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Plaintiff, Commodity Futures Trading Commission ("Commission"), on March 27, 1998, filed a complaint against John Larry Schenk individually and d/b/a Linz Gruppe Inc. and Systrac Inc. ("Schenk"), Fidelity Traders Group Inc. ("Fidelity Traders") and Sam Gray among others, seeking injunctive and other equitable relief for violations of the Commodity Exchange Act, as amended, 7 U.S.C. ���1 et seq. (1994) ("Act"), and the Regulations promulgated thereunder, 17�C.F.R. ���1 et seq. (1999). On September 25, 1998, this Court entered a Consent Order of Preliminary Injunction against defendants Schenk, Fidelity Traders and Gray in which they acknowledged service of the Summons and Complaint, admitted jurisdiction of this Court over them and the subject matter of this action and admitted that venue lies properly with this Court.

The Court has considered the complaint, declarations, exhibits, brief in support of the motion for preliminary injunction, the Pretrial Order and the testimony presented at the hearing for the preliminary injunction as well as the testimony and exhibits in support of Plaintiff's Motion for Repatriation of Funds and Motion for Rule to Show Cause. It further appearing to this Court that there is no just reason for delay, and the Court being fully advised in the premises,

THE COURT FINDS THAT:

1. This Court has jurisdiction over this action and all parties hereto pursuant to Section 6c of the Act, 7 U.S.C. ��13a-1, which authorizes the Commission to seek injunctive relief against any person whenever it shall appear that such person has engaged, is engaging, or is about to engage in any act or practice constituting a violation of any provision of the Act or any rule, regulation or order thereunder.

2. Venue properly lies with this Court pursuant to Section 6c of the Act, 7 U.S.C. ��13a-1, in that the defendants are found in, inhabit, or transact business in this district, and the acts and practices in violation of the Act have occurred within this district, among other places.

3. The allegations of the complaint are well-pleaded and hereby taken as true. This Order is supported by the following facts.

4. Plaintiff Commission is an independent federal regulatory agency charged with the responsibility for administering and enforcing the provisions of the Act, 7 U.S.C. �� 1 et seq. (1994), and the Regulations promulgated thereunder, 17 C.F.R. �� 1 et seq. (1999).

5. Defendant John Larry Schenk currently resides at 7520 Silver Fork Dr., Salt Lake City, Utah 84121. Acting as a sole proprietorship d/b/a/ Linz Gruppe Inc. ("Linz Gruppe") and Systrac Inc. ("Systrac"), Schenk was registered with the Commission as a commodity pool operator ("CPO") and as a commodity trading advisor from October 10, 1990 to January 2, 1998 and as an introducing broker from September 23, 1992 to August 11, 1996. Schenk, in his individual capacity, was also registered as an Associated Person of Linz Gruppe throughout most of the time period between September 23, 1992 and January 2, 1998. Schenk was a principal of Fidelity Traders, the CPO of the Wasatch Fund, and was one of the CPOs of the Capital Advantage Group II ("CAG II") pools. Schenk made the trading decisions for the Wasatch Fund and the CAG II pool.

6. Defendant Sam Gray ("Gray") currently resides at 4109 W. Continental Dr., West Valley City, Utah 84120. Gray has never been registered with the Commission in any capacity. Gray was one of the principals of Fidelity Traders, the CPO of the Wasatch Fund.

7. Defendant Fidelity Traders Group, Inc. is a Utah corporation. Its last known address was 2231 South 1560 West, Woods Cross, Utah. Fidelity Traders has never been registered with the Commission in any capacity. Fidelity Traders was the CPO of the Wasatch Fund.

8. From August 1993 and continuing through January 1998, Schenk and Gray solicited members of the public to invest in the Wasatch Fund, a pool to trade commodity futures contracts in precious metals and foreign currencies. Schenk and Gray accepted and pooled approximately $402,000 from sixteen participants in the Wasatch Fund.

9. In their solicitations of prospective pool participants for the Wasatch Fund, Schenk and Gray falsely represented, verbally and/or in writing, that:

Schenk and Gray knew that these statements were false when they made them. Wastach Fund participants relied upon these false representations in deciding to invest in the Wasatch Fund.

