CFTC CHARGES COMPANIES AND INDIVIDUALS WITH A $11 MILLION AUTOMATED TRADING SYSTEMS FRAUD

FROM:  COMMODITY FUTURES TRADING COMMISSION
CFTC Charges CTI Group, LLC, Cooper Trading, Stephen Craig Symons, and James David Kline, all of California, with an $11 Million Fraud in the Sale of Automated Trading Systems
Federal court issues emergency order freezing defendants’ assets and protecting books and records.
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a federal court action against defendants CTI Group, LLC, Cooper Trading, and Stephen Craig Symons of Corona del Mar, Calif., and James David Kline of Van Nuys, Calif., charging them with fraudulent sales practices in connection with the sale of two automated trading systems, known as the Boomer and Victory Trading Systems.

The CFTC complaint was filed under seal May 11, 2012, in the U.S. District Court for the Southern District of New York, and on May 14, 2012, Judge Andrew L. Carter, Jr. entered an emergency order freezing the defendants’ assets and prohibiting the destruction or alteration of books and records. The judge set a hearing date on the CFTC’s motion for a preliminary injunction for June 21, 2012.

According to the CFTC complaint, since at least August 2009 and continuing through the present, CTI Group, LLC and Cooper Trading (which allegedly operated as a common enterprise and are collectively referred to in the complaint as “CTI”), by and through Symons, Kline, and others, fraudulently solicited clients to subscribe to the Boomer and Victory Trading Systems, used by clients to trade E-mini Standard and Poor’s 500 Stock Index futures contracts in managed accounts. To carry out the fraud, CTI and Kline allegedly engaged, and continue to engage, in a systematic pattern of material false statements and omissions in connection with the marketing of CTI’s Trading Systems to clients and prospective clients. CTI sells subscriptions to its Trading Systems for $5,000 to $6,000 and has sold subscriptions to well over 1,000 clients, receiving at least $11 million from the sale of its Trading Systems, according to the complaint.

CTI’s misrepresentations and omissions in the sale of its Trading Systems allegedly concern 1) how long CTI has been in business; 2) CTI’s experience developing and marketing Trading Systems, 3) the identities and professional experience of CTI’s personnel (who use fictitious names when communicating with clients), 4) the track record of CTI’s Trading Systems, 5) the past profitability of CTI’s Trading Systems, and 6) the transaction costs associated with trading via CTI’s Trading Systems.

CTI’s salespeople, including Kline, also allegedly made false statements to clients and prospective clients about CTI’s purported money-back guarantee and misrepresented the risks associated with trading futures contracts using CTI’s systems. The complaint further alleges that Symons and Kline controlled CTI and actively participated in CTI’s unlawful conduct.

Two California-based relief defendants named
The CFTC complaint also names as relief defendants California companies Snonys, Inc. and Dragonfyre Magick Incorporated, allegedly owned or operated by Symons and Kline, respectively. The relief defendants allegedly received funds as a result of the defendants’ fraudulent conduct and have no legitimate entitlement to those funds.

In its continuing litigation, the CFTC seeks disgorgement of ill-gotten gains from the defendants and the relief defendants, restitution, civil monetary penalties, permanent trading and registration bans, and preliminary and permanent injunctions against further violations of the Commodity Exchange Act and CFTC regulations, as charged.

CFTC establishes special toll-free call-in number for alleged victims
The CFTC has established a special toll-free call-in number – 1-866-720-9071 – for CTI’s clients to leave messages for the CFTC’s Division of Enforcement.
The CFTC appreciates the assistance of the National Futures Association.
CFTC Division of Enforcement staff members responsible for this case are R. Stephen Painter, Jr., Laura A. Martin, Michael C. McLaughlin, David W. MacGregor, Lenel Hickson, Jr., Stephen J. Obie, and Vincent A. McGonagle.

SEC CLAIMS INVESTMENT FUND RUN LIKE A PONZI SCHEME

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION
May 24, 2012
On May 24, 2012, the Securities and Exchange Commission charged an investment adviser in Scotts Valley, Calif., with running a $60 million investment fund like a Ponzi scheme and defrauding investors by touting imaginary trading profits instead of reporting the actual trading losses he had incurred.

The SEC alleges that John A. Geringer, who managed the GLR Growth Fund (Fund), used false and misleading marketing materials to lure investors into believing that the Fund was earning double-digit annual returns by investing 75% of its assets in investments tied to well-known stock indices like the S&P 500, NASDAQ, and Dow Jones. In reality, Geringer’s trading generated consistent losses and he eventually stopped trading entirely. To mask his fraud, Geringer paid millions of dollars in “returns” to investors largely by using money received from newer investors. He also sent investors periodic account statements showing fictitious growth in their investments.

