Release: 4958-04
For Release: July 15, 2004

COMMODITY FUTURES TRADER ORDERED TO PAY MORE THAN $1 MILLION TO DEFRAUDED CUSTOMERS

Federal Court Bans Utah Man, Stanley E. Varner, from Trading Commodities for Five Years and Imposes a $575,000 Civil Penalty

WASHINGTON, D.C. - The U.S. Commodity Futures Trading Commission (CFTC) announced today that the United States District Court for the District of Utah issued a consent order requiring Stanley E. Varner of Salt Lake City, Utah, to pay back over $1 million to seven defrauded customers, and imposing other sanctions. The consent order, entered on July 8, 2004, by the Honorable Ted Stewart, settles CFTC charges against Varner arising out of the CFTC’s December 11, 2002, complaint in CFTC v. Stanley E. Varner, 02-1373 (see CFTC News Release 4726-02, December 12, 2002).

The complaint alleged that Varner, operating as a commodity trading advisor (CTA), misrepresented his ability to generate profits -- falsely promising prospective customers an annual return of 20 percent.

The complaint further alleged that Varner misled customers by claiming that there was virtually no risk of financial loss associated with trading futures using his system. What Varner failed to disclose to prospective customers, according to the complaint, was that he regularly incurred substantial trading losses -- before, during, and after his solicitation of customers. As alleged in the complaint, Varner lost approximately $925,000 of customers' funds trading futures, and misappropriated the remaining $575,000 to pay for his personal living expenses. The complaint also alleges that Varner provided a false account statement concerning his futures trading to at least one customer. In consenting to the entry of the order, Varner neither admitted nor denied the allegations in the complaint or the conclusions of law contained in the consent order.

In addition to prohibiting Varner from future violations of the federal commodity laws, the order permanently prohibits him from soliciting, accepting funds, or trading commodity futures or options for others, imposes a civil monetary penalty of $575,000, and bans Varner from trading futures on his own behalf for five years.

The following CFTC Division of Enforcement staff were responsible for the case: Clifford Histed, Ralph DerAsadourian, Cynthia Cannon, Hugh Rooney, Elizabeth M. Streit, Scott R. Williamson, and Rosemary Hollinger.

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Media Contacts
Alan Sobba
(202) 418-5080
Dennis Holden
(202) 418-5088
Office of External Affairs

Staff Contact
Rosemary Hollinger
Associate Director and Regional Counsel
CFTC Division of Enforcement
(312) 596-0520

Related Document
Order of Permanent Injunction