Miami, FL – August 21, 2009 – Christopher Smithers has been ordered to pay over $422,000 in penalties and disgorgement following a CFTC investigation into fraudulent commodity trading practices. The U.S. Commodity Futures Trading Commission obtained an order on August 17, 2009, in the Southern District of Florida (Civil Action No. 05-80592-civ-Hurley) finding Smithers, along with his associate Jack Smithers and their firm, Prosperity Consultants, Inc. (PCI), jointly and severally liable for $96,263.61 in ill-gotten gains.
The CFTC initially filed a complaint on June 29, 2005, alleging that the Smitherses and PCI defrauded clients who invested in commodity interest accounts managed by them. The court found that the defendants solicited over $511,000 from at least 35 clients with promises of substantial profits and guaranteed returns, violating the Commodity Exchange Act.
An audit of client funds revealed that of the $361,000 directly invested with the Smitherses, only approximately $198,000 was actually used for trading futures contracts. Similarly, only $113,500 of the $149,000 invested with PCI was used for trading. The court determined that the Smitherses misappropriated client funds, using them for personal expenses and falsely representing them as investment returns to conceal their trading losses.
Furthermore, Christopher Smithers failed to disclose a prior injunction barring him from trading futures contracts, as well as the fact that over 90% of clients from his previous firm had lost money. This constituted a violation of a previous federal court injunction, dating back to October 24, 2002 (CFTC News Release 4716-02). In addition to the joint liability, Christopher Smithers is personally responsible for an additional $109,783.00 in disgorgement and $206,046.61 in monetary penalties.
The CFTC staff members responsible for this matter include John W. Dunfee, Ken Koh, Jason Mahoney, Paul G. Hayeck, and Joan Manley.
Source: CFTC.gov
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