UNITED STATES OF AMERICA
Before The
COMMODITY FUTURES TRADING COMMISSION
| _______________________________________________ | ||
| ) | ||
| IN THE MATTER OF: | ) | CFTC Docket No. 00-21 |
| ) | ||
| �� Timothy M. Bengson | ) | COMPLAINT AND NOTICE OF HEARING |
|
�� 24 Clermont Cross Ct., Apt. K |
) | PURSUANT TO SECTIONS 6(c) AND 6(d) |
| �� St. Louis, MO 63146 | ) | OF THE COMMODITY EXCHANGE ACT, |
| ) | AS AMENDED | |
| _______________________________________________ | ) |
�
The Commodity Futures Trading Commission (the "Commission") has received information from its staff which tends to show, and the Commission's Division of Enforcement ("Division") alleges, that:
I.
SUMMARY
1. At various times between June 1995 and February 1997 (the "relevant period"), Timothy Michael Bengson ("Bengson"), an associated person ("AP") of a registered futures commission merchant ("FCM"), defrauded customers of the FCM by fraudulently allocating commodity interest trades between customer accounts that he handled and two accounts in which he held a financial interest.
II.
RESPONDENT
2. Timothy Michael Bengson, age 38, whose last known address is 24 Clermont Cross Ct., Apt. K, St. Louis, MO 63146, was registered with the Commission as an AP of an FCM, pursuant to Section 4k of the Act, 7 U.S.C.���6k�(1994), from November 1992 to May 1997. On May�9, 1997, after an internal investigation, the FCM terminated Bengson's employment. The FCM reported its investigation of Bengson to the National Futures Association. Bengson was also the president of a commodity trading advisor that was registered with the Commission, pursuant to Section 4m of the Act, 7�U.S.C.���6m�(1994), from February 21, 1997 to May 1, 1998. Bengson is not currently registered with the Commission in any capacity.
III.
FACTS
3. In June 1995, Bengson opened a commodity interest account at the FCM in the name of his then girlfriend ("the girlfriend's account"). Bengson was the AP on the girlfriend's account and controlled the trading in the account.
4. Between June 1995 and February 1997, Bengson fraudulently allocated commodity interest trades between customer accounts he handled and two accounts in which he had a financial interest.
5. Between June 1995 and February 1997, Bengson made one hundred and forty-two (142) round-turn trades in the girlfriend's account, of which one hundred and thirty-four (134), or 94%, were profitable, and the account had profits totaling approximately $50,000.
6. Beginning in or around October 1995, account statements and disbursement checks for the girlfriend's account were mailed to a Chicago mailbox maintained by Bengson. Bengson received the checks, forged his girlfriend's endorsement and deposited the funds in his personal account.
7. At various times during the relevant period, Bengson fraudulently allocated trades in various ways including but not limited to:
a) changing or causing to be changed the account identification on original floor and/or office order tickets after the trades were executed but before they were placed in customer accounts, the girlfriend's account or Bengson's error account; and
b) changing or causing to be changed the account identification on the trades after the trades were executed and assigned to customer accounts or the girlfriend's account through an instruction to the FCM's back office.
8. Bengson fraudulently allocated trades at least twenty-one (21) trades on at least the following dates during the relevant period: July�6,�1995; Aug.�2,�1995; Sept.�1,�1995; Sept.�22,�1995; Oct. 3, 1995; Oct. 12, 1995; Feb. 13, 1996; Mar. 14, 1996; Mar. 25, 1996; Apr.�11, 1996; Apr. 18, 1996; May 13, 1996; May 23, 1996; May 31,1996; July 30, 1996; Aug.�19, 1996; Oct. 1, 1996; Nov. 27, 1996; Dec 11, 1996; Jan. 9, 1997; and Jan. 23, 1997. (The specific trades involved are identified in Exhibit A which is incorporated herein by reference).
IV.
VIOLATIONS OF THE ACT
COUNT ONE
Violations of Sections 4b(a)(i) and (iii) of the Act
9. Paragraphs 1 through 8 are realleged and incorporated herein by reference.
10. All orders to make and the making of contracts of sale of commodities for future delivery described herein were or may have been used for 1) hedging any transaction in interstate commerce in such commodity or the by-products thereof, or 2) determining the price basis of any transaction in interstate commerce in such commodity, or 3) delivering any such commodity sold shipped, or received in interstate commerce for the fulfillment of such futures contracts.
11. At various times, between June 1995 and February 1997, by the conduct alleged in this Complaint, Bengson, in or in connection with orders to make or the making of contracts of sale of commodities for future delivery, made or to be made for future delivery, made or to be made for or on behalf of other persons, where such contracts for future delivery were or could have been used for any of the purposes set forth in paragraph 10 above:
(i) cheated or defrauded, or attempted to cheat or defraud such persons; and
(iii) willfully deceived or attempted to deceive such persons in regard to such orders or contracts, or the disposition or execution of such orders or contracts, or in regard to acts of agency performed with respect to such orders or contracts for such persons, in violation of Sections 4b(a) (i) and (iii) of the Act, 7 U.S.C. �� 6b(a)(i) and (iii) (1994).
12. Bengson violated Section 4b of the Act by, among other things, fraudulently allocating commodity interest trades and deceiving customers by failing to disclose to them that he had misappropriated and/or allocated trades either to or from their accounts.
