Thu, 11/12/2008 - 06:00
The US Commodity Futures Trading Commission has obtained more than USD12m in restitution and civil monetary penalties against nine Florida defendants to settle an anti-fraud lawsuit in connection with the offer and sale of illegal off-exchange foreign currency options.
On 4 December 2008, US Magistrate Judge Edwin Torres of the Southern District of Florida entered four separate consent orders of permanent injunction against The Liberty Mutual Group, Addison Financial Group, Addison Management Group, Hamlin Mercer Group, Colfax Management Group, (collectively 'Addison Enterprise'), Alan Lerner, Forefront Investments, Todd Guthrie and Benji Dayan, all of whom were charged with fraud in a CFTC complaint filed on 16 May 16 2007.
Specifically, the court's orders require defendants to pay a total of USD7,081,036.63 in restitution to defrauded investors.
In addition, the orders impose civil monetary penalties, as follows: The Addison Enterprise, USD3,329,524.50; Forefront Investments, USD1, 065,459.61; Dayan, USD260,000; Guthrie, USD260,000; and Lerner, USD260,000.
The orders also permanently bar Forefront Investments and the Addison Enterprise firms from engaging in any commodity-related activity, and permanently bar Dayan, Guthrie and Lerner from engaging in any commodity trading on behalf of others on any exchange or soliciting or accepting any funds from others for any on-exchange commodity trading.
Additionally, all defendants are permanently prohibited from applying for registration with the CFTC, engaging in any activity requiring registration, or acting as a principal, agent, or any other officer or employee of any registered entity or person required to be registered.
The orders find that, from at least February 2005 through at least June 2006, the Addison Enterprise fraudulently solicited retail customers to engage in off-exchange forex options transactions, with Forefront Investments as the counterparty to each transaction.
Customers lost at least USD7,081,036.63 out of approximately USD7,611,306.46 that they invested in the scheme, or approximately 93 per cent of their investments, while Addison Enterprise generated commissions of USD3,329,524.50.
During the relevant period, Lerner acted as the controlling person of the Addison Enterprise, while Dayan and Guthrie were acting as the controlling persons of Forefront Investments.
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