CFTC News Release 4482-00

For Release December 22, 2000


Court Issues Restraining Order Freezing Assets, Barring the Destruction of Books and Records, and Prohibiting Further Violations of Federal Commodity Law

WASHINGTON---The Commodity Futures Trading Commission (CFTC) announced today that on December 21, 2000, the Honorable David W. McKeague of the U.S. District Court for the District of Michigan entered a restraining order against John F. O'Herron of Onekama, Michigan, and O'Herron Asset Management, Inc. (OAM), a Michigan corporation, freezing their assets, preventing the destruction or alteration of their books and records, and prohibiting further violations of the Commodity Exchange Act (CEA) and CFTC regulations. O'Herron was formerly registered with the CFTC as a commodity trading advisor and an associated person.

The court's order arises out of the six-count injunctive complaint filed by the CFTC on December 14, 2000, charging O’Herron and OAM with fraudulently operating a commodity pool and with registration violations.

Specifically, the CFTC complaint alleges that, since at least January 1998 and continuing through the present, O'Herron solicited, accepted, and pooled at least $2.7 million from approximately 27 members of the general public (investors), mostly Michigan residents, for the purported purpose of trading commodity futures. The complaint alleges that, among other things, O'Herron misappropriated funds received from investors and used them for personal expenses, misrepresented his past trading success to potential investors, fraudulently made promises of highly profitable trading while claiming to be able to limit risks, and issued false monthly commodity statements to investors -- all in violation of sections 4b(a)(i), (ii) and (iii); and 4o(1) of the CEA.

The complaint also alleges that, among other things, O'Herron and OAM failed to register with the CFTC as commodity pool operators, in violation of section 4m(1) of the CEA, and that since O'Herron was acting within the scope of his employment with OAM, OAM is liable for his actions or omissions.

In its continuing litigation against the defendants, the CFTC is seeking preliminary and permanent injunctive relief, an accounting, restitution to customers, disgorgement of ill-gotten gains, and civil monetary penalties of not more than the higher of $110,000 for each violation ($120,000 for violations on or after October 23, 2000) or triple the monetary gain to defendants, among other remedial relief. A hearing has been scheduled for January 29, 2001, before Judge McKeague on the CFTC’s motion for preliminary injunction.