure that conformed to Regulation 4.41(b), 17 C.F.R. � 4.41(b) (2000). Moreover, CTS's disclaimer was not prominently displayed, as required by Regulation 4.41(b)(2), 17 C.F.R. � 4.41(b)(2) (2000).

(2) Representations Regarding the Trading Experiences and Trading Success of CTS Personnel Featured in Advertisements

28. The core texts of both Futures Traders Special "Options" Issue and New Wealth are in the first person. In Futures Traders Special "Options" Issue the narrator is Van Nice. In New Wealth, the narrator is Tom Triggs ("Triggs"), who at the time of New Wealth's initial publication, was employed at Dearborn and associated with CTS.

29. The core texts of both of Futures Traders Special "Options" Issue and New Wealth fraudulently represent that both Van Nice and Triggs were professional traders and had done a considerable amount of actual trading in commodity futures or option contracts. In fact, neither Van Nice nor Triggs engaged in any significant commodity futures or option trading, and what trading either of them did was minimal and for their own accounts.

30. Van Nice once traded an account in the mid-1990s, but the account was under $10,000, and he sustained aggregate net losses.

31. Although Futures Traders Special "Options" Issue contains numerous representations as to Van Nice's trading, it does not disclose the limited nature of his trading and the fact that he sustained aggregate net losses trading commodity futures or option contracts for his own account.

32. The following are examples of statements in Futures Traders Special "Options" Issue that falsely represent that Van Nice was an experienced, professional commodity option trader and that he used Futures Options Weekly to trade commodity options:

33. Moreover, the following is a statement in New Wealth that falsely represents to the public that Van Nice traded commodity futures and/or option contracts:

Each night, Nick Van Nice, editor of America's premier charting service, Futures Charts, will review his top trading strategies, reveal emerging market trends, and more. It's the next best thing to having Nick come into your home each evening to review the markets over a cup of coffee. Once you learn his trading savvy, you'll realize how many profit opportunities exist and how easy it is to make spectacular profits. Test his techniques against your own and see how yours match.

34. During the entire time he was employed at Dearborn and associated with CTS --March 1992 through September 1995--Triggs did not maintain a personal commodity futures trading account, did not trade commodity futures or option contacts, did not have authority to trade the accounts of others, and did not trade the accounts of others. The only time Triggs traded commodity futures was prior to 1990, and that trading was not profitable.

35. The following are statements in New Wealth that falsely represent to the public that Triggs traded commodity futures and/or option contracts (boldface and underlining in original):

In fact, Triggs had not been actively trading at any time near the time of the distribution of New Wealth. He traded futures personally prior to 1990, but the trading was not profitable, and he has not traded since that time period.

(3) Representations Regarding Joe Van Nice's Association with CTS and Futures Charts

36. The core text of Futures Traders' Profit Guide is also in the first person. The narrator is Joe Van Nice. Joe Van Nice was the owner of CTS prior Dearborn's purchase of the firm in October 1991, after which he was not associated with CTS or involved in its business activities.

37. The core text of Futures Traders' Profit Guide contains statements that falsely represent to the public that the representations and views contained therein were those of Joe Van Nice. In fact, the issues of Futures Traders' Profit Guide mailed to the public during the time period had not been reviewed or approved by Joe Van Nice. The following are examples of such statements:

(4) Use of Customer Testimonials in CTS Advertisements

38. All of the advertisements included customer "testimonials" attesting to the profits realized through the use of CTS products. Although CTS had on file these testimonials and the authorizations to use them, with one possible exception (where a facsimile letter was obtained from a customer verifying profits), CTS did not obtain and retain trading records from customers demonstrating that they, in fact, realized profits attributed to them in the advertisements.

39. CTS used testimonials for one product to advertise the sale of other unrelated products. Testimonials relating to the product Futures Charts were used to advertise the benefits and effectiveness of (a) The Million Dollar No-Risk Trading Course being offered in the New Wealth advertisement, and (b) the trading course being offered in The Million Dollar Trading Adventure. At the time those advertisements were published and disseminated, both of those courses were new and had not been offered previously to or used by members of the public. As a result, the use of those testimonials was misleading because no members of the public nor any prior purchasers of other CTS products testified -- or could testify -- to their results, effectiveness or usefulness; CTS did not have a reasonable basis for using the testimonials to advertise its products; and the testimonials did not reflect the typical or ordinary experience of members of the public who used these CTS products.

