The Commodity Futures Trading Commission has obtained more than USD25m in civil monetary penalties and equitable relief in orders against Safevest, a firm located in Mission Viejo, Cali
The Commodity Futures Trading Commission has obtained more than USD25m in civil monetary penalties and equitable relief in orders against Safevest, a firm located in Mission Viejo, California and its owners and officers Jon G. Ervin and John V. Slye.
Judge James V. Selna, of the US District Court for the District of California, Southern Division, issued separate orders requiring Safevest to pay a USD5m civil monetary penalty and Ervin and Slye each to pay a USD1m penalty.
The orders also provide for equitable relief and require the defendants to pay restitution and disgorgement totaling USD18,431,931.
Additionally, the orders permanently ban all three defendants from trading in any commodity.
The court’s orders stem from a 1 May 2008, CFTC complaint. The orders find that the defendants solicited more than 500 members of the public to send Safevest more than USD25.7m to purchase interests in a commodity pool that purportedly would trade commodity futures contracts. The defendants, however, did not use the customer funds to trade commodity futures but instead misappropriated virtually all the solicited funds.
The court also found that, to induce people to send funds, the defendants misrepresented that Safevest used computerized trading software that consistently produced daily profits of between 1.6 per cent and 1.9 per cent.
In addition to telling customers that profits were virtually guaranteed, the court found, the defendants also falsely represented that there was minimal risk of loss.
