Release: 4787-03
For Release: May 14, 2003
PORTLAND FOREIGN CURRENCY FIRM, ITS PRESIDENT, AND OTHERS CHARGED WITH STEALING MORE THAN $9 MILLION IN CUSTOMER FUNDS
CFTC Obtains Federal Court Order Freezing Assets of Orion International, Inc. and Several Individuals
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC) today announced that on May 8, 2003, U.S. District Judge Garr King of the federal district court in Portland, Oregon issued an order freezing the assets and preventing the destruction of the books and records of defendant Orion International, Inc. (Orion), its President, Russell Cline (Cline), and other defendants -- Bagone Vorachith, April Duffy, and Nancy Hoyt -- in an action filed by the CFTC on May 7th.
The CFTC’s complaint charges each of the defendants with stealing customer funds, making fraudulent sales solicitations, and issuing false account statements in connection with their work for Orion. The complaint also charges defendants Orion and Cline with engaging in a business that solicited retail customers to invest in illegal foreign currency (forex) futures contracts.
The State of Oregon Department of Consumer and Business Services joined the CFTC’s action as a named plaintiff, and charges the defendants with violations of the state anti-fraud and securities laws based on the same alleged conduct.
Defendants Allegedly Fraudulently Solicited at Least $27 Million
from Customers
The CFTC complaint alleges that, from at least December 1998 through
the present, defendants have fraudulently solicited at least $27
million from over 600 individuals to participate in a purported
foreign currency fund (the Orion Fund). In soliciting
customers, defendants falsely represented that trading in the fund had
produced annual profits in excess of 150 percent and monthly profits
from December 1998 through May 2002. As alleged, defendants stole at
least $9 million in customer funds and used that money for personal
purposes, such as to purchase eight large homes in Portland and at
least 24 luxury automobiles.
The complaint also alleges that, to the extent the defendants actually
used customer funds for trading, they traded those funds in the name
of Orion, not in the name of the Orion Fund or the individual
customers. As charged, that trading resulted in net losses for
customers. The complaint alleges that to hide their theft of funds and the poor
trading results, defendants issued
false written reports and made oral misrepresentations to customers
showing consistently profitable trading.
The complaint further alleges that in August 2002, defendants falsely
informed investors that “unrealized long term positions”
in the market had to be closed out causing losses in excess of 90
percent of the total pool of funds. At that time, defendants allegedly
notified investors that all requests for withdrawals from accounts
would be cancelled and all accounts would be frozen. As a result,
investors have been unable to secure a return of their funds from the
Orion Fund, according to the complaint.
Also, according to the complaint, defendants have represented to
customers that they are continuing to trade foreign currency contracts
for the purpose of restoring lost customer funds. In March 2003,
defendants informed customers that the Orion Fund had a balance of
over $6.5 million in December 2002 that was attributable to a 210
percent trading gain between July and November 2002. Contrary to these
representations, the complaint alleges that Orion Fund trading
accounts had a balance of only approximately $240,000 in December 2002
and had sustained losses of almost $400,000 between July and November
2002.
The CFTC is seeking an injunction against each of the defendants, the
repayment of ill-gotten gains, a refund of customer losses, and civil
monetary penalties against each defendant.
Gregory Mocek, CFTC Director of Enforcement, said:
“Forex prosecutions such as this should send a clear message
to scam artists that sell illegal foreign currency investments: If you
operate a forex boiler room and steal from investors, we will use all
of our internal and cooperative enforcement resources to find you,
freeze your assets, close your business, and prosecute you to the
fullest extent of the law.”
The following CFTC Division of Enforcement staff members are
responsible for this case: Elizabeth Padgett, Alan Edelman, Todd
Kelly, and Richard Foelber. A copy of the CFTC complaint and
restraining order may be obtained at www.cftc.gov.
Media Case Enforcement Contact:
Gretchen L. Lowe, Associate Director,
CFTC Division of Enforcement, (202) 418-5379
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A CFTC Consumer Advisory Warns the Public of the Risks of
Foreign Currency (FOREX) Trading and Foreign Currency Scams
The CFTC has issued a Consumer Advisory urging the public to scrutinize claims of high-return, low-risk investment opportunities in foreign currency (FOREX) trading. This Consumer Advisory provides "red flags" to look for, and cautionary steps to be taken, before making an investment. See Beware of Foreign Currency Trading Frauds, March 8, 2001 (www.cftc.gov/cftc/cftccustomer.htm).
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