Source: http://www.cftc.gov/enf/99orders/enftrivette.htm
Timestamp: 2018-01-21 01:05:58
Document Index: 727582951

Matched Legal Cases: ['§ 6', '§ 33', '§4', '§ 13', '§ 13', '§ 13', '§ 1', '§ 6', '§ 6', '§ 6', '§6', '§ 6', '§ 6', '§ 6', '§ 33', '§ 6', '§ 33', '§ 6', '§ 33', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 13']

Final Trivette Complaint
Commodity Futures Trading Commission, ) Case No. 99-Civ. 54-V
) COMPLAINT FOR A
v. ) PERMANENT INJUNCTION,
) OTHER EQUITABLE RELIEF
Donald G. Trivette, ) AND CIVIL MONETARY
Defendant. ) PENALTIES
1. Since at least 1995, Donald Trivette ("Trivette"), a former floor broker, has fraudulently solicited and accepted in excess of $100,000 from at least seven members of the public, many of whom are members of the same church as he, to participate in a commodity pool or, in the case of one investor, a joint account, to trade S&P 500 futures contacts ("S&Ps") and options on S&Ps. During the course of these solicitations, Trivette misrepresented to prospective investors the performance record and size of a pool he had been trading. Trivette has commingled these investor funds with his own funds and has misappropriated at least part of these funds by using them for his personal trading and personal expenses.
2. After the investors invested with Trivette, he continuously represented to them that their investments were doing well and earning double-digit returns, when, in fact, both the pool account and Trivette's other trading accounts all lost money in 1996, 1997 and 1998. Losses in the pool account for those three years totalled approximately $55,000, and total trading losses for those three years exceeded $200,000. When a number of the investors recently asked for their money back, Trivette failed to return any of the money, which appears to be approximately $100,000. He has falsely represented to the investors that their monies were seized or frozen by the Chicago Mercantile Exchange ("CME"), at which he had been a registered floor broker for approximately five years.
3. Trivette's misappropriation of investor funds and fraudulent misrepresentations to investors violate Sections 4b(a), 4c(b) and 4o(1) of the Commodity Exchange Act, as amended (the "Act"), 7 U.S.C. §§ 6b(a), 6c(b) and 6o(1) (1994), and Section 33.10 of the Commission's Regulations (the "Regulations"), 17 C.F.R. § 33.10 (1998). In addition, by commingling pool money with his own funds and failing to treat the pool as a separate entity, Trivette violated Section 4.20 of the Regulations, 17 C.F.R. §4.20 (1998).
4. Accordingly, the Commodity Futures Trading Commission (the "Commission") brings this action pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1, to enjoin Trivette's unlawful acts and practices and to compel his compliance with the Act. In addition, the Commission seeks disgorgement of Trivette's ill-gotten gains, restitution to customers for damages proximately caused by Trivette's violations, civil monetary penalties and such other relief as this Court may deem necessary or appropriate.
5. Unless restrained and enjoined by this Court, Trivette is likely to continue to engage in the acts and practices alleged in this Complaint and similar acts and practices, as more fully described below.
6. The Act establishes a comprehensive system for regulating the purchase and sale of commodity futures contracts and options. This Court has jurisdiction over this action pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1, which provides that, whenever it shall appear to the Commission that any person has engaged, is engaging, or is about to engage in any act or practice constituting a violation of any provision of the Act or any rule, regulation, or order promulgated thereunder, the Commission may bring an action against such person to enjoin such practice or to enforce compliance with the Act.
7. Venue properly lies with this Court pursuant to Section 6c(e) of the Act, 7 U.S.C. § 13a-1(e), because the defendant is found in, inhabits, or transacts business in this District and the acts and practices in violation of the Act have occurred, are occurring, or are about to occur within this District, among other places.
8. Plaintiff Commission is a federal independent regulatory agency which is charged with the administration and enforcement of the Act, 7 U.S.C. §§ 1 et seq., and the regulations promulgated thereunder.
9. Defendant Donald G. Trivette is an individual residing at 477 Trivette Road, Union Grove, North Carolina 28289. He was a floor broker registered with the Commission from 1993 to October 1998.
10. From at least 1995 to the present, Trivette has been orally soliciting money from investors and prospective investors. Trivette represents that he is soliciting and accepting funds to pool with other investors' funds or, in the case of one investor, to open a joint account to trade futures contracts and options on such futures contracts on the CME.
11. Trivette holds himself out to investors as a person knowledgeable in commodity futures and commodity options trading and represents that he has previously operated and profitably traded a commodity pool for a period of sixteen months.