13. Bengson violated Sections 4b(a)(i) and (iii)of the Act by the conduct alleged in the Complaint at least with respect to each trade identified in Exhibit A.
14. Each trade which Bengson fraudulently allocated is alleged as a separate and distinct violation of Sections 4b(a)(i) and (iii) of the Act.
V.
By reason of the foregoing allegations, the Commission deems it necessary and appropriate, pursuant to its responsibilities under the Act, to institute public administrative proceedings to determine whether the allegations set forth in Parts, I, II, III and IV above are true and, if so, whether orders should be entered in accordance with Sections 6(c) and 6(d) of the Act, 7 U.S.C. �� 9 and 13b (1994).
Section 6(c) of the Act allows the Commission to (1) prohibit a respondent from trading on or subject to the rules of any contract market and require all contract markets to refuse such person all trading privileges thereon for such period as may be specified in the Commission's Order, (2) if the respondent is registered with the Commission in any capacity, suspend, for a period not to exceed six months, or revoke, the registration of that respondent, (3) assess against a respondent a civil monetary penalty of not more than the higher of $100,000 ($110,000 for violations occurring after November 27, 1996), or triple the monetary gain to the respondent for each violation, and (4) require restitution to customers of damages proximately caused by the violations of the respondent.
Section 6(d) of the Act allows the Commission to enter an Order directing that the respondent cease and desist from violating the provisions of the Act and Regulations found to have been violated.
VI.
WHEREFORE IT IS HEREBY ORDERED that a public hearing for the purpose of taking evidence on the allegations set forth in Sections I, II, III, and IV above be held before an Administrative Law Judge in accordance with the Commission's Rules of Practice under the Act ("Rules"), 17 C.F.R. �� 10.1 et seq. (1999), at a time and place to be set as provided by Section 10.61 of the Rules, 17 C.F.R. � 10.61 (1999), and that all post-hearing procedures shall be conducted pursuant to Sections 10.81 through 10.107 of the Rules, 17 C.F.R. �� 10.81 through 10.107 (1999).
IT IS FURTHER ORDERED that Bengson shall file an Answer to the allegations contained in this Complaint within twenty (20) days after service pursuant to Section 10.23 of the Rules, 17 C.F.R. � 10.23 (1999), and pursuant to Section 10.12 of the Rules, 17 C.F.R. � 10.12 (1999), shall serve two copies of such Answer and of any documents filed in these proceedings upon Scott R. Williamson, Deputy Regional Counsel, Elizabeth M. Streit, Senior Trial Attorney and David A.Terrell, Trial Attorney, Division of Enforcement, U.S. Commodity Futures Trading Commission, 300 S. Riverside Plaza, Suite 1600N, Chicago, IL 60606. If Bengson fails to file the required Answer, or fails to appear at a hearing after being duly notified, he shall be deemed in default and the proceedings may be determined against him upon consideration of the Complaint, the allegations of which shall be deemed to be true.
IT IS FURTHER ORDERED that this Complaint and Notice of Hearing shall be served on the Respondent personally, or by registered or certified mail, or by publication, pursuant to Section 10.22 of the Rules, 17 C.F.R. � 10.22 (1999).
IT IS FURTHER ORDERED that if the current residence address of the Respondent has not been ascertained at the time service is sought to be made, and no forwarding address is available, additional service shall be made promptly by publishing a notice of the filing of the proceeding and a summary of the Complaint, in the form attached hereto, once a week for three consecutive weeks in a newspaper of general circulation where the respondent's last known residence address was located, and also by continuously displaying the Complaint on the Commission's internet web site during the same three-week period.
In the absence of an appropriate waiver, no officer or employee of the Commission engaged in the performance of investigative or prosecutorial functions in this or any factually related proceeding will be permitted to participate in or advise on the decision in this matter except as a witness or counsel in a proceeding held pursuant to notice.
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| Dated: June 28, 2000 | By the Commission. | |
| _______________________ | ||
| Jean Webb | ||
| Secretary to the Commission | ||
| U.S. Commodity Futures Trading Commission |
NOTICE
On __________, 2000, the United States Commodity Futures Trading Commission ("CFTC"), a federal agency, filed an administrative complaint against Timothy Michael Bengson, recently a resident of St. Louis, Missouri, alleging fraud in connection with futures trading. This notice is being published in an attempt to advise Mr. Bengson of the filing and contents of the action, as he is no longer resident at his last known address. A copy of the complaint in In re Timothy M. Bengson, Admin. Proceeding No. ___, is available from the Office of Proceedings, CFTC, 1155 21st St. NW, Washington, D.C. 20581, Tel. (202) 418-5250.
The complaint alleges that from at least July 1996 through at least January 1997, Mr. Bengson, while he was registered as an associated person ("AP") of a futures commission merchant, ("FCM") defrauded customers of the FCM by fraudulently misappropriating and allocating commodity interest trades, in violation of Sections 4b(a)(i), and (iii) of the Commodity Exchange Act, as amended, 7 U.S.C.
�� 6b(a)(i), and (iii)(1994). Remedies available to the Commission in its action include a cease and desist order, a prohibition against futures trading on or subject to the rules of any contract markets, civil monetary penalties of $100,000 per violation ($110,00 for violations committed after November 27, 1996) or triple the monetary gain to Bengson, and restitution to injured customers.