Jupiter, FL – July 19, 2006 – Andrew Alan Wilshire, along with employees Eric Scott Malcolmson and James Joseph Russo, were found guilty of solicitation fraud by the U.S. District Court for the Southern District of Florida, the Commodity Futures Trading Commission (CFTC) announced today. The judgment stems from a complaint filed in September 2004 alleging fraudulent solicitation of customers by Wilshire Investment Management Corporation, Inc. (WIMC) and National Commodities Corporation, Inc. (NCC).
The court found that Wilshire, as president and CEO of WIMC, knew of or was willfully blind to his employees’ fraudulent sales practices. Malcolmson and Russo were specifically found to have committed solicitation fraud, misrepresenting the potential for profits and downplaying the risks associated with commodity options trading. WIMC was held vicariously liable for its employees’ actions, and NCC, as WIMC’s guarantor, was held jointly and severally liable for the violations.
Evidence presented at the four-day bench trial revealed that, since at least September 2000, the defendants fraudulently solicited customers by falsely promising substantial profits and linking those expectations to factors like weather events and historical price trends. Malcolmson, for instance, allegedly claimed he could help clients “double or triple” their money, despite the fact that 88% of his clients lost money between 2000 and 2004, with the largest gain being only around $8,000.
The court rejected arguments that written risk disclosure statements signed by customers offset the misleading profit claims. Judge Donald M. Middlebrooks found the defendants’ behavior to be “blatant, brazen, and repeated.”
The final judgment orders the defendants to pay a total of $147,891.99 in restitution to eight defrauded customers. Additionally, a $100,000 civil penalty was imposed on each of the three individual defendants – Wilshire, Malcolmson, and Russo – as well as on WIMC, for which NCC is jointly and severally liable. The court permanently prohibited Wilshire, Malcolmson, and Russo from engaging in any further commodity-related activities.
The case was led by CFTC staff members Allison Lurton, Rachel Entman, Jason Gizzarelli, and Lacey Dingman.
Source: CFTC.gov
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