12. As a result of Trivette's representations, individuals, including members of his church, have each invested sums of money ranging from $5,000 to $50,000.
13. Trivette has deposited investors' funds in one or more accounts in his own name and commingled the funds with his own funds.
14. Trivette has misappropriated at least some of the investors' funds for his own personal trading and for personal expenses.
15. In engaging in the activities set forth above, Trivette has acted as a commodity pool operator ("CPO"), which, pursuant to Section 1a(5) of the Act, is any person who is engaged in the business that is of the nature of an investment trust, syndicate or similar form of business and who, in connection therewith, solicits, accepts or receives from others funds, securities or property for the purpose of trading in any commodity for future delivery, on or subject to the rules of any contract market.
16. During 1996, 1997 and 1998, Trivette has periodically orally represented and occasionally represented in writing to investors that their investments were making substantial rates of return and generating substantial profits.
17. Trivette's trading for investors in 1996, 1997 and 1998 was unprofitable.
18. In 1999, when investors requested that Trivette return their funds, Trivette has failed and refused to return funds to investors and has falsely claimed to the investors that the CME has frozen or seized the funds of his investors.
VIOLATIONS OF SECTIONS 4b(a)(i) - (iii) OF THE ACT :
MISAPPROPRIATION OF INVESTOR FUNDS AND FRAUD
19. The allegations set forth in paragraphs 1 through 18 are realleged and incorporated herein by reference.
20. From at least 1995 and continuing to the present, Trivette has: (i) cheated or defrauded or attempted to defraud other persons; (ii) willfully made or caused to be made to other persons false reports or statements, or willfully entered or caused to be entered for other persons false records; and (iii) willfully deceived or attempted to deceive other persons, in or in connection with orders to make, or the making of, contracts of sale of commodities for future delivery, made, or to be made, for or on behalf of any other persons, where such contracts for future delivery were or could be used for the purposes set forth in Section 4b(a) of the Act, 7 U.S.C. § 6b(a), all in violation of Section 4b(a)(i), (ii) and (iii) of the Act, 7 U.S.C. § 6b(a)(i), (ii) and (iii).
21. By using, for his own personal trading and personal expenses, funds solicited to trade commodity futures for investors, as set forth in paragraph 14 above, Trivette has knowingly misappropriated investor funds, in violation of Section 4b(a)(i) and (iii) of the Act, 7 U.S.C. § 6b(a)(i) and (iii).
22. In the course of his solicitations of investors to invest money with him to trade commodity futures, Trivette has knowingly made material misrepresentations and omitted materials facts including, but not limited to, the misrepresentations set forth at paragraphs 11, 16 and 18, in violation of Section 4b(a)(i) and (iii) of the Act, 7 U.S.C. §6b(a)(i and iii).
23. Trivette has knowingly issued false reports and has made false statements to investors who invested money with him to trade commodity futures, as set forth in paragraphs 16 and 18, in violation of Section 4b(a)(i), (ii) and (iii) of the Act, 7 U.S.C. § 6b(a)(i), (ii) and (iii).
VIOLATIONS OF SECTION 4c(b) OF THE ACT AND REGULATION 33.10:
MISAPPROPRIATION OF INVESTOR FUNDS AND OPTIONS FRAUD
24. The allegations set forth in paragraphs 1 through 23 are realleged and incorporated herein by reference.
25. From at least 1995 and continuing to the present, Trivette has: (i) cheated or defrauded or attempted to defraud other persons; (ii) willfully made or caused to be made to other persons false reports or statements, or willfully entered or caused to be entered for other persons false records; and (iii) willfully deceived or attempted to deceive other persons, in or in connection with an offer to enter into, the entry into, the confirmation of the execution of, or the maintenance of, commodity option transactions, all in violation of Section 4c(b) of the Act, 7 U.S.C. § 6c(b).
26. By using, for his own personal trading and personal expenses, funds solicited to trade options on commodity futures for investors, as set forth in paragraph 14, Trivette has knowingly misappropriated investor funds, in violation of Section 4c(b) of the Act, 7 U.S.C. § 6c(b), and Regulation 33.10(a) and (c), 17 C.F.R. § 33.10(a) and (c).
27. In the course of his solicitations of investors to invest money with him to trade options on commodity futures, Trivette has knowingly made material misrepresentations and omitted material facts including, but not limited to, the misrepresentations set forth at paragraphs 11, 16 and 18, in violation of Section 4c(b) of the Act, 7 U.S.C. § 6c(b), and Regulation 33.10(a) and(c), 17 C.F.R. § 33.10(a) and (c).