10. Schenk and Gray failed to disclose to prospective and actual pool participants that:

11. Schenk, Gray and Fidelity Traders failed to provide prospective and actual pool participants with a Disclosure Document setting forth the Wasatch Fund's actual performance for the life of the pool, the performance of any other pools they operated, and the performance of any other accounts they traded or, if they had no

12. Schenk and Gray received funds from investors in person and through the mail, that were made payable to Fidelity Traders and intended for investment in the Wasatch Fund. Schenk and Grey deposited these funds into accounts maintained in the names of Fidelity Traders or Systrac.

13. Schenk and Gray prepared and mailed Fidelity Traders' account statements to each pool participant on a monthly basis. Schenk and Gray also orally confirmed to several pool participants the profitability of the futures trading reflected in the written statements. The account statements falsely stated that the futures trading in the Wasatch Fund generated profits in the range of 1.8 to 18 percent per month and overstated the value of each pool participant's share of the pool. Schenk knew that these account statements were false when the statements were prepared and issued to Wasatch Fund participants. At the time the account statements were prepared and issued, Gray knew that these account statements were false or had no reasonable basis to make such a report.

14. The Wasatch Fund traded commodity futures from September 1993 to December 1997 and lost money trading almost every month. The Wasatch Fund ultimately lost a total of approximately $234,434 trading commodity futures and lost money trading almost every month. Even though the Wasatch Fund ceased trading in July 1996, Gray and Schenk continued until January 1998 or later to issue statements to customers which falsely stated that the Wasatch Fund was trading profitably.

15. Of the $402,000 received from Wasatch Fund pool participants, Schenk and Gray misappropriated approximately $68,000. Of this amount, Schenk directly received approximately $15,500, Gray received $29,465 and Schenk and Gray used approximately $39,000 to make unauthorized payments to family members and business associates.

16. In or about February 1995, Schenk, Brian Tobler, Robert Moncur and Douglas Foster ("CAG II defendants") agreed to form a pool to trade commodity futures pursuant to a trading program devised by Schenk. They divided the responsibilities for the pool operation among themselves. Schenk made the trading decisions and traded the pool accounts.

17. Commission Regulation 4.13(a)(2), 17 C.F.R. � 4.13(a)(2), exempts from registration CPOs whose pools' total gross capital contributions are less than $200,000 and have fewer than 15 participants. In order to appear to fit within this exemption, the CAG II defendants subdivided the pool into three component pools: Capital Advantage Group II, L.L.C. ("CAG II"); Brighton Fund, L.L.C. ("Brighton"); and Augusta Fund, L.L.C. ("Augusta") (collectively the "CAG II pools"). CAG II, Brighton and Augusta had separate bank and commodity trading accounts. The CAG II commodity accounts were each introduced by Linz Gruppe to a futures commission merchant ("FCM"). Each had a different nominal pool operator. However, the CAG II defendants treated the pools as one pool.

18. The CAG II defendants transferred pool participant funds among the pool accounts without the prior knowledge or consent of the pool participants.

19. On occasion, the CAG II defendants traded the CAG II pools using block orders, i.e., one order was placed and the executed trades were distributed among the component pools.

20. The CAG II defendants traded each of the CAG II pools differently, but reported identical performance results to the pool participants.

21. Schenk falsely represented to Foster and Moncur that:

Schenk knew these statements were false at the time he made them.

22. Foster and Moncur did not verify the representations Schenk made to them, but they solicited prospective and actual pool participants to invest in CAG II by falsely representing that:

23. The CAG II Defendants accepted and received funds in person and through the mail from at least 29 CAG II pool participants.

24. Schenk failed to provide pool participants with a Disclosure Document that set forth the CAG II pool's actual performance for the life of the pool, the performance of any other pools he operated, and the performance of any other accounts he traded.

25. Some of the funds received were made payable to Western Funding and Capital Advantage Group, other entities owned by Schenk, and were deposited into bank accounts in the names of Western Funding and Capital Advantage Group.

26. From approximately March 1995 to at least June 1996, Schenk failed to disclose to prospective and actual pool participants:

27. The CAG II pools paid in excess of $153,000 in commissions to the FCM clearing the CAG II pools' trades. As the owner of Linz Gruppe, the introducing broker, Schenk received a portion of this amount.

