U.S. Commodity Futures Trading Commission v. Vasquez et al

Filing 8

STATUTORY RESTRAINING ORDER - Motion Hearing set for 8/15/2014 03:30 PM in Courtroom 1, 100 Otis St, Asheville, NC 28801 before District Judge Martin Reidinger re: 4 MOTION for Preliminary Injunction. Signed by District Judge Martin Reidinger on 8/1/14. (nv)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA

U. S. COMMODITY
FUTURES
TRADING COMMISSION,
Case No. 1:14-cv-00196
Plaintiff,
Hon. Martin Reidinger
v.
Mag. Judge Dennis Howell
EDWIN A. VASQUEZ and
VASQUEZ GLOBAL
INVESTMENTS, LLC
Defendants.

STATUTORY RESTRAINING ORDER
On July 30, 2014, Plaintiff U.S. Commodity Futures Trading
Commission (“CFTC” or “Commission”) filed a Complaint for Injunctive and
Other Equitable Relief and Penalties under the Commodity Exchange Act
as Amended (“Complaint”) against Defendants Edwin A. Vasquez
(“Vasquez”) and his company, Vasquez Global Investments, LLC (“VGI”)
for violating core anti-fraud provisions of the Commodity Exchange Act
(“Act”), 7 U.S.C. §§ 1 et seq. (2012), by fraudulently soliciting at least
$583,491 from participants in an unregistered commodity pool Defendants
operated, by misappropriating at least $331,556 of those funds, and by
issuing false or misleading account statements to those pool participants to

conceal their fraud. Contemporaneously, the CFTC filed a Motion for a
Statutory Restraining Order (“Motion”), Motion for Preliminary Injunction,
Combined Memorandum in Support of Plaintiff’s Motions for a Statutory
Restraining Order and Preliminary Injunction (“Memorandum”) and
Appendix to Plaintiff’s Memorandum (“Appendix”).
Having read the Complaint, Motion, Memorandum and Appendix, and
the Defendants have been given telephonic notice of the Motion and an
opportunity to be heard,
THIS COURT HEREBY FINDS:
1.

This Court has jurisdiction over the parties and subject matter

of this action pursuant to the Commodity Exchange Act (the “Act”), 7 U.S.C.
§§ 1 et seq. (2012).
2.

This Court is authorized by Section 6c(a) of the Act, 7 U.S.C. §

13a-1(a), to issue a statutory restraining order against Defendants.
3.

Venue properly lies with this Court pursuant to Section 6c(e) of

the Act, 7 U.S.C. § 13a-1(e).
4.

It appears to the satisfaction of the Court that the Plaintiff has

presented a prima facie case, and further has shown by competent
evidence that there is a substantial likelihood that the Plaintiff will prevail on
the merits of this matter in showing, that the Defendants have engaged, are

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engaging, or are about to engage in conduct in violation of the Act and
Commission Regulations (“Regulations”) promulgated thereunder, 17
C.F.R. §§ 1.1 et seq. (2013). Specifically, there has shown by competent
evidence that there is a substantial likelihood that Defendants have
engaged, are engaging, or are about to engage in conduct in violations of
Sections 4b(a)(1)(A)-(C), 4k(2), 4m(1), 4(o)(1)(A),(B) and 6(c)(1) of the Act,
7 U.S.C. § 6b(a)(1)(A)-(C), 6k(2), 6m(1), 6o(1)(A), (B) and 9(c)(1) (2012),
and Regulation 180.1(a), 17 C.F.R. § 180.1(a) (2013); that Vasquez is
liable for VGI’s violations as a controlling person pursuant to Section 13(b)
of the Act, 7 U.S.C. § 13c(b) (2012; and that VGI is principally liable for the
acts constituting Vasquez’s violations pursuant to Section 2(a)(1)(B) of the
Act, 7 U.S.C. § 2(a)(1)(B) (2012), and Regulation 1.2, 17 C.F.R. § 1.2
(2013).
5.

It appears to the satisfaction of the Court that there is a

substantial likelihood that Defendants’ violations of the Act and Regulations
are likely to continue unless they are restrained and enjoined from
committing further violations.
6.

