Release: #4244-99 (CV-99-02412)

For Release: March 17, 1999

CFTC FILES COMPLAINT AND OBTAINS STATUTORY AND TEMPORARY RESTRAINING
    ORDER AGAINST MARK E. CHULIK IN ANTI-FRAUD ACTION; CHULIK, OF MANHATTAN
    BEACH, CA., IS ACCUSED OF COMMODITY FRAUD

The CFTC Complaint Alleges that Chulik Committed Fraud By
    Misrepresenting the Profitability of a Commodity Pool that He Controlled
    and by Commingling and Misappropriating the Pool's Funds

WASHINGTON – The Commodity Futures Trading Commission (CFTC)
    announced that on March 11, 1999, U.S. District Judge George H. King of the
    Central District of California issued a statutory and temporary restraining
    order against Mark E. Chulik of Manhattan Beach, California. The
    order freezes Chulik's assets, prohibits him from destroying records,
    restrains him from further violating the Commodity Exchange Act (CEA), and
    prohibits him from further soliciting clients or customers or accepting
    funds from them.

The order also requires the defendant to show cause why a preliminary
    injunction should not be granted to prohibit further violations of the CEA
    and the regulations thereunder, and to show cause why he should not be
    ordered to file an accounting. A hearing has been scheduled for March 25,
    1999.

The court issued the temporary restraining order as a result of a
    six-count civil complaint filed by the CFTC on March 9, 1999, against
    Chulik, individually and doing business as Westgate Partners, MEC
    Management, and MEC Capital Management. The complaint alleges
    that Chulik violated the anti-fraud provisions of the CEA, acted as an
    unregistered commodity pool operator (CPO), misappropriated pool
    participants' funds, commingled their funds with his own, and failed to
    provide required CPO disclosure documents and reports to pool
    participants

The complaint alleges that since May 1997, Chulik, who is registered
    with the CFTC as a commodity trading advisor (CTA), obtained in excess of
    $750,000 from at least seven investors and pooled these funds for the
    purpose of trading commodity futures contracts. The complaint further
    alleges that Chulik transferred substantial portions of the pool's
    funds and commingled them with funds in his own personal futures trading
    account. The complaint alleges that Chulik lost in excess of $500,000
    trading futures contracts in that account in 1998 and that Chulik reported
    fictitious profits to pool participants when, in fact, his trading resulted
    in significant losses, not profits. Finally, the complaint alleges that in
    individual customer accounts, where Chulik directed trading as a CTA, he
    fraudulently exaggerated the actual balance in such accounts.

The complaint seeks orders of preliminary and permanent injunction to
    prohibit Chulik from, among other things, cheating and defrauding members
    of the public, soliciting new funds, and operating his business in any
    manner which would violate the CEA. The CFTC also seeks an order requiring
    Chulik to disgorge his ill-gotten gains, to make restitution, and imposing
    civil monetary penalties of up to $110,000 or triple the monetary gain for
    each violation of the CEA of CFTC regulations.

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