The Commodity Futures Trading Commission (CFTC) announced today that it obtained more than $25 million in civil monetary penalties and equitable relief in orders against Safevest LLC, a firm located in Mission Viejo, Calif. and its owners and officers, Jon G. Ervin of Laguna Hills, Calif. and John V. Slye of Herndon, Va.
Judge James V. Selna, of the U.S. District Court for the District of California, Southern Division, issued separate orders requiring Safevest to pay a $5 million civil monetary penalty and Ervin and Slye each to pay a $1 million penalty. The orders also provide for equitable relief and require the defendants to pay restitution and disgorgement totaling $18,431,931. Additionally, the orders permanently ban all three defendants from trading in any commodity.
The court’s orders stem from a May 1, 2008, CFTC complaint (see CFTC Press Release 5497-08, May 2, 2008). The orders find that the defendants solicited more than 500 members of the public to send Safevest more than $25.7 million to purchase interests in a commodity pool that purportedly would trade commodity futures contracts. The defendants, however, did not use the customer funds to trade commodity futures but instead misappropriated virtually all the solicited funds. The court also found that, to induce people to send funds, the defendants misrepresented that Safevest used computerized trading software that consistently produced daily profits of between 1.6 percent and 1.9 percent. In addition to telling customers that profits were virtually guaranteed, the court found, the defendants also falsely represented that there was minimal risk of loss.
The following CFTC Division of Enforcement staff members are responsible for this case: Peter M. Haas, Richard P. Foelber, Kyong J. Koh, Paul G. Hayeck and Joan Manley.
