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Handcuffs and money

Michael J Welke to pay USD387,000 to settle commodity pool fraud charges

The US Commodity Futures Trading Commission (CFTC) has obtained a federal court order requiring defendant Michael J Welke, of Omaha, Nebreska, to pay USD257,000 in disgorgement and a USD130,000 civil monetary penalty to settle CFTC charges of fraud, failure to register with the CFTC, and failure to comply with disclosure and reporting requirements.

The consent order of permanent injunction, entered on 12 February 2013 by Chief Judge Laurie Smith Camp of the US District Court for the District of Nebraska, also imposes permanent trading and registration bans against Welke and prohibits him from violating provisions of the Commodity Exchange Act and CFTC Regulations, as charged.

The order stems from a CFTC complaint filed on 23 May 2011 against Welke, along with defendants Jonathan W Arrington, Michael B Kratville, and their companies, Elite Management and MJM Enterprises. The CFTC complaint alleged that from approximately August 2005 until at least July 2008, Welke and the other defendants operated a fraudulent scheme that solicited at least USD4.7m from more than 130 commodity pool participants, mostly from the Omaha area, to trade commodity futures contracts and off-exchange foreign currency contracts.

The CFTC complaint further charged that Welke acted as a reference to prospective pool participants without disclosing his status as an owner and officer of Elite Management and MJM and that Welke, along with the other defendants, misappropriated more than USD1.5m of pool participants’ funds, made false representations of material facts, and issued false statements to the pool participants regarding the profitability and value of their accounts.

The CFTC has previously obtained entries of default against Arrington, Elite Management, and MJM. The CFTC’s litigation continues against Kratville.

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