(5) Representations Regarding the Risks Associated with Trading Commodity Options

40. Throughout Futures Traders Special "Options" Issue, the ability to limit risk "to the exact penny" trading commodity options is touted. While an investor could limit risk in the purchase of commodity options, it is not the case when options are sold.

41. Futures Options Weekly, which is the product being offered in this advertisement, purportedly permits the subscriber to identify overvalued options, i.e., selling opportunities, and undervalued options, i.e., buying opportunities. For example, CTS stated:

[I]f the option is 'undervalued' or 'extremely undervalued,' I would buy either put or call options, depending upon the direction of the price trend. But I would never short options in this area. Or, if the option is 'overvalued' or 'extremely overvalued,' I would sell options here. But I would never buy options in this zone.

CTS did not disclose anywhere that, in selling options, the risk of loss is limitless.

42. When Futures Traders Special "Options" Issue discusses the selling of options it does not mention or alert the prospective purchaser of Futures Options Weekly to the risks attendant to the selling of commodity options. In addition, it does not mention or alert the prospective purchaser of Futures Options Weekly to the margin requirements associated with the selling of commodity option contracts.

43. In a "Profit Tip" in Futures Traders Special "Options" Issue captioned "Can't Miss 'Bookmaker's' Strategy Brings Home 90% Profits," a strategy of selling both call and put options in sugar is discussed without any mention of the risks associated with selling options or the potential margin calls that may be made on options sold.

(6) Representations Regarding Seasonal Tendencies in Commodity Options

44. CTS misrepresented the potential profits attainable in purchasing commodity options on commodities that exhibit seasonal tendencies. A sidebar in Futures Traders Special "Options" Issue reads:

Insiders know how dynamic the most amazing money-making secret in the world really can be. Each August, they prepare to buy options on heat [sic] oil or gas. From mid-August to early October, distributors stock up their inventories ahead of the winter months. Over the last 20 years, heating [sic] and unleaded gas prices have risen 80% of the time during these months as dealers bid up prices. Based on this simple trading secret--and the proprietary safety filters Nick Van Nice has developed--you could have purchased an unleaded gas call option for only $336. As the seasonal tendency unfolded and gas prices rose, traders who did just that made a quick $798 profit. That's triple their money in only 5 weeks.

CTS did not disclose anywhere that the seasonal tendencies of underlying commodities are typically already factored into the option prices of those commodities.

(7)Misleading Use of Hypothetical Profit Examples

45. CTS's advertisements also contain numerous misleading profitable trading examples that CTS represents could have been realized by using its products. All of those examples were hypothetical. Only Futures Traders Profit Guide contains a statement that certain trades had not actually been executed. That statement, repeated four times, is, however, in small print and is made in connection with and modifies only one set of profitable trading examples contained in the advertisement.

46. Van Nice selected the profit examples to be included in CTS advertisements. He only selected profitable examples and, therefore, those examples were not necessarily representative of the trades that purchasers of CTS products could expect or would realize. In essence, Van Nice "cherry-picked" the profit examples to hype the trading effectiveness of the CTS products being advertised and thereby misled purchasers and prospective purchasers of CTS products.

47. Only once, in Futures Traders' Profit Guide, do any of these advertisements state in connection with examples of profitable trades that "other suggested trades lost money," or words to that effect. As a result, they do not fairly and adequately present the possibility of loss in connection with trading commodity futures or option contracts, and, taken as a whole, do not contain a meaningful discussion or disclosure of the risks involved in trading commodity futures or option contracts.

IV.

VIOLATIONS OF THE COMMODITY EXCHANGE
ACT AND REGULATIONS THEREUNDER

COUNT I

VIOLATIONS OF SECTIONS 4b(a)(i) and (iii) OF THE ACT:
COMMODITY FUTURES FRAUD

48. The allegations contained in paragraphs 1 through 47 above are realleged and incorporated by reference.

49. From at least October 1, 1995 through at least November 1, 1996 and for some period in 2000, CTS, Van Nice and Blitz violated Sections 4b(a)(i) and (iii) of the Act, 7 U.S.C. �� 6b(a)(i) and (iii) (1994), in that they willfully cheated, defrauded or deceived, or attempted to cheat, defraud or deceive other persons by, among other things, making material misrepresentations and omissions of fact, including, but not limited to the misrepresentations and omissions set forth in paragraphs 1 through 47 above.

