CFTC CHARGES NORTH CAROLINA RESIDENT CHARGED WITH COMMODITY POOL FRAUD

FROM: COMMODITY FUTURES TRADING COMMISSION FOREX

CFTC Charges North Carolina Resident James Harvey Mason with Commodity Pool Fraud

Federal court issues emergency order freezing assets and protecting books and records of Mason, The JHM Forex Only Pool, and Forex Trading at Home

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Graham Mullen of the U.S. District Court for the Western District of North Carolina entered an emergency Order freezing and preserving assets under the control of defendant James Harvey Mason of Graham, North Carolina, and relief defendants The JHM Forex Only Pool (JHM) and Forex Trading at Home (FTAH). The Order also prohibits Mason, JHM, and FTAH from destroying books and records, appoints a receiver to protect customer funds, and grants the CFTC immediate access to the records of the defendant and his agents.

The Order arises out of a civil enforcement Complaint filed by the CFTC on March 27, 2013, charging Mason with fraudulently soliciting, accepting, and pooling at least $1.1 million from at least 60 individuals to participate in off-exchange foreign currency (forex) commodity pools and misappropriating at least $600,000 of participant funds.

According to the CFTC’s Complaint, Mason fraudulently told pool participants and prospective pool participants that they would be at no risk of losing their principal and would instead make profits of as much as 500 percent annually if they invested with one or both of JHM and FTAH. In fact, the Complaint alleges that the forex accounts traded lost more than $1 million since July 2010. The Complaint further alleges that Mason failed to register with the CFTC as a Commodity Pool Operator and also failed to disclose to participants that he had a conviction in 2000 for wire fraud in connection with the sale of commodities.

In its continuing litigation, the CFTC seeks a permanent injunction from future violations of federal commodities laws, permanent registration and trading bans, restitution to defrauded pool participants, disgorgement of ill-gotten gains, and civil monetary penalties.

The CFTC appreciates the assistance of the North Carolina Secretary of State’s Securities Division and the U.S. Attorney’s Office for the Western District of North Carolina.

CFTC Division of Enforcement staff members responsible for this case are Barry R. Blankfield, Jennifer E. Smiley, Heather Johnson, Patricia Gomersall, Joseph Konizeski, Scott Williamson, Rosemary Hollinger, Joan Manley, and Richard B. Wagner

CFTC ANNOUNCES EMERGENCY ASSET FREEZE AGAINST COMMODITY TRADING ADVISOR

FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
CFTC Charges California Resident Victor Yu and His Company, VFRS, LLC, with Multi-Million Dollar Forex Fraud and Failure to Register as a Commodity Trading Advisor

Federal court issues order freezing defendants’ assets and protecting books and records

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that on July 27, 2012, The Honorable Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California entered an emergency order freezing the assets of defendants Victor Yu (Yu) of San Jose, Calif., and his company, VFRS, LLC (VFRS), based in Alameda, Calif. The court’s order also prohibits the destruction or alteration of books and records, and grants the CFTC immediate access to such documents. The judge set a hearing on the CFTC’s motion for a preliminary injunction for August 10, 2012.

The order arises out of a civil enforcement action filed by the CFTC on July 26, 2012, charging defendants Yu and VFRS with defrauding at least 100 clients in connection with off-exchange foreign currency (forex) trading. The CFTC’s complaint also charges Yu with failure to register with the CFTC as a commodity trading advisor (CTA).

According to the CFTC complaint, since at least August 2009 to the present the defendants’ clients invested more than $5 million in forex trading accounts and lost more than $2 million, while defendants received fees of more than $270,000 from their clients.

The defendants allegedly fraudulently solicited clients to open forex accounts that allowed the defendants to place trades in their accounts using trading software that Yu claimed to have developed. Further, defendants misrepresented to clients that the trading software made forex trading "extremely safe," prevented clients from ever reaching certain loss thresholds, and guaranteed that clients will not have a losing trade, according to the complaint. In addition, defendants allegedly misrepresented to some prospective customers that their trading software had shown positive returns on every trade it had ever made and has successfully predicted activity in the currency markets back to the 1920s.

To solicit new clients, Yu and VFRS, by and through Yu, held face-to-face meetings with prospective clients in various clients’ homes, obtaining leads primarily through word-of-mouth, according to the complaint. Yu allegedly promised existing clients a referral fee or a percentage of any profits earned in the new clients’ forex accounts. When opening accounts, clients signed agreements promising to pay the defendants a service fee of 30 percent of their net profits, and the defendants provided log-in and password information so that clients could "hook up" to the defendants’ trading software. The complaint alleges that by this conduct, Yu acted as a CTA and was required to register with the CFTC.

In its continuing litigation, the CFTC seeks civil monetary penalties, restitution, trading and registration bans, and preliminary and permanent injunctions against further violations of the federal commodities laws, as charged.