Release # 4257-99 (99-Civ-0967)

For Release: April 21, 1999

CFTC OBTAINS RESTRAINING ORDER IN CIVIL ACTION AGAINST DONALD E.
    JAMES AND DONALD JAMES, INC. OF GEORGIA ALLEGING COMMODITY POOL FRAUD;
    COMPLAINT ALLEGES THAT DEFENDANTS OPERATED A $5 MILLION PONZI SCHEME OVER A
    FOUR-YEAR PERIOD

WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced
    today the filing of an eight-count civil complaint on April 15, 1999, in
    the U.S. District Court for the Northern District of Georgia, Atlanta
    Division, alleging a $5 million fraud against Donald E. James
    (James) and Donald James, Inc. (James, Inc.), a Georgia corporation,
    both of Alpharetta, Georgia.

On April 16, 1999, U.S. District Court Judge Julie E. Carnes entered a
    statutory restraining order against James and James, Inc. The order enjoins
    the defendants from any further violations of the Commodity Exchange Act
    (CEA), freezes the defendants' assets, prohibits the destruction of books
    and records, and bans the defendants from any activity in the commodity
    futures industry. The court's order also appoints William G. Hays, Jr., of
    the Atlanta firm of William G. Hays & Associates, Inc. (Tel:
    404-875-5645), as a temporary receiver to administer the terms of the
    order. The provisions of the court's restraining order remain in
    effect until further order of the court. The CFTC, in its continuing
    litigation, also seeks preliminary and permanent injunctions, civil
    monetary penalties, restitution, disgorgement of ill-gotten gains, and
    other equitable relief.

Defendants Allegedly Solicited, Accepted, and Pooled More than $5
    Million from At Least 25 Investors, Mostly in the Atlanta, Georgia Area and
    Florida

The CFTC's complaint alleges that James and James, Inc. defrauded
    investors in two commodity pools they operated under the names of Franklin Thomas & Company and Franklin Thomas Investments,
    L.P., from November 1994 to the present, receiving more than $5 million
    from at least 25 investors, mostly in the Atlanta, Georgia area and
    Florida. The complaint names Franklin Thomas Investments, L.P. as a relief
    defendant and seeks to recover funds from it that are traceable to the
    fraud of the defendants.

The complaint alleges that James and James, Inc. misappropriated some of
    the funds of the newer investors in the pools to pay principal and
    purported profits to some of the earlier investors, in a manner akin to a
    "Ponzi" scheme. The complaint also alleges that the defendants
    misappropriated some of the investors' funds for James's own personal
    use.

The CFTC's complaint further charges that James and James, Inc.
    defrauded investors and violated sections 4b(a)(i), 4b(a)(ii) and
    4o(1) of the CEA by: 1) misrepresenting to investors that all their
    funds were going to be used to trade commodity futures, when they were not;
    2) misrepresenting James's trading success and promising profits, while
    claiming to be able to limit risks; 3) misrepresenting to investors that
    their funds were "frozen" at a brokerage firm in Chicago; 4)
    misrepresenting to investors that they could withdraw their funds at any
    time after appropriate notice; and 5) misrepresenting to investors, orally
    and in written statements, profits from trading and the value of each
    investor's share of the pool.

In addition, the complaint charges that James acted as a commodity pool
    operator and commodity trading advisor, and that James, Inc. acted as a
    commodity trading advisor, all without required registration with the CFTC
    under section 4m(1) of the CEA.

Finally, the complaint charges that James violated section 4n of the CEA
    and CFTC regulations 4.20(c), 4.21 and 4.22, by failing to provide risk
    disclosure documents and accurate account statements to investors and by
    illegally commingling investors' funds with James's own funds and the
    funds of others.

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