Release: 5104-05
For Release: August 2, 2005

U.S. COMMODITY FUTURES TRADING COMMISSION BRINGS FRAUD CHARGES AGAINST FLORIDA FATHER AND SON, JACK AND CHRIS SMITHERS

CFTC Alleges That Jack and Chris Smithers, and Their Company, Prosperity Consultants, Inc., Fraudulently Solicited Customers to Trade Commodity Futures Contracts; Chris Smithers Also Charged With Violation of Prior Injunction

WASHINGTON, D.C. – The United States Commodity Futures Trading Commission (CFTC) announced today the filing of an enforcement action in the United States District Court for the Southern District of Florida against South Florida residents Chris and Jack Smithers, and Prosperity Consultants, Inc. (PCI), a Palm Beach Gardens corporation, alleging fraud in the solicitation of clients to invest in commodity interest accounts managed by the Smithers. The matter has been assigned to the Honorable Daniel T. K. Hurley, United States District Judge.

On June 30, 2005, the Honorable Judge Hurley issued an order freezing defendants’ assets and prohibiting the destruction of books and records.

Specifically, the CFTC complaint alleges that, between June 2002 and March 2004, Chris and Jack Smithers and PCI solicited more than $511,000 from at least 35 clients to trade commodity futures contracts by making promises of large profits and guaranteed returns in violation of the Commodity Exchange Act. The complaint alleges that, of the more than $361,000 in client funds directly invested with Chris and Jack Smithers, only about $198,000 was actually used to trade futures contracts -- and of the more than $149,000 in client funds invested with PCI, only $113,500 was actually traded.

According to the complaint, the Smithers took client funds that were not used to purchase futures contracts and withdrew those funds as cash, using them for personal expenses or sending them to other clients as purported returns on their investments. The complaint further alleges that Chris and Jack Smithers, in trading for clients, realized consistent losses in their trading accounts and made a number of misrepresentations to hide the unsuccessful trading and misappropriations from clients.

The complaint further alleges that Chris and Jack Smithers failed to disclose to clients that Chris Smithers was already subject to an injunction barring him from trading futures contracts and that, in light of the profit misrepresentations and guarantees of returns, over 90 percent of the clients of Chris Smithers’ previous firm lost money.

Finally, the complaint charges that in soliciting customers, Chris Smithers violated his prior federal court injunction. (See CFTC News Release 4716-02, October 24, 2002, Commodity Futures Trading Commission v. Matrix Trading Group, Inc., David Wedeen, and Christopher Smithers, Civil Action No. 00-8880-CIV-ZLOCH (S.D. Fla. Oct. 3, 2002).)

The CFTC is seeking preliminary and permanent injunctions against all defendants, repayment to defrauded customers, the return of ill-gotten gains, and monetary penalties for violations of the Commodity Exchange Act. The following CFTC Division of Enforcement staff members are responsible for this case: Jamie Brown and John Dunfee.

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The CFTC encourages members of the public to bring to our attention any suspicious activities involving futures or commodity options, including matters involving foreign currency (forex) investments or suspicious Internet websites.�

You may contact the CFTC at 1-866-FON-CFTC (1-866-366-2382),�visit us at our Customer Protection web page: (www.cftc.gov/cftc/cftccustomer.htm), or fill out our Internet Report Form identifying your concerns (www.cftc.gov/enf/enfform.htm).

In addition, the CFTC publishes a series of Consumer Advisories at http://www.cftc.gov/cftc/cftccustomer.htm#advisory alerting the public to warning signs of possible fraudulent activity and offering precautions individuals should take before committing funds.

Media Contacts
Alan Sobba
(202) 418-5080
Dennis Holden
(202) 418-5088
CFTC Office of External Affairs, Washington, D.C.

Staff Contacts
Paul G. Hayeck
Associate Director
CFTC Division of Enforcement
(202) 418-5312

Joan Manley
Deputy Director
CFTC Division of Enforcement
(202) 418-5356

Related Documents
Complaint
Asset Freeze Order