28. Trivette has knowingly issued false reports and has made false statements to investors who invested money with him to trade options on commodity futures, as set forth in paragraphs 16 and 18, in violation of Section 4c(b) of the Act, 7 U.S.C. § 6c(b), and Regulation 33.10, 17 C.F.R. § 33.10.
CPO FRAUD
29. The allegations set forth in paragraphs 1 through 28 are realleged and incorporated herein by reference.
30. From at least 1995 and continuing to the present, Trivette, while acting as a CPO, has employed a device, scheme or artifice to defraud pool participants and prospective pool participants, in violation of Section 4o(1)(A), 7 U.S.C. § 6o(1)(A).
31. From at least 1995 and continuing to the present, Trivette, while acting as a CPO, has engaged in a transaction, practice or course of business which has operated as a fraud or deceit upon pool participants and prospective pool participants, in violation of Section 4o(1)(B) of the Act, 7 U.S.C. § 6o(1)(B).
32. By using, for his own personal trading and personal expenses, funds solicited to trade commodity futures and options on commodity futures in a commodity pool, as set forth in paragraph 14, Trivette has knowingly misappropriated commodity pool funds, in violation of Section 4o(1)(A) and (B) of the Act, 7 U.S.C. § 6o(1)(A) and (B).
33. In the course of his solicitations of pool participants to invest money with him to trade commodity futures and options on commodity futures in a pool, Trivette has knowingly made material misrepresentations and omitted materials facts including, but not limited to, the misrepresentations set forth at paragraphs 11, 16 and 18, in violation of Section 4o(1)(A) and (B) of the Act, 7 U.S.C. § 6o(1)(A) and (B).
34. Trivette has knowingly issued false reports and has made false statements to pool participants who invested money with him to trade commodity futures and options on commodity futures in a commodity pool, as set forth in paragraphs 16 and 18, in violation of Section 4o(1)(A) and (B) of the Act, 7 U.S.C. § 6o(1)(A) and (B).
VIOLATIONS OF REGULATION 4.20:
CPO'S COMMINGLING OF POOL FUNDS WITH HIS OWN FUNDS
AND FAILURE TO TREAT THE POOL AS A SEPARATE ENTITY
35. The allegations set forth in paragraphs 1 through 34 are realleged and incorporated herein by reference.
36. From at least 1995 and continuing to the present, Trivette, while operating as a CPO, has accepted pool funds in his own name, has failed to treat the pool as a separate entity by depositing those pool funds into his personal accounts and has commingled those pool funds with his own funds, all in violation of Regulation 4.20.
37. From at least 1995 and continuing to the present, Trivette, while operating as a CPO, has accepted pool funds in his own name, in violation of Regulation 4.20(b).
38. From at least 1995 and continuing to the present, by depositing pool funds into his personal accounts and not into accounts in the name of the pool, Trivette failed to operate the pool as a separate entity, in violation of Regulation 4.20(a).
39. From at least 1995 and continuing to the present, Trivette has commingled the funds of the pool with his own property, in violation of Regulation 4.20(c).
WHEREFORE, the Commission, respectfully requests that this Court, as authorized by Section 6c of the Act, 7 U.S.C. § 13a-1, and pursuant to its own equitable powers, enter:
a) a permanent injunction prohibiting the defendant and any other person or entity associated with him, including any successor thereof, from engaging in conduct violative of Sections 4b(a), 4c(b) and 4o(1) of the Act and Sections 4.20 and 33.10 of the Commission's Regulations and from engaging in any commodity-related activity, including soliciting new customers or customer funds or pool participants or pool funds;
b) an order directing the defendant to disgorge, pursuant to such procedure as the Court may order, all benefits received from the acts or practices which constitute violations of the Act or Regulations, as described herein, and interest thereon from the date of such violations;
c) an order directing the defendant to make full restitution to every customer whose funds were received by him as a result of acts and practices which constituted violations of the Act and Regulations, as described herein, and interest thereon from the date of such violations;
d) a civil penalty on the defendant in the amount of not more than the higher of $100,000 or triple the monetary gain to the defendant for each violation of the Act or Regulations committed prior to November 27, 1996, or $110,000 or triple the monetary gain to that defendant for each violation of the Act committed after that date; and
e) such other and further remedial ancillary relief as the Court may deem appropriate.
Richard Wagner, Esq.
Richard Glaser, Esq.
(202) 418-5531 (fax)
Dated: April 6, 1999 --------------------------------------------------------