Release: 4802-03
For Release: June 25, 2003


Complaint Charges British Capital Group and Michael Zelener With Fraudulently Soliciting Approximately $4 Million From Over 200 Customers

WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) announced today the filing of a federal complaint in the Northern District of Illinois charging a pair of Nevada corporations doing business in California under the name British Capital Group (British Capital), and British Capital President Michael Zelener with defrauding customers who invested in foreign currency (forex) futures. The Chicago, Illinois, firm of AlaronFX (AFX), a purported foreign currency dealer that held the customer funds, is also charged with liability for the fraudulent conduct.

The CFTC’s complaint charges that, since April 2001, British Capital fraudulently solicited approximately $4 million from customers to trade foreign currency futures contracts through the firm’s “Managed Currency Trading Accounts” program. The complaint alleges that British Capital and Zelener touted the forex trading program as a stable, conservative, high-yield, low-risk investment program -- staffed with professionals who oversee customer accounts on a 24-hour basis. According to the complaint, however, Zelener operated British Capital as a “boiler room” sales operation that fraudulently solicited unsophisticated investors through high-pressure sales tactics and phony promises of large profits – as much 120 percent annually, all with limited risk.

British Capital Customers Lost Virtually All of Their Funds

Contrary to the solicitations, British Capital customers lost virtually all of their funds, often within a few months of investing, according to the complaint. Also, as charged in the complaint, British Capital’s customers suffered more than $1.4 million in losses in the year 2002 alone, and British Capital had no round-the-clock supervision of customer accounts. The CFTC complaint alleges further that customers were typically unable to contact their account executives and the firm failed to respond to customer complaints. When investors requested the return of their account balances, British Capital either ignored their requests or did not respond until the customers lost all remaining funds, the complaint stated.

Chicago Firm Charged With Liability for Customer Fraud

The complaint alleges that approximately $4 million of British Capital’s customer funds were deposited and traded at AFX, a Chicago-based purported foreign currency dealer, and an affiliate of registered futures commission merchant Alaron Trading Corporation. The complaint alleges that, through a possibly exclusive introducing brokerage business relationship in which British Capital operated as AFX’s agent, AFX paid British Capital in excess of $1.4 million in compensation and fees in connection with the introduced customer accounts. This compensation arrangement was not disclosed to British Capital customers; rather, customers were led to believe that British Capital would not make money unless the customers’ accounts were profitable, according to the complaint.

Judge Enters Order Freezing Assets and Protecting Books and Records

On June 24, 2003, the Honorable Matthew F. Kennelly entered a restraining order freezing the assets of British Capital and Zelener. The restraining order also prohibits AFX, British Capital, and Zelener from destroying documents.

The CFTC is seeking an order enjoining future violations, requiring repayments to defrauded customers, the return of funds received illegally, and civil monetary penalties.

The following CFTC Division of Enforcement staff members are responsible for this case: Camille M. Arnold, Ava M. Gould, Mary Elizabeth Spear, Rosemary Hollinger, and Scott Williamson.

A copy of the CFTC complaint may be obtained at

Enforcement Media Case Contact
Rosemary Hollinger
Regional Counsel, CFTC Division of Enforcement
(312) 596-0520

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