The U. S. Commodity Futures Trading Commission (CFTC) recently announced that U. S. District Court Judge Daniel T. K. Hurley issued a statutory restraining order freezing the assets of United Investors Group, Inc. (UIG), and traders Greg P. Allotta, and Michael H. Savitsky III, all of Boca Raton, Florida; Jay M. Levy of Aventura, Florida; Paul F. Plunkett, UIG principal and chief executive officer, of Dearfield, Florida; and Andrew D. Ross, former UIG principal and director, of Boca Raton. The PEI Securities Office issued an investor alert in December 2003 warning investors of this unlicensed commodities and futures Florida-based company soliciting investment funds in Prince Edward Island.

The U.S. order, entered on January 3, 2005, stems from a CFTC complaint filed on the same day in the U. S. District Court for the Southern District of Florida, naming UIG, Allotta, Savitsky, Levy, Plunkett, and Ross as defendants and alleging that they violated the Commodity Exchange Act and commission regulations by defrauding customers they solicited to trade options on commodity futures contracts.

Specifically, the complaint alleges that, beginning in August 2003, UIG and several of its traders, including Allotta, Levy, and Savitsky fraudulently solicited customers to open accounts to trade options through UIG by combining high-pressure sales tactics with fraudulent misrepresentations about the likelihood of profits, the level of risk involved in trading options, and their purported success in trading. The complaint further alleges that, from August 2003 to June 2004, approximately 98 per cent of the 364 accounts opened at UIG lost money trading commodity options – for a total loss of more than $6.1 million – while, for the same time period, UIG charged more than $4.25 million in commissions and fees.

Further, the complaint names Greg Allotta Enterprises, Inc. and Michael Savitsky, Inc. as relief defendants. Relief defendants are not charged with violations of the law, but they are named solely as persons who may have received funds from a fraudulent scheme. The complaint alleges that Greg Allotta Enterprises and Michael Savitsky, Inc. received commission payments based on the fraudulent conduct of Allotta and Savitsky, respectively.

In its continuing litigation against defendants, the CFTC is seeking preliminary and permanent injunctive relief, return of funds to defrauded customers, repayment of ill-gotten gains, and an award of civil monetary penalties. Judge Hurley scheduled a hearing for January 17, 2005, on the CFTC’s motion for a preliminary injunction.

The PEI Securities Office is pleased that the CFTC is moving forward in addressing concerns raised by securities regulators and investors and is continuing to monitor this case.

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