According to the SEC’s complaint filed in federal court in San Jose, Geringer raised more than $60 million since 2005, mostly from investors in the Santa Cruz area. Geringer used fraudulent marketing materials claiming that the Fund had between 17 and 25 percent annual returns in every year of the Fund’s operation through investments tied to major stock indices. Although the Fund was started in 2003, marketing materials claimed 25 percent returns in 2001 and 2002 – before the Fund even existed. The marketing materials also falsely indicated a nearly 24 percent return in 2008 from investing mainly in publicly traded securities, options, and commodities, while the S&P 500 Index lost 38.5 percent.
The SEC alleges that Geringer’s actual securities trading was unsuccessful, and by mid-2009 the Fund did not invest in publicly traded securities at all. Instead, the Fund invested heavily in illiquid investments in two private startup technology companies. The rest of the money was paid to investors in Ponzi-like fashion and to three entities Geringer controlled that also are charged in the SEC’s complaint.

According to the SEC’s complaint, Geringer further lied to investors on account statements that falsely claimed “MEMBER NASD AND SEC APPROVED.” The SEC does not “approve” funds or investments in funds, nor was the Fund (or any related entity) a member of the NASD (now called the Financial Industry Regulatory Authority – FINRA). Geringer also falsely claimed that the Fund’s financial statements were audited annually by an independent accountant. No such audits were performed.

The SEC’s complaint alleges Geringer and three related entities violated or aided and abetted violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and Section 206(1), (2), and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The complaint also alleges the defendants violated or aided and abetted violations of Section 26 of the Exchange Act, which bars persons from claiming the SEC has passed on the merits of a particular investment. The SEC’s complaint names the Fund as a relief defendant. The complaint seeks preliminary and permanent injunctions, disgorgement of ill-gotten gains, civil monetary penalties, and other relief. Geringer, the Fund, and two of the GLR entities consented to the entry of a preliminary injunction and a freeze on the Fund’s bank account.

The SEC’s investigation, which is continuing, has been conducted by Robert J. Durham and Robert S. Leach of the San Francisco Regional Office. The SEC’s litigation will be led by Sheila O’Callaghan of the San Francisco Regional Office.
The SEC thanks the U.S. Attorney’s Office for the Northern District of California, Federal Bureau of Investigation, and FINRA for their assistance in this matter.

TWO INDIVIDUALS AND COMPANY SENTENCED IN COMPUTER PART EXPORTS TO IRAN CASE

FROM:  U.S. DEPARTMENT OF JUSTICE
Wednesday, May 16, 2012
Two Individuals and Their California Company Sentenced in Connection with Exports of Computer Equipment to Iran
Massoud Habibion, 49, a U.S. citizen, Mohsen Motamedian, 44, a U.S. citizen, and their Costa Mesa, Calif., company, Online Micro LLC, were sentenced today in the District of Columbia in connection with a scheme to illegally export millions of dollars worth of computer-related goods from the United States to Iran through the United Arab Emirates (UAE).  

The sentences were announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); David W. Mills, Assistant Secretary for Export Enforcement, Department of Commerce; and Adam Szubin, Director of the Office of Foreign Assets Control (OFAC), Department of the Treasury.

U.S. District Judge Ellen S. Huvelle today sentenced Habibion to 13 months in prison for conspiracy to violate the International Emergency Economic Powers Act and to defraud the United States.   Judge Huvelle sentenced Motamedian to three years supervised release for obstruction of justice.   Habibion and Motamedian pleaded guilty to these charges on Feb. 16, 2012.

Under the terms of their guilty pleas and related civil settlements with the Department of Commerce’s Bureau of Industry and Security (BIS) and OFAC, Habibion and his company have agreed to forfeiture of $1.9 million seized from Online Micro’s bank accounts by ICE’s Homeland Security Investigations (HSI) during the course of the investigation.   In addition, Habibion and Online Micro are denied export privileges for 10 years, although the denial order will be suspended provided that neither Habibion nor Online Micro commit any export violations during the 10-year probationary period and comply with the terms of the criminal plea agreements and sentences.  Motamedian separately agreed to a $50,000 monetary penalty to settle a civil charge that he solicited a false statement to federal law enforcement agents.
Habibion and Motamedian were arrested on a criminal complaint in California on April 7, 2011. The defendants and their company were later indicted on April 21, 2011.