50. Each fraudulent representation and omission is alleged as a separate and distinct violation of Sections 4b(a)(i) and (iii) of the Act, 7 U.S.C. �� 6b(a)(i) and (iii) (1994).

51. Blitz and Van Nice willfully aided, abetted, counseled, commanded, induced, procured, caused, or acted in combination or concert with CTS and each other in the foregoing violations of Sections 4b(a)(i) and (iii) of the Act, 7 U.S.C. �� 6b(a)(i) and (iii) (1994). Blitz and Van Nice are therefore responsible for CTS's and each others' violations of Sections 4b(a)(i) and (iii) of the Act, 7 U.S.C. �� 6b(a)(i) and (iii) (1994), pursuant to Section 13(a) of the Act, 7 U.S.C. � 13c(a) (1994).

52. Blitz and Van Nice directly or indirectly controlled CTS, and did not act in good faith or knowingly induced, directly or indirectly, the violations described above, and, pursuant to Section 13(b) of the Act, 7 U.S.C. � 13c(b) (1994), are each liable for CTS's violations of Section 4b(a)(i) and (iii) of the Act .

53. Pursuant to Section 2(a)(1)(A)(iii) of the Act, 7 U.S.C. � 4 (1994), and Regulation 1.2, 17 C.F.R. � 1.2 (2000), CTS is liable for any violations of Sections 4b(a)(i) and (iii) of the Act, 7 U.S.C. �� 6b(a)(i) and (iii) (1994), by its officers, directors, managers, employees and agents, in that all such violations were within the scope of each person's office, employment or agency with CTS.

54. Pursuant to Section 2(a)(1)(A)(iii) of the Act, 7 U.S.C. � 4 (1994), and Regulation 1.2, 17 C.F.R. � 1.2 (2000), Dearborn is liable for any violations of Sections 4b(a)(i) and (iii) of the Act, 7 U.S.C. �� 6b(a)(i) and (iii) (1994), by its officers, directors, managers, employees and agents from at least October 1, 1995 through at least November 1, 1996, in that all such violations were within the scope of each person's office, employment or agency with Dearborn.

COUNT II

VIOLATIONS OF SECTION 4o(1) OF THE ACT AND
COMMISSION REGULATION SECTION 4.41(a) and (b):
FRAUD BY A CTA AND FAILURE TO
IDENTIFY TRADES AS HYPOTHETICAL

55. The allegations contained in paragraphs 1 through 47 above are realleged and incorporated by reference.

56. From at least October 1, 1995 through at least November 1, 1996 and for some period in 2000, CTS, Van Nice and Blitz violated Section 4o(1) of the Act, 7 U.S.C. � 6o(1) (1994), and Regulation 4.41(a) and (b), 17 C.F.R. � 4.41(a) and (b) (2000),2 in that they directly or indirectly employed a device, scheme or artifice to defraud clients or prospective clients, or engaged in transactions, practices or a course of business which operated as a fraud or deceit upon clients or prospective, by, including but not limited to, making the misrepresentations and omissions set forth in paragraphs 1 through 47 above, and that they directly or indirectly failed to identify trades as hypothetical.

57. Each fraudulent representation and omission is alleged as a separate and distinct violation of Section 4o(1) of the Act, 7 U.S.C. � 6o(1) (1994), and Regulation 4.41(a) and (b), 17 C.F.R. � 4.41(a) and (b) (2000).

58. Blitz and Van Nice willfully aided, abetted, counseled, commanded, induced, procured, caused, or acted in combination or concert with CTS and each other in the foregoing violations of Section 4o(1) of the Act, 7 U.S.C. � 6o(1)(1994), and Regulation 4.41(a) and (b), 17 C.F.R. � 4.41(a) and (b) (2000). Blitz and Van Nice are therefore responsible for CTS's and each others' violations of Section 4o(1) of the Act, 7 U.S.C. � 6o(1) (1994), and Regulation 4.41(a) and (b), 17 C.F.R. � 4.41 (2000), pursuant to Section 13(a) of the Act, 7 U.S.C. � 13c(a) (1994).

