**Release: 4867-03****For Release: November 19, 2003**

**U.S. COMMODITY FUTURES TRADING COMMISSION (CFTC) JOINS OTHER MEMBERS OF   THE PRESIDENT’S CORPORATE FRAUD TASK FORCE IN UNDERCOVER   "OPERATION WOODEN NICKEL” TO PROSECUTE INDIVIDUALS AND COMPANIES   ALLEGEDLY STEALING MILLIONS OF DOLLARS THROUGH SALES OF ILLEGAL FOREIGN   CURRENCY (FOREX) FUTURES CONTRACTS**

**CFTC Charges 31 Individuals and Entities With Fraud, Selling Illegal   Futures Contracts, and Filing False Reports**

   WASHINGTON -- The U.S. Commodity Futures Trading Commission (CFTC)   announced today that on Tuesday, November 18, 2003, it filed six separate   federal injunctive actions charging a total of 31 individuals and entities   with engaging in fraud in the sale and solicitation of illegal foreign   currency (forex) futures contracts. A U.S. District Court in New York   entered restraining orders in all six cases, which, among other things,   freeze the defendants' assets.  

   The CFTC actions resulted from the CFTC's participation in **Operation   Wooden Nickel**, an undercover law enforcement sting run by federal law   enforcement personnel from the Federal Bureau of Investigation (FBI) and the   U.S. Attorney's Office for the Southern District of New York. As part of   the undercover operation, federal criminal agents infiltrated a forex boiler   room in the World Financial Center allegedly operated by corrupt sellers of   illegal forex futures contracts. The agents captured hundreds of hours of   video and audio recordings of defendants allegedly scheming to deceive   unsuspecting customers and steal millions of dollars. **Operation Wooden   Nickel** is one of the largest undercover operations in which the CFTC has   participated.  

**Gregory G. Mocek, CFTC Enforcement Director, commented**:  

> ***Today's actions demonstrate the CFTC's continuing commitment   to eradicating the scourge of foreign currency fraud. In conjunction with   actions taken by other federal agencies, the CFTC'ssix cases seek to   halt a scam that allegedly has defrauded small investors and large   institutions alike. The Commissionhas devoted substantial resources   toprotecting the public andthe markets against rogue futures   operations.***

> ***We congratulate the FBI, the US Attorney's Office for the Southern   District of New York, and the SEC for their work in Operation Wooden Nickel.   As today’s actions show, civil and criminal agencies achieve powerful   results when they work together to stamp out forex swindles. We will   continue to coordinate our civil prosecutions with state and federal   criminal authorities to protect the investing public from violations of the   Commodity Exchange Act. I am extremely proud of the work of the CFTC   personnel involved in making Operation Wooden Nickel a success.***

**Federal Court Freezes Defendants’ Assets**

   On November 18, 2003, the CFTC filed six civil injunctive actions in the   United States District Court for the Southern District of New York. Four of   the six actions allege that the defendants in those cases fraudulently   solicited customers to purchase illegal forex contracts, accepted customer   funds for the purchase and sale of those futures contracts, and subsequently   used those funds for personal expenses. The fifth complaint alleges that   defendants in that action converted funds stolen from certain banks through   the use of illegal forex futures transactions. The sixth complaint alleges   that certain defendants made false filings with the National Futures   Association (NFA), the futures industry’s self-regulatory   organization.  

**Madison Deane, et al., Docket No. 03-CV-9128**

   Specifically, the first complaint alleges that since at least the spring of   2002, defendants Madison Deane & Associates, Inc., Madison Deane Asia   Corporation, New York Capital Assets, Inc., ISB Clearing Corporation, Free   Star Capital, Inc., William, Holbrook & Associates LLC, Oxford Capital   Group LLC, Vito Napoletano of Staten Island, NY, Leonard Basman of Staten   Island, NY, Matthew Salinas of Queens, NY, Ian Bursztyn of Commack, NY,   George Omeste of Staten Island, NY, Damon Ripley of Brooklyn, NY, and   Abdeldayem Mazen of Brooklyn, NY, have fraudulently solicited funds from the   public for the purpose of trading managed forex futures accounts. In   addition, the complaint alleges that these defendants misappropriated and/or   misused those customer funds and issued false statements to customers that   did not disclose the defendants’ unauthorized withdrawal of funds from   the customers’ accounts.  

**First Lexington Group, et al., Docket No. 03-CV-9124**

   The second complaint alleges that from at least October 2001 through March   2003, defendants First Lexington Group, LLC and Joseph Grunfeld of   Cedarhurst, NY, fraudulently solicited and obtained more than $2 million   dollars from as many as 60 customers for the purpose of trading managed   accounts in forex futures contracts. In addition, the complaint alleges that   these defendants misappropriated a significant portion of the funds   solicited from customers, and issued false statements to customers that did   not disclose the unauthorized withdrawal of funds from their accounts but   instead recounted fictitious futures trading of forex futures contracts.  

