Rochester-area Resident Gary Shapoff Also Charged with Fraud
Washington DC - The U.S. Commodity Futures Trading Commission(CFTC) announced today that it obtained a federal court order inRochester, New York, freezing the assets of Atwood & James, Ltd. and Atwood & James, S.A., Inc. (collectively, Atwood) and individuals, Michael A. Kardonick, who maintains multiple residents in Brooklyn, New York, Pembrook Pines, Florida, and Rio de Janeiro, and Gary R. Shapoff,of Pittsford, New York. The order, issued by the Honorable Charles J.Siragusa of the U.S. District Court for the Western District of NewYork, also prohibits the destruction of documents and appoints areceiver to marshal assets.
Defendants Charged with Fraudulently Soliciting at Least $1.2 Million, Perhaps Millions More
The court’s order arises out of the CFTC’s complaint chargingdefendants with fraudulently soliciting more than $1 million fromretail clients to trade foreign currency (forex) options and chargingAtwood and Kardonick with misappropriating client funds.
“This forex fraud, which infiltrated the globe as an internationalenterprise, should remind all investors to exercise prudence andrestraint when presented with opportunities to profit with little to norisk. The CFTC reminds investors to conduct their own research andavoid being duped. The bottom line always is: If it sounds too good tobe true, it usually is.” said CFTC Acting Director of EnforcementStephen J. Obie.
Specifically, the complaint alleges that, from at least 2001 to thepresent, defendants fraudulently solicited funds from members of thegeneral public worldwide, including the United States and the UnitedKingdom, to trade forex options. Through the internet web sitewww.atwoodjames.com and other means, defendants allegedly madeextraordinary and false claims regarding Atwood including that:
• Atwood clients will never lose their principal and that profits are virtually guaranteed;
• Atwood is a sophisticated world-wide company with offices in New York, Amsterdam, London, and Rio de Janeiro;
• Atwood’s traders are licensed and regulated in the United States with their main corporate offices located in Rochester, New York; and
• Atwood and Kardonick have been successfully trading foreign currency options for the past 30 years.
As alleged, Atwood and Kardonick are not successful traders.According to the complaint, the only known trading accounts areKardonick’s personal trading accounts, which from 2003 throughSeptember 2008, sustained net losses of approximately $1.7 milliontrading commodity futures and options.
According to the complaint, defendants do not operate out ofRochester, New York; rather, they operate out of Rio de Janeiro,Brazil. Moreover, defendants are not registered or licensed with anyknown financial regulatory authority.
Kardonick and Shapoff Failed to Disclose Prior Criminal Records
Kardonick and Shapoff also failed to disclose that they both havecriminal convictions for mail and wire fraud and Shapoff, additionally,was the subject of two CFTC reparations actions involvingmisrepresentation, misuse of customer funds, nondisclosure, and orderexecutions.
The Honorable Charles J. Siragusa set a hearing on an order to showcause why a preliminary injunction should not be entered againstdefendants for February 6, 2009, at 4:00 p.m.
In its continuing litigation, the CFTC seeks a permanent injunctionagainst each defendant prohibiting them from further violating the CEA,restitution to defrauded customers, repayment of all ill-gotten gainsfrom the defendants, and the imposition of monetary penalties.
The following CFTC Division of Enforcement staff members areresponsible for this case: Stephen J. Obie, Vincent McGonagle, GretchenL. Lowe, James H. Holl III, Katherine M. Scovin, Kara Mucha, andMichelle Bougas.
The CFTC appreciates the cooperation of the Brazilian Comissão deValores Mobiliarios and the British Financial Services Authority ininvestigating this matter.