Habibion and Online Micro willfully conspired with a company operating in Dubai, UAE, and Tehran, Iran, to procure U.S.-origin computers from the United States and export those computers from the United States to Iran through Dubai without first obtaining licenses or authorizations from OFAC.

In or around May 2007, Online Micro purchased 1,000 computer units from Dell Inc. for approximately $500,000.   Later that year, Dell began receiving service calls concerning Dell computer units from individuals in Iran, and after conducting an internal investigation, suspended Online Micro from placing further orders with Dell.

Beginning around Nov. 9, 2009, and continuing through December 2010, Habibion and Online Micro conspired with a company operating in Dubai and Tehran, to procure U.S.-origin computer-related goods and export those goods to Iran via the UAE. During the scope of the conspiracy, Online Micro and Habibion sold to that company and exported from the United States numerous shipments of computer-related goods, worth a total of more than $4,904,962, with knowledge that the majority of those goods were destined for Iran.

Online Micro also caused Shipper's Export Declarations to be filed with U.S. Customs and Border Protection falsely identifying the ultimate destination of the goods as the UAE. During the course of the investigation, Habibion and Motamedian told a government cooperator to lie to U.S. law enforcement officials about the transactions. Specifically, the defendants told the cooperator to lie about Iran being the true ultimate destination for the goods and counseled him to tell U.S. law enforcement agents that the computer-related goods remained in Dubai.

This investigation was conducted by the ICE-HSI offices in San Diego and Orange County, Calif.  U.S. Customs and Border Protection and the Department of Commerce’s Office of Export Enforcement Los Angeles Field Office also assisted in the investigation.

Senior Attorney Adrienne Frazier from the U.S. Department of Commerce BIS and Assistant Director of Enforcement Michael Geffroy from OFAC handled the civil settlements for their agencies, respectively.

The prosecution is being handled by Assistant U.S. Attorneys T. Patrick Martin and Anthony Asuncion from the U.S. Attorney's Office for the District of Columbia, and Trial Attorney Jonathan C. Poling from the Counterespionage Section of the Justice Department’s National Security Division.

NATURAL GAS SERVICES COMPANY AGREES TO PAY $4 MILLION AND INSTALL POLLUTION CONTROLS

FROM:  U.S. ENVIRONMENTAL PROTECTION AGENCY
Colorado-based QEP Field Services Agrees to Pay $4 Million and Install Pollution Controls to Resolve Alleged Violations of the Clean Air Act
Settlement to improve air quality and establish a trust to fund environmental projects on the Uintah and Ouray Reservation in Northeastern Utah

WASHINGTON – The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice announced a settlement with QEP Field Services Co. (QEPFS), formerly Questar Gas Management Co., to resolve alleged violations of the Clean Air Act at five natural gas compressor stations on the Uintah and Ouray Reservation in Northeastern Utah.Four members of the Ute Indian Tribe intervened as co-plaintiffs. Under the proposed settlement, QEPFS will pay a $3.65 million civil penalty and pay $350,000 into a Clean Air Trust Fund to be established by the tribal member intervenors. The settlement also requires QEPFS to reduce its emissions by removing certain equipment, installing additional pollution controls, and replacing the natural gas powered instrument control systems with compressed air control systems.

“Natural gas extraction projects help to fuel our economy, but also need to follow the nation’s laws,” said Cynthia Giles, assistant administrator of EPA’s Office of Enforcement and Compliance Assurance. “Today’s settlement will bring cleaner air to the members of the Northern Ute Tribe by ensuring natural gas compressor stations are operated in compliance with the law and by creating a trust to fund environmental projects on the Uintah and Ouray Reservation.”

“This settlement will result in cleaner air for residents living on the Uintah and Ouray reservation and allow the responsible development of energy resources in accordance with the Clean Air Act,” said Ignacia S. Moreno, assistant attorney general for the Environment and Natural Resources Division of the Department of Justice. “It also will establish the Tribal Clean Air Trust Fund to fund environmental projects for the benefit of tribal members.”

QEPFS’s compressor stations remove water and compress natural gas for transportation through gas pipelines. They are sources of air pollution, emitting hazardous air pollutants (HAPs), volatile organic compounds (VOCs), and nitrogen oxides (NOx), which can increase the risk of asthma attacks and are significant contributors to the formation of ozone.The actions required in the settlement will eliminate approximately 210 tons of NOx, 219 tons of carbon monoxide, 17 tons of HAPs, and more than 166 tons of VOCs per year. It will also conserve 3.5 million cubic feet of gas each year, which could heat approximately 50 U.S. households. The reduction in methane emissions (a greenhouse gas that is a component of natural gas) is equivalent to planting more than 300 acres of trees.

