Would Repay Customers : Commodities Company to Accept Liquidation

A Huntington Beach commodities company ordered to stop doing business late last month has agreed to liquidate in order to repay its customers whatever it can, the firm’s attorney told a federal court judge in Los Angeles on Monday.

A court-appointed temporary receiver estimates that U.S.A. Commodity Futures Inc.’s 119 customers will receive about 63 cents for every $1 they invested with the firm. About $119,000 remains in company accounts, according to court records. The company had liabilities of $372,000 on Dec. 31, according to the receiver’s report.

U.S.A. Commodity’s assets were frozen and its operations were suspended by a federal judge on Dec. 24 at the request of the Commodity Futures Trading Commission. The CFTC filed a complaint against the company, alleging that it was undercapitalized.

“At this point, I see no alternative other than entering into permanent receivership or entering a Chapter 7 bankruptcy (liquidation),” John Giovannone, the company’s attorney, told U.S. Dist. Judge Irving Hill at Monday’s hearing.

Extends Order

Hill responded by extending until Jan. 13 the temporary restraining order freezing the company’s assets and suspending operations. He set a hearing for that day to appoint a permanent receiver.

The company, which bought and sold commodities through an account at Drexel Burnham Lambert Inc. in New York, found that its account had been liquidated when one customer’s $407,900 check bounced.

Giovannone said that a group of customers and employees had discussed investing money in the company to save it but decided against the move over the weekend.

He said the company was owned by and served mostly ethic Chinese people. Because few customers speak English, Giovannone said, company officials have agreed to work with Sheldon Jaffe, the court-appointed receiver, to help customers fill out forms and disperse the assets.