28. At periodic meetings, the CAG II defendants jointly decided to report monthly profits of 1 to 2% to pool participants even though they all knew that did not accurately reflect the performance of the CAG II pools.

29. After the CAG II defendants agreed on the percentage return to be reported, Moncur prepared and mailed account statements to each CAG II pool participant reporting the agreed upon rate of return. These account statements reported that profits, in the range of at least 1% to 2.3% per month, had been generated from futures trading and overstated the value of each participant's share of the pool. Schenk knew these account statements were false.

30. In fact, between April 1995 and March 1996, Schenk lost money trading the CAG II pools almost every month. Schenk ultimately lost approximately $253,498 of the participants' funds trading commodities.

ORDER

IT IS THEREFORE ORDERED THAT:

A. Defendants Schenk, Fidelity Traders and Gray are permanently restrained, enjoined and prohibited from directly or indirectly:

B. Defendants Fidelity Traders and Gray are permanently restrained, enjoined and prohibited from directly or indirectly soliciting, accepting and receiving funds, securities or other property from investors for the purpose of trading in commodity interests without being registered with the Commission as a commodity pool operator, as required, and by making use of the mails or other means or instrumentalities of interstate commerce in connection with this business, in violation of Section 4m(1) of the Act, 7 U.S.C. ��6m(1) (1994).

C. Defendants Schenk, Fidelity Traders and Gray are permanently restrained, enjoined and prohibited from directly or indirectly:

D. The injunctive provisions of this Order shall be binding upon Schenk, Fidelity Traders and Gray, upon any person insofar as he or she is acting in the capacity of officer, servant, agent, employee or attorney of any of them, and upon any person who receives actual notice of this Order by personal service or otherwise, insofar as he or she is acting in active concert or participation with Schenk, Fidelity Traders and Gray.

E. Within thirty days of the date of this Order, Schenk and Gray shall make restitution in the total amount of $360,016.35 ("Restitution Amount") to make whole all persons whose funds were received or disposed of by Schenk and Gray in connection with their operation of the Wasatch Fund in violation of the statutory and other provisions identified in this Order. In addition, Schenk and Gray shall pay prejudgment interest upon the Restitution Amount in the a mount of $89,862.50; and Schenk and Gray shall pay postjudgment interest at the Treasury bill rate prevailing on the date the Order is entered, pursuant to 28 U.S.C. � 1961(a). The Wasatch Fund participants to whom restitution shall be paid are identified in Exhibit A, which is attached hereto and incorporated herein by reference.

F. Within thirty days of the date of this Order, Defendant Schenk shall pay $175,687 in disgorgement, representing Schenk's gross profits from the conduct alleged in the Commission's Complaint, and Defendant Gray shall pay $29,465 in disgorgement, representing Gray's gross profits from the conduct alleged in the Commission's Complaint. Disgorgement shall be directed to the Commodity Futures Trading Commission, Division of Trading and Markets, 1155 21^st St., N.W., Washington, D.C. 20581 to the attention of Dennese Posey under a cover letter that identifies the defendant and the name and docket number of this proceeding. A copy of the cover letter and the form of payment shall be simultaneously transmitted to Phyllis Cela, Acting Director, Division of Enforcement, Commodity Futures Trading Commission, 1155 21^st St., N.W., Washington, D.C. 20581.

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H. If any provision of this Order or the application of any provision or circumstance is held invalid, the remainder of this Order, and the application of the provision to any other person or circumstance, shall not be affected by the holding.

I. Schenk and Gray shall not transfer or cause others to transfer funds or other property to the custody, possession or control of any other person for the purpose of concealing such funds or property from the Court, the Commission, or any officer that may be appointed by the Court.

J. This Court shall retain jurisdiction of this action in accordance with the principles of equity and the Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and decrees that may be entered or to entertain any suitable application or motion for additional relief within the jurisdiction of this Court.

K. There being no just reason for delay, the Clerk of the Court is hereby directed to enter this Order of Permanent Injunction.

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DONE AND ORDERED this 22^nd day of May, 2000.