It appears to the satisfaction of the Court that there is a

substantial likelihood that the participants in the commodity pool commonly
known as the “Vasquez pool” may be cheated and defrauded and
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immediate and irreparable damage will occur to the Court’s ability to grant
effective final relief in the form of monetary redress due to the dissipation of
customer assets and destruction of books and records unless Defendants
are immediately restrained and enjoined by order of the Court. Further, the
Court finds that balance of hardships tips in the Plaintiff’s favor, as the
potential harm to the public in not granting the requested restraining order
outweighs the potential harm to the Defendant in granting the requested
relief.
7.

Consequently, the Court concludes as a matter of law that a

statutory restraining order should issue to preserve the status quo, protect
public customers from loss and damage, and enable the CFTC to fulfill its
statutory duties.
DEFINITIONS
For the purposes of this Order, the following definitions apply:
8.

The term “assets” means any legal or equitable interest in, right

to or claim to any real or personal property, including, but not limited to,
chattels, goods, instruments, equipment, fixtures, general intangibles,
effects, leaseholds, mail or other deliveries, inventory, checks, notes,
accounts, credits, receivables, lines of credit, contracts, insurance policies
and all cash, wherever located.

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9.

The term “document” is synonymous in meaning and equal in

scope to the usage of the term in Fed. R. Civ. P. 34(a) and includes, but is
not limited to, writings, drawings, graphs, charts, photographs, audio and
video recordings, computer records and other data compilations from which
information can be obtained and translated, if necessary, through detection
devices into reasonably usable form. A draft or non-identical copy is a
separate document within the meaning of the term.
10. “Defendants” Edwin A. Vasquez (“Vasquez”) and Vasquez
Global Investments, LLC (“VGI”), as well as any persons insofar as they
are acting in the capacity of Defendants’ agents, servants, successors,
employees, assigns and attorneys, and all persons insofar as they are
acting in active concert or participation with Defendants who receive actual
notice of this Order by personal service or otherwise.
RELIEF GRANTED
STATUTORY RESTRAINING ORDER
I.

ASSET FREEZE
IT IS HEREBY ORDERED that Vasquez and VGI are restrained and

enjoined from, directly or indirectly, withdrawing, transferring, removing,
dissipating, concealing, assigning, pledging, leasing, loaning, encumbering,
disbursing,

converting,

selling,

liquidating,

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alienating,

or

otherwise

disposing of any funds, assets, or other property, wherever located,
including funds, assets, or other property held outside the United States,
except as authorized by the Corporate Monitor in accordance with Part I of
this Order.

The assets affected by this Paragraph shall include both

existing assets and assets acquired after the effective date of this Order.
IT IS FURTHER ORDERED that, until further Order of this Court, any
bank, financial or brokerage institution, entity, or person that holds,
controls, or maintains custody of any funds, assets, or other property of
Vasquez and VGI or commodity pools operated by Vasquez and VGI, or
has held, controlled, or maintained custody of any funds, assets, or other
property of Vasquez and VGI or any commodity pool operated by Vasquez
and VGI, and who receives notice of this Order by any means, including
facsimile, electronic mail, United Parcel Service, or Federal Express, shall:
A.

prohibit Vasquez and VGI from withdrawing, removing,

assigning, transferring, pledging, encumbering, disbursing, dissipating,
converting, selling, or otherwise disposing of any such assetsin accordance
with Part I of this Order;
B.

deny Vasquez and VGI access to any safe deposit box that is:
1.

titled in the name of or maintained by Vasquez or VGI or

any commodity pool operated by Defendants, whether individually,
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jointly, or in any other capacity, including safe deposit boxes titled in
the name of or maintained by nominees of Vasquez or VGI; or
2.

otherwise subject to the control of or access by Vasquez

or VGI; and
C.

cooperate with all reasonable requests of the CFTC relating to

implementation of this Order, including producing records related to VGI’s
businesses and accounts held by Vasquez or VGI or commodity pools
operated by Vasquez or VGI.
II.

PROHIBITION OF DESTRUCTION OF BOOKS AND RECORDS
IT IS HEREBY ORDERED THAT Vasquez and VGI are restrained

and enjoined from, directly or indirectly, destroying, mutilating, concealing,
altering,

or

disposing

of

any

books

and

records,

documents,

correspondence, brochures, manuals, electronically stored data, tape
records, or other property of Vasquez and VGI or any commodity pool
operated by Vasquez and VGI, including all such records concerning the
business operations of Vasquez and VGI and any commodity pool
operated by Vasquez and VGI, wherever located.
III.