**Walter Scott Lev, et al., Docket No. 03-CV-9126**

   The third complaint alleges that from at least January 1999 to at least   April 2002, defendants Walter Scott Lev & Associates, LLC, Michael Ross   of NY, NY, Maxim Yampolsky of NY, NY, Edward Sapienza, Jr. of NY, NY, Frank   Schiavone of Howard Beach, NY, Michael Korobov of NY, NY, and Boris Shuster,   a/k/a/ Robert Shuster of Brooklyn, NY, fraudulently solicited and obtained   approximately $21.9 million from more than 850 customers for the purpose of   trading forex futures. According to the complaint, instead of trading their   customers' funds, these defendants misappropriated a substantial portion   of the $21.9 million obtained from unsuspecting customers. As alleged, in   furtherance of their fraudulent scheme, these defendants misled customers   with false monthly account statements showing considerable profits, and then   abruptly notified customers that purported catastrophic trading losses had   wiped out their funds.  

**Itradecurrency USA, et al., Docket No. 03-CV-9129**

   The fourth complaint alleges that from at least December 21, 2000 to the   present, defendants Itradecurrency USA, LLC, Stephen E. Moore of New York,   NY, and Anthony Iannuzzi of Goshen, NY, fraudulently solicited and obtained   approximately $1.6 million from customers for the purpose of trading forex   contracts. Instead of actually trading their customers' funds,   defendants allegedly misappropriated and misused a substantial portion of   these funds.  

**“Knowledgeable Trades”, Docket No. 03-CV-9125**

   The fifth complaint alleges that from May 2003 to the present, traders at   certain banks and their co-conspirators in the retail forex business engaged   in a scheme they called “knowledgeable trades” to defraud and   deceive the banks. The complaint alleges that by engaging in illegal foreign   currency futures transactions, these co-conspirators converted funds   belonging to the banks and concealed the conversion from the banks. The   complaint names as defendants: Ian Bursztyn of Commack, New York, Vito   Napoletano of Staten Island, NY, Anthony DiNapoli of Brooklyn, NY, John   Capuano of Brooklyn, NY, Patrick Sweeney of Freehold, NJ, Joseph Torre of   Old Bridge, NJ, John Messina of Brooklyn, NY, Itradecurrency USA, LLC,   Stephen Moore of NY, NY, and Anthony Iannuzzi of Goshen, NY.  

**ISB Clearing Corporation, et al, Docket No. 03-CV-9127**

   The sixth complaint alleges that from at least April 2003 to the present,   defendants ISB Clearing Corporation, a Futures Commission Merchant   registered with the CFTC, Ian Bursztyn of Commack, NY, and Vito Napoletano   of Staten Island, NY repeatedly have filed financial reports with the NFA   that contain materially false statements that purport to identify accounts   at banks or broker/dealers that hold customer funds and the amounts of   customer funds purportedly held in those accounts.  

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   In its complaints, the CFTC is seeking preliminary and permanent injunctive   relief, restitution for defrauded customers, civil monetary penalties, and   disgorgement of ill-gotten gains.  

   The CFTC was assisted in its action by the National Futures Association. The   CFTC coordinated its actions with the U.S. Attorney's Office for the   Southern District of New York, the Federal Bureau of Investigation, and the   Securities and Exchange Commission.  

   Staff from the CFTC’s Eastern Regional Office, Division of   Enforcement, were responsible for this action.  

**CFTC Media Contact:**   Stephen J. Obie   Associate Director and Regional Counsel   Eastern Regional Office   CFTC Division of Enforcement   (646) 746-9766  

**Other Media Contacts**:   Securities and Exchange Commission (SEC)   Mark K. Schonfeld, Associate Regional Director   646-428-1650  

   U.S. Attorney's Office (USAO)   Michael Kulstad, Public Information Office   U.S. Department of Justice, United States Attorney   Southern District of New York   212-637-2600  

**Victim Information**Department of              Justice**Website for identified victims who have              been provided with a Victim Identification Number              (VIN))**              �              Department of              Justice**Website for victims who have not yet been              identified or provided with a Victim Identification Number              (VIN)**

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**The CFTC Has Issued A Consumer Advisory Warning the Public of the Risks   of Foreign Currency Trading and Foreign Currency (FOREX) Scams**

   The CFTC has issued a Consumer   Advisory (at www.cftc.gov/cftc/cftccustomer.htm) urging the public to   scrutinize claims of high-return, low-risk investment opportunities in   foreign currency trading. This **Consumer****Advisory** provides   "red flags" to look for, and cautionary steps to be taken before   making an investment. The CFTC has also issued **Advisories** concerning   the *Commodity Futures Modernization Act of 2000*, and how FOREX firms   may ***lawfully*** offer foreign currency futures and options   trading opportunities to the retail public (see CFTC Press Release   4625-02, March 21, 2002, CFTC Advisory, March 21,   2002, and CFTC Advisory 06-01,   February 5, 2001).  

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