Release: #3946-96 (CIV 96-74525)

For Release: October 1, 1996

CFTC FILES CIVIL ANTI-FRAUD CHARGES IN MICHIGAN DISTRICT COURT
    AGAINST GARY BERUS INDIVIDUALLY AND D/B/A PROFIT MASTERS GROUP, MECA
    INTERNATIONAL, AND PATRICIA GALE

Complaint Alleges That Defendants Cheated and Defrauded

Approximately 50 Michigan Customers Out of Approximately $1
    Million

Washington -- The Commodity Futures Trading Commission (CFTC) today
    announced the filing on September 30, 1996, of a seven-count civil
    complaint in the U.S. District Court for the Eastern District of Michigan
    against Gary Berus of Warren, Michigan (individually and doing
    business as Profit Masters Group), Meca International, Inc.,
    a Michigan corporation controlled by Berus and located in Warren, and Patricia Gale of Gaylord, Michigan, a tax return preparer and financial
    planner.

The complaint alleges that from October 1992 to the present, the
    defendants violated the anti-fraud provisions of the Commodity Exchange
    Act (CEA) and CFTC regulations in that Berus, Meca International, and
    Gale fraudulently solicited approximately 50 elderly and retired Michigan
    residents to invest approximately

$1 million in two pools to trade, among other things, commodity futures
    contracts. The CFTC also charges that the defendants violated disclosure,
    reporting, and recordkeeping provisions of federal commodities law and CFTC
    regulations applicable to commodity pool operators.

In addition, the CFTC complaint alleges that Berus and Meca
    International fraudulently solicited approximately $376,000 from 10
    individuals to trade commodity futures contracts in accounts managed by
    Berus, by, among other things, falsely representing their track record in
    trading such accounts and falsely stating that any losses could and would
    be limited to a specific amount.

As to the pools, the defendants are charged with cheating and defrauding
    customers by, among other things:

--

misrepresenting that pool investors had achieved and would continue to
    achieve significant profits ranging from 12 to 24 percent annually with
    little or no risk;

--

misrepresenting or failing to disclose the risks associated with
    commodity futures trading;

--

misrepresenting the track record of Berus' previous trading; and

--

misrepresenting the performances of the two commodity pools in written
    and oral statements, by reporting large profits when, in fact, neither of
    the pools was ever profitable.

Complaint Alleges that Berus and Meca Misappropriated Pool Funds, and
    Operated the Pools in a Manner Akin to a Ponzi Scheme

The complaint further alleges that Berus and Meca International
    misappropriated investors' funds in the pools and converted the funds to
    their own use for personal and unrelated business expenses, and to pay
    purported profits to other investors in a manner akin to a Ponzi
    scheme.

The CFTC complaint also charges that Berus and Meca International
    violated the CFTC registration requirements by acting in an unregistered
    capacity as commodity trading advisors in connection with the individual
    managed accounts and as unregistered commodity pool operators. Gale is
    charged with acting as an unregistered associated person of the commodity
    pool operators.

Finally, Berus and Meca International are charged with acting as
    unregistered commodity trading advisors by soliciting customers to purchase
    a computer software commodity trading system.

The CFTC is seeking preliminary and permanent civil injunctions against
    the defendants, restitution to customers, disgorgement of ill-gotten gains,
    and a civil monetary penalty against each defendant of up to $100,000, or
    triple the monetary gain, whichever is greater for each violation, among
    other remedial sanctions.

Simultaneous with the filing of the CFTC's action, the Securities and
    Exchange Commission filed a separate action, also in the U.S. District
    Court for the Eastern District of Michigan, alleging federal securities
    violations against Berus, Gale, and others in connection with several
    investment schemes related to the CFTC charges.

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