Plantation, FL – October 6, 2006 – Steven Labell, along with six co-defendants, has been permanently barred from all commodity-related activity and faces over $14.7 million in penalties following a consent order issued by the U.S. Commodity Futures Trading Commission (CFTC). The order, entered by the Honorable Anita B. Brody of the United States District Court for the Eastern District of Pennsylvania on September 20, 2006, stems from a complaint filed in August 2004 and amended in October 2005, alleging widespread fraud.
Labell, a principal of Worldwide Commodity Corporation and South Coast Commodities, Inc., both based in Pembroke Pines, Florida, is accused of misrepresenting facts and omitting crucial information when soliciting customers to trade commodity options. Also named in the order are Larry Kahn, Joseph Allen, Phil Ferrini, and Stuart Schwartz, all of Plantation and Hollywood, Florida, respectively. South Coast Commodities, Inc. is identified as a successor corporation to Worldwide, inheriting liability for the fraudulent actions.
According to the CFTC, from January 2003 through January 2005, Worldwide and its sales force—including Allen, Ferrini, and Schwartz—engaged in high-pressure sales tactics to entice the public into trading options. The defendants allegedly promised quick and substantial returns based on well-known global events, such as the Iraq War and seasonal trends, falsely claiming these events would “virtually guarantee a profit” with minimal risk. The CFTC notes that such claims ignore the realities of efficient markets, which quickly incorporate public information into contract prices.
The result, the CFTC alleges, was devastating for investors. Approximately 98% of Worldwide’s 341 customers lost money, totaling over $5 million in losses. Of that $5 million, over $3.5 million was siphoned off as commissions and fees. The consent order holds Worldwide and SCC jointly and severally liable for $5,021,892 each. Labell and Kahn are each responsible for $2.5 million. Allen, Ferrini, and Schwartz face penalties of $435,000, $320,000, and $460,000, respectively.
The CFTC maintains that Labell and Kahn, as principals, knowingly induced the fraudulent activities or failed to act to prevent them. The order mandates the defendants collectively repay customers more than $5 million, in addition to the substantial civil monetary penalties. The consent order effectively removes Labell, Kahn, Allen, Ferrini, and Schwartz from any future involvement in the commodity markets.
Source: CFTC.gov
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