Release: #4246-99 (Civ 97-5691)

For Release: March 17, 1999

Minnesota District Court Bars James M. Zoller And The Tech-Comm Limited Partnerships From The Futures Industry For Fraudulent Scheme; Orders Restitution to Defrauded Investors of Over $4.91 Million

WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced that U.S. District Court Judge David S. Doty of the District of Minnesota entered a consent order of permanent injunction against James M. Zoller of Apple Valley, Minnesota, and the Tech-Comm Limited Partnerships, a series of 29 Minnesota Limited Partnerships operated by Zoller as commodity pools.

The court's order permanently enjoins the defendants from further violations of the federal commodity laws and regulations, orders Zoller to pay restitution to defrauded investors totaling $4,914,783.60 (plus prejudgment and post-judgment interest thereon), and prohibits the defendants from ever engaging in activities in the futures industry, on behalf of themselves or others.

The court's order, entered on February 23, 1999, stems from a six-count civil injunctive action filed by the CFTC on November 21, 1997 against Zoller and the Tech-Comm pools (see CFTC News Release #4083-97, November 25, 1997). The order finds that from 1984 until October 1997, Zoller and the Tech-Comm pools accepted more than $13 million from at least 219 investors throughout the country and fraudulently misappropriated $4,914,783.60 of investors' funds.

The order further finds that Zoller misrepresented to investors that all of their funds would be used to trade commodity futures when, in fact, Zoller placed only approximately $719,000 of the approximately $13 million raised into commodity trading accounts. The order also finds that Zoller violated the anti-fraud provisions of the Commodity Exchange Act by misrepresenting to investors, both orally and in written statements, that they were earning profits from the futures trading he conducted when, in fact, Zoller consistently lost money in the trading that he actually did engage in over the last 13 years.

According to the findings in the order, to facilitate his operation of the Tech-Comm pools, Zoller used some of the investors' funds to make returns of principal and purported profits to other investors, in a manner akin to a Ponzi scheme. This was done, according to the order, to deceive investors into believing that their funds were being utilized to profitably trade commodity futures and to attract additional funds. Finally, the court's order finds that Zoller illegally acted as a commodity pool operator without proper registration with the CFTC; violated the CFTC's regulations by accepting funds in his own name and not in the name of the pools; and illegally commingled investors' funds with his own.

In a related criminal action brought by the United States Attorney for the District of Minnesota, Zoller pled guilty in June 1998 to four counts of mail fraud and one count of embezzlement. Zoller was sentenced to 41 months in prison and he is currently serving that sentence.

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