Release #3991-97 (CV97-0777RSWL)

For Release: February 12, 1997

EX PARTE ASSET FREEZE ORDER ISSUED BY CALIFORNIA COURT IN CFTC ENFORCEMENT ACTION AGAINST CARL J. HERMANS OF NORTH HOLLYWOOD, CALIFORNIA, D/B/A/ CALIFORNIA TRADERS GROUP

Order Freezes Defendant's Assets and Protects Books and Records

WASHINGTON - The Commodity Futures Trading Commission (CFTC) announced today that on February 6, 1997, the Honorable Harry L. Hupp of the U.S. District Court for the Central District of California entered an ex parte asset freeze order against

Carl J. Hermans of North Hollywood, California, doing business as California Traders Group. Hermans has never been registered with the Commission in any capacity. The court's order freezes the defendant's assets and prohibits the defendant from destroying books and records and from denying CFTC representatives access to such records.

The court's action stems from a five-count CFTC civil complaint filed on February 5, 1997, alleging that Hermans aided and abetted the fraud and registration violations of Edward W. Schroeder, an unregistered commodity pool operator of Santa Monica, California. Schroeder, in a separate CFTC complaint filed on July 1, 1996, is charged with defrauding more than 40 commodity pool customers of over $3 million. This action is currently in litigation in the Central District of California. (See CFTC News Release 3925-96, July 16, 1996.)

The CFTC's complaint against Hermans charges that he agreed to "launder" the assets of Schroeder's commodity pool through an entity controlled by Hermans in order to conceal Schroeder's pool assets and his continuing unlawful activities. The complaint further alleges that Hermans violated the Commodity Exchange Act (CEA) by collecting more than $100,000 from investors while operating as an unregistered commodity pool operator, failing to provide prospective investors with the disclosure documents required by law, and failing to operate a commodity pool as a separate entity.

Hearing Scheduled for February 14th

A hearing on a preliminary injunction is set for February 14, 1997, before Judge Hupp. In its litigation against the defendants, the CFTC is seeking preliminary and permanent civil injunctions, in addition to other remedial relief, including, cease and desist orders, an accounting, disgorgement of unlawfully obtained benefits, restitution to customers, and civil penalties in the amount not more than the higher of $110,000 or triple the monetary gain to the defendant for each violation of the CEA or CFTC regulations.

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