The US Commodity Futures Trading Commission has obtained an emergency federal court order freezing the assets of defendants People’s Alternative of Los Angeles and its principals, Jaime Gallardo of Pasadena and Karl Ochoa and Maria Iracheta of Los Angeles.
The court’s order also prohibits the destruction of books and records and grants the CFTC immediate access to such documents.
The order stems from a CFTC enforcement action filed on 21 September 2010 in the US District Court for the Central District of California, charging the defendants with solicitation fraud and misappropriation of customer funds in connection with the operation of a commodity pool.
Specifically, the CFTC’s complaint charges that since at least November 2008, defendants fraudulently solicited and pooled at least USD1.2m from approximately 98 participants to invest in commodity futures, foreign currency, gold and securities.
However, the defendants allegedly failed to disclose to participants that their funds would be used to trade commodity futures and forex and failed to disclose the significant risks associated with such trading.
The defendants also misrepresented that participants would not lose their principal, while failing to disclose the full extent of their trading losses, according to the complaint.
The complaint also alleges that Gallardo, Ochoa and Iracheta together misappropriated at least USD533,000 of participant funds for personal uses, such as for automobile expenses, mortgage payments and debit card purchases for entertainment, travel and food.
In its continuing litigation, the CFTC seeks full restitution to defrauded customers, disgorgement of ill-gotten gains, rescission of contracts, civil monetary penalties, trading and registration bans and permanent injunctions against further violations of federal commodities laws.
The defendants have been ordered to appear in federal court on 8 October.
