Release: #4052-97 (97-Civ 6800)

For Release: September 16, 1997


Filing of Action Results from Cooperative Enforcement Effort Between CFTC, Redondo Beach Police Department, and California Department of Corporations

WASHINGTON - The Commodity Futures Trading Commission (CFTC) announced today that the Honorable Mariana Pfaelzer of the U.S. District Court for the Central District of California entered a temporary restraining order and an asset freeze order against L.A. Forex, Inc., Gabor Urban (president of L.A. Forex), and Marta Ban (vice president of L.A. Forex), all of Redondo Beach, California. None of the defendants has ever been registered with the CFTC in any capacity.

The court's temporary restraining order prohibits the defendants from soliciting or accepting funds from the public in any investment relating to commodity futures. In addition, the asset freeze order freezes the defendants' assets and prohibits them from both destroying books and records and denying CFTC representatives access to such records. The order was entered on September 15, 1997.

Defendants Allegedly Misappropriated More than $900,000 in Investors' Funds and Used the Funds for Personal Items

The court's action stems from a five-count civil complaint filed by the CFTC on September 12, 1997, alleging that since early 1996 the defendants misappropriated more than $900,000 in a fraudulent Ponzi scheme in connection with their operation of an unregistered commodity futures pool.

Specifically, the CFTC complaint alleges that the defendants falsely represented to prospective and current investors that their commodity futures trading has been highly profitable when, in fact, the only trading conducted by Urban and Ban sustained over $670,000 in trading losses. The defendants made "profit" payments to current investors using money received from newer investors, in order to create an illusion of profitable trading, the complaint alleges.

In addition, the CFTC complaint alleges that the defendants made numerous fraudulent misrepresentations and omissions in the course of their solicitation of investors. Defendants allegedly misrepresented to investors, among other things, that their trading record was highly profitable and that they would implement measures to reduce the risk of futures trading. Defendants also allegedly misrepresented the risky nature of trading futures. Finally, the complaint alleges that defendants failed to disclose that they were misappropriating investors' funds for their own use, that most trades resulted in significant losses, and that "profits" were being paid out of other investors' principal.

The CFTC's injunctive action is a result of a cooperative civil and criminal investigation by the CFTC; the Redondo Beach, California, Police Department; and the California Department of Corporations. On September 11, the Redondo Beach Police Department served a criminal search warrant on the defendants and seized defendants' trading equipment and commodity pool records.

A Second Hearing on the Temporary Restraining Order is Set for September 23, 1997

On Monday, September 23, 1997, the court will consider the CFTC's request for a temporary restraining order prohibiting violations of the Commodity Exchange Act (CEA) and CFTC regulations as charged, ordering an accounting, and allowing expedited discovery against defendants. The court will also consider the CFTC's request for an order to show cause as to why the court should not issue a preliminary injunction against the defendants.

In its litigation against the defendants, the CFTC is seeking preliminary and permanent civil injunctions in addition to other remedial relief, including cease and desist orders, an accounting, disgorgement of unlawfully obtained benefits, and civil penalties to be assessed by the court separately against each defendant in amounts not to exceed the higher of $110,000 or triple the monetary gain to defendants for each violation of the CEA and CFTC regulations.