CFTC FILES COMPLAINT AND OBTAINS AN ASSET FREEZE AGAINST DEFENDANTS IN ILLINOIS ACCUSED OF COMMODITY FRAUD

The CFTC Complaint Alleges that the Defendants Committed Fraud in Soliciting and Accepting Funds for a Non-Existent Commodity Pool and for Investments in Commodity Trading Accounts Over Which the Defendant Exercised Discretion

WASHINGTON � The Commodity Futures Trading Commission (CFTC) announced today that on November 23, 1998, it filed a three-count civil complaint in the U.S. District Court for the Northern District of Illinois alleging that Ronald J. Swartz of Glenview, Illinois, and Vertrix, Inc., a dissolved Illinois corporation of which Swartz was president, violated the anti-fraud provisions of the Commodity Exchange Act (CEA) and CFTC regulations.

The complaint alleges that from at least August 1997 through the present, the defendants defrauded at least eight investors of at least $165,000 in connection with their solicitation for and operation of a fictitious commodity pool, and defrauded at least two investors of at least $80,000 in connection with investments in commodity trading accounts in which Swartz was a joint owner and exercised trading discretion. The complaint charges that in operating this pool and soliciting and handling these other commodity investments, the defendants violated the anti-fraud provisions of the CEA by, among other things:

• fraudulently misrepresenting their track record trading commodity futures;
• falsely representing that the pool was highly profitable;
• preparing and distributing a false disclosure document;
• misappropriating funds received from investors; and
• preparing and issuing false account statements to investors, which showed that their investments were profitable, when they were not.

Based upon the allegations in the complaint and evidence presented by the CFTC, on November 23, 1998, the Honorable Judge Ruben Castillo issued a statutory ex parte restraining order freezing the assets of the defendants, prohibiting the defendants from destroying any of their books and records, and requiring them to make their books and records available for inspection and copying by the CFTC.

The CFTC also is seeking preliminary and permanent civil injunctions, an accounting, disgorgement of all benefits received, restitution to the defrauded investors and civil penalties.

Geoffrey F. Aronow, the Director of the CFTC's Division of Enforcement, expressed his appreciation to the Federal Bureau of Investigation and the National Futures Association for their assistance in the investigation.

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