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Commodity Futures Trading Commission 

CEA CASES 

NAME: ALVIS R. DAVIS 

DOCKET NUMBER: 50 

DATE: JUNE 21, 1949 

DOCUMENT TYPE: DECISION AND ORDER 

UNITED STATES DEPARTMENT OF AGRICULTURE 

BEFORE THE SECRETARY OF AGRICULTURE 

In re Alvis R. Davis, Respondent 

CEA Docket No. 50 

Decision and Order 

Preliminary Statement 

This is a disciplinary proceeding under the Commodity Exchange Act (7 U.S.C., 

Chapter 1), initiated by a complaint issued by the Secretary of Agriculture on 

May 23, 1949, charging the respondent with cheating, defrauding, and wilfully 

deceiving customers, and with falsely reporting to a customer that transactions 

for the customer's account had been executed on a contract market. The 

complaint alleged that the respondent, an agent and correspondent of a 

registered futures commission merchant, converted to his own use funds received 

from customers to margin or secure the trades of such customers, that he caused 

the execution of a trade for the account of a customer without authority from 

the customer, and that he reported to a customer that orders which the customer 

had placed had been executed whereas, as a matter of fact, the respondent had 

failed to transmit such orders to his principal and no such executions had taken 

place. 

The complaint was served on the respondent in Chicago on May 26, 1949. Later 

during the same day the respondent conferred with representatives of the 

Commodity Exchange Authority in Chicago and expressed a desire to enter into a 

stipulation for the purpose of dispensing with 

a hearing. On May 27, 1949, the respondent executed a document in which he 

admitted the facts, waived hearing, and consented to the entry of an order 

denying trading privileges to him for such period of time as the Secretary of 

Agriculture or his duly authorized representative might determine. This 

document was filed with the Hearing Clerk on June 2, 1949, in accordance with 

section 0.4(b) of the rules of practice (17 CFR, Cum. Supp., 0.4(b)). Under 

date of June 3, 1949, the respondent addressed a letter to the Hearing Clerk in 

which he stated his desire to have included in the record the fact that all 

customers who lodged legitimate claims against him had been paid in full. 

Section 0.4(b) of the rules of practice provides that prior to the hearing in 

any proceeding the Secretary may in his discretion, allow a respondent to 

consent to an order, provided that the respondent submits, for filing in the 

record, a stipulation or statement in which, he admits at least, those facts 

necessary to the Secretary's jurisdiction and agrees that an order may be 

entered against him. Since the respondent has admitted the facts charged in the 

complaint and has agreed that an order may be entered against him, no purpose 

can be served by a hearing. 

Findings of Fact 
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1. The respondent, Alvis R. Davis, an individual doing business as Alvis R. 

Davis and Company, 208. Woodruff Building, Springfield, Missouri, was at all 

times material hereto a non-clearing member of the Board of Trade of the City of 

Chicago (hereinafter called the Chicago Board of Trade) and of the Chicago 

Mercantile Exchange, both duly designated 

contract markets under the Commodity Exchange Act. The respondent had an 

agreement or arrangement with the Uhlmann Grain Company of Chicago, Illinois, a 

registered futures commission merchant and clearing member of the Chicago Board 

of Trade and of the Chicago Mercantile Exchange, under which the respondent 

acted as agent and correspondent of the said Uhlmann Grain Company in accepting 

and transmitting orders from customers for the purchase or sale of commodities 

for future delivery on or subject to the rules of contract markets. In 

connection with the acceptance and transmission of such orders, the respondent 

was required to receive money, securities and property from customers to margin, 

guarantee or secure the trades or contracts accruing to them as the result of 

such orders, and to remit such money, securities and property to the said 

Uhlmann Grain Company for credit to the accounts of such customers. 

2. On or about January 23, 1948, the respondent, acting in the capacity of 

agent for Uhlmann Grain Company, converted to his own use funds in the sum of 

one thousand dollars ($ 1,000) which he had received from one A. J. Sams, to 

margin, guarantee and secure transactions in commodity futures for the account 

of the said A. J. Sams with Uhlmann Grain Company. 

3. On or about January 16, 1949, the respondent, acting in the capacity of 

agent for Uhlmann Grain Company, converted to his own use funds in the sum of 

thirteen hundred dollars ($ 1,300) which he had received from one Lawrence J. 

Haymes to margin, guarantee and secure transactions in commodity futures for the 

account of the said Lawrence J. Haymes with Uhlmann Grain Company. 

4. On or about February 10, 1949, and February 12, 1949, the respondent, 

acting in the capacity of agent for Uhlmann Grain Company, converted to his own 

use funds in the sum of one thousand two dollars and fifty-six cents ($ 

1,002.56) which he had received from one Leonard A. Voeltz to margin, guarantee 

and secure transactions in commodity futures for the account of the said Leonard 

A. Voeltz with Uhlmann Grain Company. 

5. On or about February 8, 1949, the respondent, acting in the capacity of 

agent for Uhlmann Grain Company, sold 40,000 pounds of March lard futures on the 

Chicago Board of Trade at 11.82 cents per pound for the account and risk of 

Leonard A. Voeltz. On the same day, on his own initiative and without any 

authority from or notification to the said Leonard A. Voeltz, the respondent 

instructed Uhlmann Grain Company to purchase 40,000 pounds of March lard futures 

on the Chicago Board of Trade at 11 cents per pound and caused such executed 

purchase to be entered in the account of the said Leonard A. Voeltz with Uhlmann 

Grain Company. 