QEPFS is a wholly-owned subsidiary of QEP Resources, Inc., which is headquartered in Denver.QEPFS provides midstream field services such as natural gas gathering, compression, dehydration and processing to upstream natural gas companies.

The consent decree is subject to a 30-day public comment period and final court approval.

PHYSICAL THERAPY COMPANY CO-OWNER SENTENCED TO 48 MONTHS FOR MEDICARE FRAUD

FROM:  U.S. DEPARTMENT OF JUSTICE
Thursday, May 17, 2012
Co-Owner of Detroit-Area Physical Therapy Company Sentenced to 48 Months for Medicare Fraud Scheme
The co-owner of a Detroit-area physical therapy company was sentenced today to 48 months in prison for her leading role in a more than $1.9 million Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).

Fatima Hassan, 44, was sentenced by U.S. District Judge Avern Cohn in the Eastern District of Michigan.   In addition to her prison term, Hassan was sentenced to three years of supervised release and ordered to pay $ 855,484 in restitution.    

Hassan pleaded guilty on Sept. 15, 2011, to one count of conspiracy to commit health care fraud.   According to the plea documents, i n 2005, Hassan incorporated a company known as Jos Campau Physical Therapy, which she owned with a co-defendant.   Jos Campau Physical Therapy did not have a Medicare provider number and was not entitled to bill Medicare for therapy services.

According to court documents, Hassan paid kickbacks to recruiters who obtained Medicare beneficiary information and signatures needed to create fictitious physical and occupational therapy files.   The Medicare beneficiaries pre-signed forms and visit sheets that were later falsified to indicate that they received therapy services that were never provided.

Hassan and the co-owner of Jos Campau Physical Therapy hired and paid an occupational therapist and an uncertified occupational therapy assistant to falsify medical files.   The occupational therapist created patient evaluation forms for beneficiaries whom she had never met, seen or evaluated.   The uncertified therapy assistant fabricated and signed patient notes for occupational therapy visits.   The uncertified therapy assistant did not provide the services reflected in the fictitious patient notes.   Additionally, Hassan’s co-owner, a physical therapist, falsified patient evaluation forms and fictitious patient notes for physical therapy services that were never rendered.

Hassan and the co-owner of Jos Campau Physical Therapy sold the fictitious physical and occupational therapy files to multiple fraudulent therapy companies that had obtained Medicare provider numbers.   Those companies billed the fictitious files created by Jos Campau Physical Therapy to Medicare and paid kickbacks to Jos Campau Physical Therapy based on these billings.   Hassan and her co-owner split the profits from the sale of the falsified files.

Hassan admitted that, between approximately June 2005 and May 2007, she and her co-conspirators at Jos Campau Physical Therapy submitted or caused the submission of approximately $1.9 million in fraudulent claims to the Medicare program for physical and occupational therapy services that were never rendered.

Hassan’s co-owner, Victor Jayasundera, pleaded guilty on Jan. 18, 2012, for his role in the scheme and is scheduled to be sentenced on May 31, 2012.

Tariq Mahmud, the owner of a Medicare provider company that bought and billed Jos Campau Physical Therapy ’s fake files, was convicted at trial on Feb. 2, 2012, for his role in the scheme and is scheduled to be sentenced on June 11, 2012.

Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.

This case was prosecuted by Trial Attorney Catherine K. Dick and Assistant Chief Benjamin D. Singer of the Criminal Division’s Fraud Section, with assistance from Trial Attorney Niall M. O’Donnell.    It was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.  

HIM DISCRIMINATION COMPLAINTS SETTLED WITH HEALTH CARE PROVIDERS

FROM:  U.S. DEPARTMENT OF JUSTICE
Friday, May 11, 2012
Health Care Providers Settle with Justice Department Over Complaints of HIV Discrimination

The Justice Department announced that it has reached two settlements today resolving claims that health care providers refused to serve people with HIV in violation of the Americans with Disabilities Act (ADA).

The first complaint was filed by a man with HIV who went to the Mercy Medical Group Midtown Clinic in Sacramento, Calif.   After meeting with the patient and examining him, a podiatrist at the clinic informed the patient of his treatment options.   Although surgery was one of the treatment options, the podiatrist incorrectly told the patient that he could not perform the surgery because of a risk that he would contract HIV from the patient during surgery.   The United States determined that the podiatrist’s actions violated the ADA by denying the patient the full and equal enjoyment of the services offered at the clinic on the basis of his disability.

