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FOREX Cases

Release #4299-99 (Civ-98-70169)

For Release: August 10, 1999

MICHIGAN FEDERAL COURT ENTERS PERMANENT INJUNCTION AGAINST THOMAS LAMAR, OF WATERFORD, MICHIGAN, IN CFTC ENFORCEMENT ACTION CHARGING FRAUDULENT OPERATION OF A COMMODITY POOL

Court Orders Lamar to Pay Over $2.8 Million In Restitution and Disgorgement to Defrauded Customers and Permanently Bars Him
from the Commodity Industry

WASHINGTON—The Commodity Futures Trading Commission (CFTC) announced today that on August 5, 1999, Judge Denise Page Hood of the U.S. District Court for the Eastern District of Michigan entered a consent order permanently enjoining Thomas Lamar of Waterford, Michigan, from, among other things, violating the anti-fraud, registration, disclosure, and reporting provisions of the Commodity Exchange Act (CEA) and CFTC regulations.

The entry of the consent order of permanent injunction stems from a five-count CFTC complaint against Lamar filed on February 13, 1998 (see CFTC News Release 4108-98, February 17, 1998), which alleged that Lamar defrauded at least 85 investors who had invested at least $2 million in the Lamar Investments Group (LIG), a commodity futures trading pool operated by Lamar.

Specifically, the CFTC complaint alleged that, among other things, from about March 1989 through October 1996, Lamar made misrepresentations to investors concerning the status and performance of LIG, reported fictitious profits to customers through fraudulent monthly account statements, and misappropriated funds received from investors. Lamar was also charged with acting as a commodity pool operator and commodity trading advisor without being registered as such with the CFTC.

In the consent order, Lamar admits the allegations of the CFTC's complaint and agrees to pay $2,838,169 as disgorgement and restitution to customers. In addition, Lamar also agrees to be permanently enjoined from violating the following provisions of the CEA and CFTC regulations: sections 4b and 4o of the CEA (anti-fraud provisions); section 4m (requirement that commodity pool operators and commodity trading advisors register with the CFTC); section 4n and regulation 4.21 (requirement to file with the CFTC and provide pool participants with a disclosure document); regulation 4.20 (requirement that pool operate as separate legal entity and prohibition against commingling customer funds with the funds of the commodity pool operator); regulation 4.22 (requirement to provide account statements and annual reports to pool participants); regulations 4.24 and 4.31(requirements that pool operator receive from pool participants a signed acknowledgement before accepting funds and entering into an agreement to direct trading on their behalf); and regulation 4.30 (prohibition against accepting funds in the name of the commodity trading advisor).

Finally, Lamar consents to be permanently banned from seeking registration with the CFTC or acting in any capacity that requires registration or is exempt from registration, and to a permanent prohibition on trading commodity interests for himself or others, or otherwise engaging in any business activities relating to commodity interest trading.

The entry of the consent order by Judge Hood represents the successful conclusion to a joint effort between the CFTC and the U.S. Attorney's Office for the Eastern District of Michigan. On February 12, 1998, the day before the CFTC filed its complaint, a grand jury issued an eight-count indictment against Lamar alleging fraud and money laundering violations in connection with the operation of the LIG pool. (United States v. Lamar, No. 98-80173 (E.D. Mich. 1998)). Lamar subsequently pleaded guilty to one count of mail fraud and one count of fraud, false reporting and deception in commodity futures trading. On May 26, 1999, Judge Hood sentenced Lamar to fifteen months in a halfway house, fifteen months of home confinement, and ordered him to pay restitution to pool customers in the amount of $2,838,169. The court's order that Lamar pay restitution as ordered by the Court in the criminal sentencing will satisfy the restitution and disgorgement obligations of the consent order with the CFTC.

http://www.cftc.gov/opa/enf99/opa4299-99.htm