59. Blitz and Van Nice directly or indirectly controlled CTS, and did not act in good faith or knowingly induced, directly or indirectly, the violations described above, and, pursuant to Section 13(b) of the Act, 7 U.S.C. � 13c(b) (1994), are each liable for CTS's violations of Section 4o(1) of the Act, 7 U.S.C. � 6o(1) (1994), and Regulation 4.41(a) and (b), 17 C.F.R. � 4.41(a) and (b) (2000).

60. Pursuant to Section 2(a)(1)(A)(iii) of the Act, 7 U.S.C. � 4 (1994), and Regulation 1.2, 17 C.F.R. � 1.2 (2000), CTS is liable for any violations of Section 4o(1) of the Act, 7 U.S.C. � 6o(1) (1994), and Regulation 4.41(a) and (b), 17 C.F.R. � 4.41(a) and (b) (2000), by its officers, directors, managers, employees and agents, in that all such violations were within the scope of each person's office, employment or agency with CTS.

61. Pursuant to Section 2(a)(1)(A)(iii) of the Act, 7 U.S.C. � 4 (1994), and Regulation 1.2, 17 C.F.R. � 1.2 (2000), Dearborn is liable for any violations of Section 4o(1) of the Act, 7 U.S.C. � 6o(1) (1994), and Regulation 4.41(a) and (b), 17 C.F.R. � 4.41(a) and (b) (2000), by its officers, directors, managers, employees and agents from at least October 1, 1995 through at least November 1, 1996, in that all such violations were within the scope of each person's office, employment or agency with Dearborn.

COUNT III

VIOLATIONS OF SECTION 4c(b) OF THE ACT
AND COMMISSION REGULATION SECTION 33.10:
COMMODITY OPTION FRAUD

62. The allegations contained in paragraphs 1 through 47 above are realleged and incorporated by reference.

63. From at least October 1, 1995 through at least November 1, 1996 and for some period in 2000, CTS, Van Nice and Blitz violated Section 4c(b) of the Act, 7 U.S.C. � 6c(b) (1994), and Regulation 33.10, 17 C.F.R. � 33.10 (2000), in that they directly or indirectly cheated or defrauded or attempted to cheat or defraud, or deceived or attempted to deceive other persons in or in connection with an offer to enter into, the entry into, the confirmation of the execution of, or the maintenance of, commodity option transactions by, including but not limited to, making the misrepresentations and omissions set forth in paragraphs 1 through 47 above.

64. Each fraudulent representation and omission is alleged as a separate and distinct violation of Section 4c(b) of the Act, 7 U.S.C. � 6c(b) (1994), and Regulation 33.10, 17 C.F.R. � 33.10 (2000).

65. Blitz and Van Nice willfully aided, abetted, counseled, commanded, induced, procured, caused, or acted in combination or concert with CTS and each other in the foregoing violations of Section 4c(b) of the Act, 7 U.S.C. � 6c(b) (1994), and Regulation 33.10, 17 C.F.R. � 33.10 (2000). Blitz and Van Nice are therefore responsible for CTS's and each others' violations of Section 4c(b) of the Act, 7 U.S.C. � 6c(b) (1994), and Regulation 33.10, 17 C.F.R. � 33.10 (2000), pursuant to Section 13(a) of the Act, 7 U.S.C. � 13c(a) (1994).

66. Blitz and Van Nice directly or indirectly controlled CTS, and did not act in good faith or knowingly induced, directly or indirectly, the violations described above, and, pursuant to Section 13(b) of the Act, 7 U.S.C. � 13c(b) (1994), are each liable for CTS's violations of Section 4c(b) of the Act, 7 U.S.C. � 6c(b) (1994), and Regulation 33.10, 17 C.F.R. � 33.10 (2000).

67. Pursuant to Section 2(a)(1)(A)(iii) of the Act, 7 U.S.C. � 4 (1994), and Regulation 1.2, 17 C.F.R. � 1.2 (2000), CTS is liable for any violations of Section 4c(b) of the Act, 7 U.S.C. � 6c(b) (1994), and Regulation 33.10, 17 C.F.R. � 33.10 (2000), by its officers, directors, managers, employees and agents, in that all such violations were within the scope of each person's office, employment or agency with CTS.

