Release #4254-99 (99-Civ. 2375)

For Release: April 13, 1999

CFTC OBTAINS RESTRAINING ORDER AGAINST JOSEPH P. MCGIVNEY, SR., EDWIN
    A. KOZIOL, JR. AND SIX CORPORATIONS IN ILLINOIS ACCUSED OF COMMODITY
    FRAUD

The CFTC Complaint Alleges that the Defendants Committed Fraud in
    Soliciting and Accepting Funds for a Series of Commodity Pools and a
    Commodity Trading Hotline, and for Acting Without the Required Commission
    Registration

WASHINGTON — The Commodity Futures Trading Commission (CFTC)
    announced today that on April 12, 1999, it filed an eight-count civil
    complaint in the U.S. District Court for the Northern District of Illinois
    alleging that Joseph P. McGivney, Sr. (McGivney) of Midlothian,
    Illinois, Edwin A. Koziol, Jr. (Koziol) of Oak Lawn, Illinois, and a
    series of six corporations in which they were officers, violated the
    anti-fraud provisions of the Commodity Exchange Act (CEA) and CFTC
    regulations. According to the complaint, McGivney is a former CFTC
    registrant whose registrations as a commodity pool operator (CPO) and
    associated person were revoked by the CFTC in December 1990, after a civil
    injunction was entered against him in an action brought by the Securities
    and Exchange Commission. McGivney is currently not registered with the CFTC
    in any capacity. The complaint also seeks to recover funds that are
    directly traceable to the fraud from two other individuals, Leslie
    Wnukowksi of Midlothian, Illinois, and Marita McGivney of Orland
    Park, Illinois, and two other corporations.

The complaint alleges that McGivney operated a "Ponzi" scheme in which
    public investors were defrauded. According to the complaint, to effect the
    scheme, McGivney incorporated a series of companies, including defendants
    Capital Strategies, Inc., JPM2, Inc., JPM Commodities, Inc. and JPM
    Traders, Inc. (the Corporations), through which he solicited money from
    individual investors under the guise of so-called "loan" agreements between
    the Corporations and the investors. The agreements provided that investors
    would receive a pro-rata share of profits from commodity futures trading
    purportedly being conducted by the Corporations. Since January 1993,
    McGivney and the Corporations allegedly accepted nearly $1 million from at
    least 72 investors pursuant to these "loan" agreements.

Specifically, the complaint alleges that McGivney and the Corporations
    defrauded commodity investors by fraudulently soliciting funds and that
    they are acting, and have acted, as unregistered CPOs, in violation of
    section 4m(1) of the CEA. The complaint also alleges that McGivney, Koziol,
    and the Corporations defrauded commodity investors by misappropriating
    investors' funds and mailing false statements to investors, in
    violation of sections 4b(a)(i), 4b(a)(ii) and 4o(1) of the CEA.
    McGivney and the Corporations allegedly have repaid a fraction of the funds
    invested, and misappropriated the remaining investor funds for their own
    use – a portion of which the complaint alleges were diverted to
    Wnukowski, Marita McGivney and others.

The complaint further alleges that McGivney and the Corporations, while
    acting as CPOs, failed to operate their commodity pools as separate legal
    entities and commingled investor funds with the property of others, in
    violation of CFTC regulation 4.20; and failed to distribute a disclosure
    document to commodity pool investors, in violation of CFTC regulation
    4.21(a).

In addition, the complaint alleges that McGivney and three of the
    corporations he formed, JPM Investments, Inc., JPM Traders, Inc. and JPM,
    Inc., have advertised and operated a daily telephone hotline, which
    disseminated specific commodity futures trading recommendations since at
    least 1997, without being registered with the CFTC, as required by federal
    commodity laws. Finally, the complaint alleges that McGivney and these
    three corporations, while acting as CTAs, failed to distribute a disclosure
    document to clients or prospective clients, in violation of CFTC regulation
    4.31(a).

Based upon the allegations in the complaint and evidence presented by
    the CFTC, on April 12, 1999, the Honorable Judge Joan B. Gottschall issued
    a statutory restraining order freezing the assets of the defendants,
    prohibiting the defendants from destroying any of their books and records,
    requiring them to make their books and records available for inspection and
    copying by the CFTC, and temporarily prohibiting the defendants from
    soliciting investments in commodity futures or engaging in any
    futures-related activities. The CFTC also is seeking preliminary and
    permanent civil injunctions, an accounting, disgorgement of all benefits
    received, restitution to the defrauded investors and civil penalties. A
    hearing on the CFTC's request for preliminary relief was set for April 22,
    1999.