6. On or about February 9, 1949, the respondent, acting in the capacity of 

agent for Uhlmann Grain Company, received an order for the purchase of 40,000 

pounds of March lard futures and the sale of 40,000 pounds of May lard futures 

for the account of Leonard A. Voeltz with Uhlmann Grain Company. The respondent 

subsequently reported to the said Leonard A. Voeltz that 40,000 pounds of March 

lard futures had been 

bought on the Chicago Board of Trade at 11.45 cents per pound and that 40,000 

pounds of May lard futures had been sold on the Chicago Board of Trade at 11.50 

cents per pound for his account and risk, whereas, in truth and in fact, the 

respondent had not transmitted such orders for execution and no such purchase or 

sale had been executed. 
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7. The transactions in commodity futures contracts described in paragraphs 2, 

3, 4, 5, and 6, above, were capable of being used for hedging transactions in 

interstate commerce in such commodities or the products or by-products thereof, 

or for determining the price basis of transactions in interstate commerce in 

such commodities, or for delivering such commodities, sold, shipped, or received 

in interstate commerce. 

8. By an arrangement between respondent and Uhlmann Grain Company, all 

customers who lodged legitimate complaints against respondent because of 

respondent's activities described above, have been paid in full. 

Conclusions 

Section 4b of the act declares it to be unlawful for any agent or 

correspondent of a member of a contract market, in connection with any 

transaction in commodity futures on behalf of any person, to cheat or defraud, 

or wilfully deceive such person in regard to such transaction or to any act of 

agency performed with respect thereto. Conversion is the fraudulent 

appropriation of another's property. Terry v. Water Improvement District, 179 

Okla. 106, 64 P. (2d) 904, 906 (1937). The terms "defraud" and "cheat" are 

synonymous. State v. Mastin, 277 Mo. 495, 211 S.W. 14, 18 (1919). Accordingly, 

the conversion to his own use 

of the funds entrusted to the respondent constituted cheating and defrauding in 

violation of section 4b. The respondent is also chargeable with wilful deceit 

in permitting his customers to believe that the funds which they had turned over 

to him would be credited to their accounts in the usual manner. The act of 

causing the execution of a sale for the account of Leonard A. Voeltz without the 

latter's authorization or knowledge also constitutes wilful deceit. 

Section 4h of the act declares it to be unlawful for any person falsely to 

represent, in connection with the handling of an order for the purchase or sale 

of commodity futures, that such order has been executed on a contract market. 

The respondent's false representation to Mr. Voeltz that orders given by the 

latter had been executed on the Chicago Board of Trade was a clear violation of 

this section, and was also wilful deceit under section 4b. 

The violations admitted by the respondent are serious and warrant the 

imposition of an effective sanction. If the respondent were registered as a 

futures commission merchant, suspension or revocation of such registration would 

be justified. Since he is not so registered, the same objective can be reached 

by a denial of trading privileges in such a manner that he will be unable to 

trade for or handle accounts of customers. In view of the nature of the 

violations, such denial should continue until further order of the Secretary. 

In re Charles Vojtek, 7 Agric. Dec. 386 (7 A.D. 386) (1948), was a proceeding 

which also involved the conversion of customers' funds and false reports to 

customers that transactions for their accounts had 

been executed. A denial of trading privileges until further notice by the 

Secretary was ordered. Accordingly, all contract markets should be ordered, 

until further notice, to refuse trading privileges to the respondent except in 

connection with transactions for his own account and in which no customers are 

involved. 

Since the Commodity Exchange Act imposes duties and obligations upon futures 

commission merchants and their agents which are separate and distinct from those 

imposed upon traders, and since the act also provides for different sanctions 

appropriate to each of these classes of persons, we believe it would be 

preferable wherever possible and equitable to relate the sanction to the 

particular duty or obligation which has been breached. The respondent violated 

the obligations and duties which he owed to his customers and not those which he 

owed as a trader. Accordingly; the sanction recommended is designed to prevent 
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him from having any further dealings with customers, but will not affect the 

privilege of trading for himself. 

Order 

Effective on the 30th day after the date of this order, all contract markets 

shall, until further notice by the Secretary of Agriculture or his duly 

authorized representative, refuse all trading privileges to Alvis R. Davis 

except in connection with transactions for the account of the said Alvis R. 

Davis in which no customers are involved. 

A copy of this decision and order shall be sent by registered mail to the 

respondent and to each contract market under the act. 

Done at Washington, D. C., this 21st day of June 1949. 

/s/ Thomas J. Flavin 

Judicial Officer 

UNITED STATES DEPARTMENT OF AGRICULTURE 

Commodity Exchange Authority 

Washington 25, D. C. 

May 26, 1949 

ISSUANCE OF COMPLAINT - CE-A DOCKET NO. 50 

(Administrative Hearing under the Commodity Exchange Act) 

A complaint and notice of hearing was signed by the Secretary of Agriculture 

on May 23, 1949, charging 

ALVIS R. DAVIS of Springfield, Missouri with violation of the Commodity 

Exchange Act. 

Complaints are issued under the Commodity Exchange Act for the purpose of 

notifying respondents that the Secretary of Agriculture has reason to believe 

that respondents have violated the Act and to advise them of the time and place 

of hearings to be held to determine whether the charges are correct. The 

issuance of a complaint does not, of course, constitute proof of violation of 

the law. Such violation is established only when the Judicial Officer of the 

Department has made a determination that the evidence substantiates allegations 

in the complaint. 

Complaints are filed in the office of the hearing clerk of the solicitor of 

the Department of Agriculture and are thereupon a matter of public record. 

Copies are filed in the Washington office and the field offices of the Commodity 

Exchange Authority. 

In cases where the Judicial Officer determines that a violation has occurred 

the resulting order will be served upon all contract markets and circularized 

among all registered futures commission merchants for their information and 

guidance. Pending disposition by the Judicial Officer it is the policy of the 

Commodity Exchange Authority not to comment or elaborate upon the charges 

contained in complaints or discuss the evidence upon which they are based. 

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