68. Pursuant to Section 2(a)(1)(A)(iii) of the Act, 7 U.S.C. � 4 (1994), and Regulation 1.2, 17 C.F.R. � 1.2 (2000), Dearborn is liable for any violations of Section 4c(b) of the Act, 7 U.S.C. � 6c(b) (1994), and Regulation 33.10, 17 C.F.R. � 33.10 (2000), by its officers, directors, managers, employees and agents from at least October 1, 1995 through at least November 1, 1996, in that all such violations were within the scope of each person's office, employment or agency with Dearborn.

V.

By reason of the foregoing allegations, the Commission deems it necessary and appropriate, pursuant to its responsibilities under the Act, to institute public administrative proceedings to determine whether the allegations set forth in Section III above are true and, if so, whether an appropriate order should be entered in accordance with Sections 6(c) and 6(d) of the Act, 7 U.S.C. �� 9 and 13b (1994).

Section 6(c) allows the Commission to enter an order (1) prohibiting a respondent from trading on or subject to the rules of any contract market and requiring all contract markets to refuse such person all trading privileges thereon for such period as may be specified in the Commission's order, (2) assessing against the respondent a civil penalty of $100,000 for each violation of the Act or Regulations committed before November 27, 1996, and not more than the higher of $110,00 or triple the monetary gain to the respondent for each violation of the Act or Regulations committed after November 27, 1996, and (3) requiring restitution to customers of damages proximately caused by the violations of the respondent.

Section 6(d) allows the Commission to enter an Order directing that the respondent cease and desist from violating the provisions of the Act and Regulations found to have been violated.

VI.

WHEREFORE, IT IS HEREBY ORDERED that a public hearing for the purpose of taking evidence and hearing arguments on the allegations set forth in Section III above be held before an Administrative Law Judge, in accordance with the Rules of Practice under the Act, 17 C.F.R. �� 10.1 et seq. (2000), at a time and place to be fixed as provided in Section 10.61 of the Rules of Practice, 17 C.F.R. � 10.61 (2000), and that all post-hearing procedures shall be conducted pursuant to Sections 10.81 through 10.107 of the Rules of Practice, 17 C.F.R. �� 10.81 through 10.107 (2000).

IT IS FURTHER ORDERED that each Respondent shall file an Answer to the allegations against said Respondent in the Complaint within twenty (20) days after service, pursuant to Section 10.23 of the Rules of Practice, 17 C.F.R. � 10.23 (2000), and pursuant to Section 10.12(a) of the Rules of Practice, 17 C.F.R. � 10.12(a) (2000), shall serve two copies of such Answer and of any document filed in this proceeding upon Lloyd E. Friesen, Trial Attorney, Commodity Futures Trading Commission, Division of Enforcement, Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581, or upon such other counsel as designated by the Division. If any Respondent fails to file the required Answer or fails to appear at a hearing after being duly served, such Respondent shall be deemed in default, and the proceeding may be determined against such Respondent upon consideration of the Complaint, the allegations of which shall be deemed to be true.

IT IS FURTHER ORDERED that this Complaint and Notice of Hearing shall be served on each Respondent personally or by certified or registered mail forthwith pursuant to Section 10.22 of the Commission's Rules of Practice, 17 C.F.R. � 10.22 (2000).

In the absence of an appropriate waiver, no officer or employee of the Commission engaged in the performance of the investigative or prosecutorial functions in this or any factually related proceeding will be permitted to participate or advise in the decision upon this matter except as witness or counsel in proceedings held pursuant to notice.

By the Commission.
Dated: September 28, 2000 ______________________
Jean A. Webb
Secretary to the Commission

Commodity Futures Trading Commission



NOTES:

1 With respect to the statements from CTS product advertisements set forth below, all boldface, underlining, italics, use of capital letters, and other emphases appear in the original advertisements. The font size used herein does not necessarily reflect the font size in the original advertisements; in many instances, the font size used in the original advertisements is larger or considerably larger than the font size used herein.

2 Regulation 4.41(b) requires the following disclosure:

Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.