BURLINGTON, VT – June 20, 2006 – Gary F. Scholze, a retired chiropractor from Lower Burrell, Pennsylvania, has been charged with fraudulent solicitation of over $1.2 million in a commodity futures and options scheme, according to a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) in the U.S. District Court for the District of Vermont.
The CFTC alleges that from approximately August 2001 through May 2006, Scholze targeted chiropractors through professional publications and commodity trading seminars, convincing at least 14 investors nationwide to invest in commodity futures and options. He offered to trade on their behalf, either through individual accounts or a pooled account.
According to the complaint, Scholze made false promises of profit to some investors and assured others their principal investment was safe due to his “specialized trading strategy.” However, the CFTC claims Scholze only traded less than half of the funds entrusted to him, resulting in over $200,000 in losses. He further allegedly misappropriated investor funds to cover personal expenses.
Scholze is accused of concealing his trading losses and misappropriation by falsely reporting positive investment growth to customers. One investor reportedly believed their $300,000 investment had grown to over $1 million by early 2005 based on Scholze’s statements. Since March 2005, customers have reportedly received no funds despite repeated requests for repayment.
The CFTC also alleges that Scholze failed to register with the agency as a commodity trading advisor and commodity pool operator, violating the Commodity Exchange Act. He allegedly failed to provide required disclosures, accepted funds in his own name, and commingled customer funds with his personal finances.
The CFTC is seeking a statutory restraining order to freeze Scholze’s assets and preserve his records, as well as a preliminary and permanent injunction. They are also pursuing disgorgement of ill-gotten gains, restitution for investors, and civil monetary penalties. A hearing on the restraining order and preliminary injunction is scheduled for June 22, 2006.
In a related criminal case, Scholze was arraigned on June 19, 2006, on one count of wire fraud filed by the United States Attorney for the District of Vermont.
Source: CFTC.gov
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