Coral Springs, FL – Linda R. Kuhney and her husband, Michael Kuhney, along with Commodity Investment Group, Inc. (CIG) and affiliated companies, have been penalized a combined $21.8 million for defrauding commodity options customers, the Commodity Futures Trading Commission (CFTC) announced March 22, 2007. The penalties stem from a complaint filed in June 2005, alleging misrepresentation of profits and minimization of risks associated with commodity options trading.
According to the CFTC, CIG, operating from Ft. Lauderdale, Florida, misrepresented the likelihood of profits while failing to disclose that over 90% of its 1,200 customers lost money – totaling over $11 million between February 2001 and December 2005. Linda Kuhney allegedly directed brokers to conceal written sales scripts during National Futures Association (NFA) and CFTC audits, actively covering up deceptive sales practices.
The U.S. District Court for the Southern District of New York issued a consent order permanently banning Linda Kuhney, Michael Kuhney, and CIG from all commodity-related activity. Linda Kuhney and Michael Kuhney are each responsible for $1.25 million in restitution. CIG is required to pay $11,819,785 in restitution to affected customers. International Commodity Clearing, LLC (ICC) and National Commodities Corporation, Inc. (NCCI) are jointly and severally liable for portions of the restitution, totaling $3,374,357 and $8,445,428 respectively, due to guarantee agreements with CIG.
In addition to restitution, civil monetary penalties were assessed: $7 million against CIG, $250,000 against Linda Kuhney, and $250,000 against Michael Kuhney. Michael Kuhney was also found to have aided and abetted CIG’s misconduct. The Kuhneys were held liable as controlling persons who failed to act in good faith to prevent the fraudulent activities.
The case was led by CFTC staff members W. Derek Shakabpa, Eliud Ramirez, David Oakland, Nathan Ploener, Manal Sultan, Lenel Hickson, Jr., Stephen J. Obie, Richard Wagner, and Vincent McGonagle.
Source: CFTC.gov
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