The second complaint was filed by a man with HIV who went to the Knoxville Chiropractic Clinic North in Knoxville, Tenn., for chiropractic treatment following an automobile accident.   After examining him, the doctor determined that the patient required 24 subsequent appointments to treat his injuries.   On his third visit to the clinic, however, the receptionist informed him that the doctor would not see him because they could not treat people “like him.”   The United States determined that Knoxville Chiropractic Centers had a blanket policy of refusing treatment to persons with HIV in violation of the ADA.

“It is critical that people with disabilities, including HIV, not be denied equal access to goods and services, especially to health care services.   The Civil Rights Division takes discrimination based on unfounded fears and stereotypes about HIV very seriously,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.   “We applaud Mercy Medical Group and CHW Medical Foundation, as well as Knoxville Chiropractic Centers, for working cooperatively with the Justice Department to resolve these matters quickly and fairly.”

The settlement agreements require the entities to develop and implement a non-discrimination policy and to train staff on the requirements of the ADA.   In addition, Mercy Medical Group and CHW Medical Foundation are required to pay $60,000 to the complainant and $25,000 as a civil penalty, and Knoxville Chiropractic Centers is required to pay $10,000 as a civil penalty.

The ADA requires public accommodations, like doctors’ offices, medical clinics, hospitals and other health care providers, to provide individuals with disabilities, including people with HIV, equal access to goods, services, privileges, accommodations, facilities, advantages and accommodations.

The Department of Justice provides a webpage specifically dedicated to information about the ADA and HIV at www.ada.gov/aids.   Those interested in finding out more about these settlements or the obligations of public accommodations under the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov.  ADA complaints may be filed by email toada.complaint@usdoj.gov.

COMPANY AND PRINCIPALS CHARGED WITH FRAUDULENTLY RAISING INVESTMENT FUNDS

Photo:  Currency Sign.  Credit:  Wikimedia
FROM:  COMMODITIES FUTURES TRADING COMMISSION
CFTC Charges New York Firm Madison Dean, Inc., and its Principals, George Athanasatos and Laurence Dodge, with Forex Fraud

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil enforcement action in the U.S. District Court for the Eastern District of New York charging Madison Dean, Inc. (Madison Dean), of Wantagh, N.Y., and its principals, George Athanasatos, also of Wantagh, and Laurence Dodge of Fresh Meadows, N.Y., with fraudulently soliciting approximately 19 persons to invest approximately $415,000 in managed trading accounts to trade off-exchange foreign currency (forex) contracts on a leverage or margined basis. None of the defendants has ever been registered with the CFTC.

The CFTC complaint, filed on May 8, 2012, alleges that from approximately December 2008 through approximately July 2010, defendants Madison Dean, Athanasatos, and Dodge, through an Internet website, written solicitation materials, and other actions, misrepresented and omitted material facts about Madison Dean, including the background and qualifications of Madison Dean employees and the firm’s performance record, to create a false impression that it was a well-established and successful company.

Specifically, according to the complaint, the defendants allegedly fraudulently claimed that 1) Madison Dean had been in existence since 1998, 2) Madison Dean’s customers included high net worth individuals, financial institutions, and institutional clients, 3) Madison Dean provided “professional money managers” who would be in charge of the forex trading for the customers’ managed accounts, and 4) Madison Dean had been making money for its customers for years.

Contrary to these claims, Madison Dean had not been making money for its customers for years, as it did not exist prior to December 2008, and its customers were “neither high net worth individuals, financial institutional or other institutional clients, hedge funds, nor millionaires,” according to the complaint. Also, according to the complaint, Madison Dean did not have professional money managers in charge of customer trading. Rather, Athansatos allegedly managed the trading of customer accounts, and on various occasions, Dodge and Athanasatos’ mother – neither a professional money manager – also traded customer accounts.

The complaint further alleges that Madison Dean’s customers lost approximately $250,000, “as a result of its poor trading.” As further alleged, after being in operation for a little over a year, during which time the firm collected approximately $112,000 in commissions and fees, Madison Dean shut down its operation with no notice to its customers and no way for those customers to contact the company or anyone associated with it.

In its continuing litigation, the CFTC seeks civil monetary penalties, restitution, disgorgement of ill-gotten gains, trading and registration bans, and preliminary and permanent injunctions against further violations of the Commodity Exchange Act, as charged.
The CFTC appreciates the assistance of the United Kingdom Financial Services Authority in this matter.

CFTC Division of Enforcement staff members responsible for this case are Alan I. Edelman, James H. Holl, III, Michelle Bougas, Gretchen L. Lowe, and Vincent McGonagle.