Mason, Michigan – February 8, 2008 – Tyand Monette Klotz were ordered to pay over $3.1 million in restitution and penalties for orchestrating a fraudulent investment scheme, the U.S. Commodity Futures Trading Commission (CFTC) announced today. Judge Robert Holmes Bell of the U.S. District Court for the Western District of Michigan issued the order on February 1, 2008.
The Klotzs, who formerly resided in Mason, Michigan, operated a scheme falsely advertised as a “private hedge fund” under the name “Aurifex Investment” and through companies Aurifex Commodities Research Co. and Aurifex Research LLC. The CFTC brought charges against them following an investigation into their business practices.
According to the court order, the Klotzs made false and misleading statements to investors regarding the profitability and risk associated with Aurifex. Ty Klotz specifically claimed average monthly returns of 20 percent and falsely stated investments were insured by Lloyd’s of London. He also disseminated fraudulent statements reporting fabricated profits.
The scheme operated in a Ponzi-like manner, utilizing funds from new investors to pay earlier investors. The Klotzs also used investor funds to finance a lavish lifestyle, purchasing luxury items such as Rolex watches, over $140,000 in gold and silver, a house and renovations, medical treatment, and automobiles.
The court found that 352 individuals invested at least $2,226,267.59 in Aurifex. The Klotzs were ordered to pay $1,826,708.16 in restitution to investors. In addition to the restitution, the judge imposed penalties totaling $1.3 million and issued a permanent injunction to prevent future violations. Claims against the Aurifex companies are still pending.
Source: CFTC.gov
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