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Release: 4787-03
For Release: May 14, 2003
PORTLAND FOREIGN CURRENCY FIRM, ITS PRESIDENT,
AND OTHERS CHARGED WITH STEALING MORE THAN $9 MILLION IN CUSTOMER FUNDS
CFTC Obtains Federal Court Order Freezing Assets
of Orion International, Inc. and Several Individuals
WASHINGTON, D.C. – The U.S. Commodity Futures Trading Commission (CFTC)
today announced that on May 8, 2003, U.S. District Judge Garr King of the federal
district court in Portland, Oregon issued an order freezing the assets and
preventing the destruction of the books and records of defendant Orion
International, Inc. (Orion), its President, Russell Cline (Cline), and other defendants --
Bagone Vorachith, April Duffy, and Nancy Hoyt -- in an action filed by the
CFTC on May 7th.
The CFTC’s complaint charges each of the defendants with stealing customer
funds, making fraudulent sales solicitations, and issuing false account statements
in connection with their work for Orion. The complaint also charges defendants
Orion and Cline with engaging in a business that solicited retail customers
to invest in illegal foreign currency (forex) futures contracts.
The State of Oregon Department of Consumer and Business Services joined the
CFTC’s action as a named plaintiff, and charges the defendants with violations
of the state anti-fraud and securities laws based on the same alleged conduct.
Defendants Allegedly Fraudulently Solicited at Least $27 Million from Customers
The CFTC complaint alleges that, from at least December 1998 through the present,
defendants have fraudulently solicited at least $27 million from over 600 individuals
to participate in a purported foreign currency fund (the Orion Fund). In soliciting
customers, defendants falsely represented that trading in the fund had produced
annual profits in excess of 150 percent and monthly profits from December 1998
through May 2002. As alleged, defendants stole at least $9 million in customer
funds and used that money for personal purposes, such as to purchase eight
large homes in Portland and at least 24 luxury automobiles.
The complaint also alleges that, to the extent the defendants actually used
customer funds for trading, they traded those funds in the name of Orion, not
in the name of the Orion Fund or the individual customers. As charged, that
trading resulted in net losses for customers. The complaint alleges that to
hide their theft of funds and the poor trading results, defendants issued false
written reports and made oral misrepresentations to customers showing consistently
profitable trading.
The complaint further alleges that in August 2002, defendants falsely informed
investors that “unrealized long term positions” in the market had
to be closed out causing losses in excess of 90 percent of the total pool of
funds. At that time, defendants allegedly notified investors that all requests
for withdrawals from accounts would be cancelled and all accounts would be
frozen. As a result, investors have been unable to secure a return of their
funds from the Orion Fund, according to the complaint.
Also, according to the complaint, defendants have represented to customers
that they are continuing to trade foreign currency contracts for the purpose
of restoring lost customer funds. In March 2003, defendants informed customers
that the Orion Fund had a balance of over $6.5 million in December 2002 that
was attributable to a 210 percent trading gain between July and November 2002.
Contrary to these representations, the complaint alleges that Orion Fund trading
accounts had a balance of only approximately $240,000 in December 2002 and
had sustained losses of almost $400,000 between July and November 2002.
The CFTC is seeking an injunction against each of the defendants, the repayment
of ill-gotten gains, a refund of customer losses, and civil monetary penalties
against each defendant.
Gregory Mocek, CFTC Director of Enforcement, said:
“Forex prosecutions such as this should send a clear message
to scam artists that sell illegal foreign currency investments: If you operate
a forex
boiler room and steal from investors, we will use all of our internal and cooperative
enforcement resources to find you, freeze your assets, close your business,
and prosecute you to the fullest extent of the law.”
The following CFTC Division of Enforcement staff members are responsible for
this case: Elizabeth Padgett, Alan Edelman, Todd Kelly, and Richard Foelber.
A copy of the CFTC complaint and restraining order may be obtained at www.cftc.gov.
Media Case Enforcement Contact:
Gretchen L. Lowe, Associate Director,
CFTC Division of Enforcement, (202) 418-5379
* * * * * * * * * *
A CFTC Consumer Advisory Warns the Public of the Risks of
Foreign Currency (FOREX) Trading and Foreign Currency Scams
The CFTC has issued a Consumer
Advisory urging the public to scrutinize claims
of high-return, low-risk investment opportunities in foreign currency (FOREX)
trading. This Consumer Advisory provides "red flags" to look for,
and cautionary steps to be taken, before making an investment. See Beware of
Foreign Currency Trading Frauds, March 8, 2001 (www.cftc.gov/cftc/cftccustomer.htm).
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