Miami, FL – Alan Lerner and several affiliated companies are facing fraud charges following a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) in the U.S. District Court for the Southern District of Florida on May 25, 2007. The complaint alleges a scheme to defraud retail investors through the sale of illegal off-exchange foreign currency (forex) options.
Lerner, identified as the president of Addison Enterprise – a collective of companies including The Liberty Mutual Group, Inc., Addison Financial Group, Inc., Addison Management Group, Inc., Hamlin Mercer Group, Inc., and Colfax Management Group, Inc. – is accused of inducing account executives to fraudulently solicit investors for these forex options. Also named in the complaint are Forefront Investment LP, Todd Guthrie, and Benji Dayan.
According to the CFTC, from February 2005 through June 2006, Addison Enterprise account executives failed to disclose the poor performance of customer accounts while simultaneously promoting the potential for high profits and minimal risk. The complaint alleges that most customers experienced losses, totaling over $7 million, with $3 million of that amount being paid out as commissions to Addison Enterprise.
On May 16, 2007, U.S. District Judge Joan A. Lenard issued a restraining order, freezing the assets of the defendants and preventing the destruction of relevant documents. A hearing to determine whether a preliminary injunction should be issued is scheduled for May 29, 2007, before Magistrate Judge Edwin Torres.
The CFTC is seeking a permanent injunction against the defendants, along with restitution for defrauded investors, disgorgement of any ill-gotten gains, and civil monetary penalties. The Florida Office of Financial Regulations assisted in the investigation.
Source: CFTC.gov
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