Operators of Trading Firm Settle U.S. Fraud Charges
Three former operators of a Monterey Park currency-trading firm have settled federal fraud charges by agreeing to pay $335,000 in fines and be barred from trading commodities, regulators said Wednesday.
The settlement, finalized last week, stemmed from a two-year-old lawsuit by the Commodity Futures Trading Commission accusing the defendants of marketing illegal, off-exchange foreign currency futures contracts to hundreds of small investors in 2000 and 2001.
The CFTC described the case as one of a spate of scams, often targeting ethnic communities, that promised high returns from supposedly low-risk strategies involving foreign currency futures, which are bets on fluctuations in exchange rates.
The defendants were Acro Information Service Inc.; its affiliate Pakco Holdings Ltd. of Carson City, Nev., which operated out of the same Monterey Park offices; former Acro owner Florentius Chan, a Monterey Park psychologist; his wife, Sandy H. Chan, Acro’s former president; and Andrew Tai Wai, who became Acro’s owner and president in May 2001, three months before the government shut down the operation.
According to the CFTC complaint, Acro advertised high-income employment opportunities in Asian-language newspapers, offering jobs trading futures contracts to anyone who responded.
The real goal, however, was to persuade the “employees” to open their own trading accounts, the CFTC said. Prospective employees were assured they would make profits while being exposed to limited risks. But with few exceptions, they lost all or most of their investments, the CFTC lawsuit contended.
Acro’s records were so badly kept that it was impossible to determine the number of victims and how much they lost, said Richard Wagner, deputy director of the CFTC.
Permanent injunctions signed by U.S. District Judge John F. Walter in Los Angeles prohibit Acro, Pakco, Florentius Chan and Wai from violating the anti-fraud provisions of the Commodity Exchange Act and CFTC regulations. All were ordered not to violate the Commodity Exchange Act’s off-exchange trading provisions.
The orders require the Chans to pay $225,000 in fines -- an immediate $50,000, then $175,000 in five annual installments of $35,000, Wagner said. Reached at his psychology practice, Chan declined to comment.
Wai, a former Alhambra resident who has moved to Almaty, Kazakhstan, agreed to pay $110,000 over 10 years. His attorney, David K.W. Chang, said Wai was “misled into taking over the operation without knowing what was going on” and “never meant to hurt anyone.” Wai left the country for family reasons, Chang said.
