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NEW YORK COURT FINDS THAT AVCO FINANCIAL CORP. AND ANTHONY VARTULI
DEFRAUDED OVER 1,000 CUSTOMERS IN CONNECTION WITH THE SALE OF FUTURES
TRADING COMPUTER SOFTWARE, AND DIRECTS THEM TO DISGORGE $4.1 MILLION
WASHINGTON - The Commodity Futures Trading Commission (CFTC) announced
today that the Honorable John F. Keenan of the U.S. District Court for
the Southern District of New York, after a two-week bench trial earlier
this year, issued a decision on June 30, 1998, against AVCO Financial
Corp. (AVCO) and its president Anthony Vartuli, both of Greenwich,
Connecticut.
In its decision, the court found AVCO and Vartuli liable for
fraudulently promoting their futures trading software and directed them
to disgorge $4.1 million in ill-gotten gains. The judge also found that
AVCO and Vartuli gave commodity trading advice through their software
and thus were required to be registered with the CFTC as commodity
trading advisors.
Judge Keenan dismissed the charges brought against a third defendant, J.
Michael Gent, of Tunnel Hill, Georgia, the developer of the trading
program, finding insufficient evidence of his control of AVCO and of his
participation directly in the fraudulent conduct.
The court found that AVCO and Vartuli violated the Commodity Exchange
Act (CEA) and the CFTC's regulations by fraudulently soliciting
customers to purchase their software program through false
representations that the program had generated large profits,
overwhelmingly picked winning trades, involved little or no risk of
loss, and had a profitable track record in actual commodity futures
trading. Judge Keenan found that these false representations were made
"in connection with" futures trading within the meaning of the CEA and
that customers relied on these misrepresentations in purchasing the
defendants' program, resulting in $4.1 million in sales revenue for the
defendants. The court also found that AVCO met the statutory definition
of a "commodity trading advisor" and provided personalized trading
advice.
The court indicated that it would permanently enjoin AVCO and Vartuli
from future violations of the CEA and Commission regulations, directed
AVCO and Vartuli to disgorge $4.1 million dollars in ill-gotten customer
fees, and imposed a civil monetary penalty of $5,000 on both AVCO and
Vartuli.
CFTC Director of Enforcement Geoffrey Aronow commented:
"This court's carefully-reasoned decision reaffirms the Commission's
statutory mandate to pursue those who provide fraudulent commodities
trading advice for profit, whatever the media they choose to use to
transmit their misinformation. Whether people get their advice
face-to-face, by telephone, by fax, or by computer, they must always be
on guard against promises that seem too good to be true."
Hehe.
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