Ty Klotz and his wife, Monette Klotz, were ordered to pay significant penalties for operating a Ponzi-like scheme through their companies, Aurifex Commodities Research Company and Aurifex Research L.L.C., according to a judgment obtained by the U.S. Commodity Futures Trading Commission (CFTC).
On November 24, 2008, Judge Robert Holmes Bell of the U.S. District Court for the Western District of Michigan entered a consent order resolving the CFTC’s charges against Aurifex Commodities Research Company. The company was required to pay $30,000 in restitution and a $120,000 civil monetary penalty. This judgment concludes all litigation against the defendants in the case CFTC v. Aurifex Commodities Research Co., et al., case number 06-CV-0166.
The CFTC initially filed charges on March 7, 2006, alleging that Ty and Monette Klotz defrauded investors by operating a fraudulent “private hedge fund.” Judge Bell previously ordered the Klotzes to pay over $3.1 million in sanctions on February 1, 2008, for their conduct, which impacted approximately 352 individuals who invested at least $2.2 million.
A default judgment was also entered against Aurifex Research L.L.C. on February 15, 2008, finding the company misappropriated investor funds, made false representations to participants, and was responsible for Ty Klotz’s fraudulent statements. Aurifex Research L.L.C. was ordered to pay $1,826,708.16 in restitution to the defrauded investors and an additional $960,000 in penalties. The combined penalties against the Klotzes and their companies aim to recover losses for the 353 investors impacted by the scheme.
The case was led by CFTC staff members Susan Padove, Merle K. Hampton, Thomas J. Koprowski, Venice Bickham, Ava Gould, Scott Williamson, Rosemary Hollinger, and Richard Wagner. The judgment was announced on November 25, 2008, from Washington, D.C.
Source: CFTC.gov
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