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Monday, December 29, 2014

CFTC ORDERS MAN AND CO. TO PAY $2.5 MILLION IN SANCTIONS

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 
December 16, 2014

Federal Court Orders Missouri Resident Daniel K. Steele and His Missouri Company, Champion Management International, LLC, to Pay over $2.5 Million in Monetary Sanctions

Order Also Requires Relief Defendant Judy D. Steele to Disgorge Ill-Gotten Gains

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced that the Honorable Ronnie L. White of the U.S. District Court for the Eastern District of Missouri entered a Consent Order for permanent injunction against Defendants Daniel K. Steele and Champion Management International, LLC, (Champion Management), a Missouri limited liability company. The Court’s Order requires Defendants jointly to pay $1,544,722.81 in restitution to defrauded investors, imposes a $1 million civil monetary penalty, and requires Relief Defendant Judy D. Steele to disgorge ill-gotten gains totaling $187,083.58. The Order also imposes a permanent trading and registration ban on the Defendants and prohibits them from further violations of the anti-fraud provisions of the Commodity Exchange Act (CEA), as charged.

The Court’s Order stems from a CFTC Complaint filed on September 25, 2013 and an amended Complaint filed on July 16, 2014, charging that from approximately February 28, 2011 through September 25, 2013, Steele individually and acting as an agent of Champion Management solicited at least $1.97 million from at least 24 pool participants to participate in three foreign currency (forex) pools (see CFTC Press Release and Complaint 6712-13, September 26, 2013, and CFTC Press Release and Amended Complaint 6962-14, July 18, 2014).

Specifically, the Court’s Order finds that Steele knowingly made material misrepresentations to actual and prospective pool participants concerning Defendants’ forex trading and trading results, such as:  “I’ve been doing this long enough to know what I can consistently deliver above expenses, in all market conditions…the return is fixed and is currently 5% per month on your invested amount compounded… .”

The Court’s Order also finds, among other things, that Steele concealed trading losses, misappropriated approximately $1 million of pool participants’ funds, issued false account statements to pool participants, and failed to disclose that the counterparty to the retail forex transactions that were offered or entered into with the respective pools was not registered with the CFTC as a Retail Foreign Exchange Dealer, all in violation of Sections 4o and 4b of the CEA.

The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

The CFTC appreciates the assistance of the Missouri Secretary of State, Securities Division, the U.S. Postal Inspection Service, and the Swiss Financial Market Supervisory Authority.

CFTC Division of Enforcement staff members responsible for this case are Eugene Smith, Melanie Devoe, George Malas, Kyong J. Koh, Peter M. Haas, and Paul G. Hayeck.

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CFTC’s Foreign Currency (Forex) Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Foreign Currency Trading (Forex) Fraud Advisory, which states that the CFTC has witnessed a sharp rise in Forex trading scams in recent years and helps customers identify this potential fraud.

Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.