ACCESS TO AND INSPECTION OF BOOKS AND RECORDS
IT IS FURTHER ORDERED that representatives of the CFTC be

allowed immediately to inspect the books, records, and other documents of

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Vasquez and VGI, any commodity pool operated by Vasquez and VGI, and
their agents, including, but not limited to, documents, correspondence,
brochures, manuals, electronically stored data, tape recordings, and
computer discs, wherever they may be situated and whether they are in the
possession of Vasquez and VGI or others, and to copy said books, records,
and other documents, either on or off the premises where they may be
situated.
IV.

DIRECTIVES TO FINANCIAL INSTITUTIONS AND OTHERS
IT IS FURTHER ORDERED, pending further Order of this Court, that

any bank, financial or brokerage institution, futures commission merchant,
business entity, or person that holds, controls, or maintains custody of any
account or asset owned, controlled, managed, or held by, on behalf of, or for
the benefit of the Defendants, either individually or jointly, or has held,
controlled, or maintained custody of any account or asset owned,
controlled, managed, or held by, on behalf of, or for the benefit of the
Defendants, either individually or jointly, at any time since May 2007, and
who receives notice of this Order by personal service or otherwise,
including facsimile, electronic mail, Federal Express and United Parcel
Service, shall:
A. Prohibit Defendants and any other person from withdrawing,
removing, assigning, transferring, pledging, encumbering,
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disbursing, dissipating, converting, selling or otherwise
disposing of any such asset except as directed by further order
of the Court;
B. Deny Defendants and all other person(s) access to any safe
deposit box that is: (a) titled in the name of Defendants, either
individually or jointly; or (b) otherwise subject to access by the
Defendants; and
C. Provide counsel for the Commission, within five (5) business
days of receiving a copy of this Order, a statement setting forth:
(a) the identification number of each and every such account or
asset titled in the name, individually or jointly, of the
Defendants, or owned, controlled, managed, or held by, on
behalf of, or for the benefit of the Defendants: (b) the balance of
each such account, or a description of the nature and value of
such asset as of the close of business on the day on which this
Order is served, and, if the account or other asset has been
closed or removed, the date closed or removed, the total funds
removed in order to close the account, and the name of the
person or entity to whom such account or other asset was
remitted; and (c) the identification of any safe deposit box that
is either titled in the name, individually or jointly, of the
Defendants or is otherwise subject to access by the
Defendants.
V.

BOND NOT REQUIRED OF PLAINTIFF
IT IS FURTHER ORDERED that pursuant to Section 6c(b) of the Act,

7 U.S.C. § 13a-1(b), no bond need be posted by the Commission, which is
an agency of the United States of America.
VI.

SERVICE OF THE ORDER
IT IS FURTHER ORDERED that copies of this Order may be served

by any means, including by way of personal service, UPS or other

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commercial overnight service, email, facsimile or pursuant to Fed. R. Civ.
P. 5 and Articles 2 through 10 of the Hague Convention, Service Abroad of
Judicial and Extrajudicial Documents, upon any financial or brokerage
institution, futures commission merchant, bank, savings and loan institution,
other financial institution, or any other person or entity that holds any
accounts, funds, assets, or other property of Defendants or that may have
possession, custody, or control of any documents of Defendants, or that
may be subject to any provision of this Order. Elizabeth N. Pendleton,
Susan

Gradman,

Rosemary

Hollinger

and

Joseph

Patrick,

all

representatives of the Commission, are hereby specially appointed to serve
process and/or effectuate service of process, including of this Order and all
other papers in this action.
IT IS FURTHER ORDERED that the United States Marshals Service
is directed to assist the Commission with service of process, including of
the Complaint, summons, and all other papers in this case, as well as
assist the Commission with taking control and custody of the assets, books
and records, and business premises of Defendants.
VII.

SERVICE ON THE COMMISSION
IT IS FURTHER ORDERED that Defendants shall serve all

pleadings, correspondence, notices required by this Order, and other

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materials on the Plaintiff by delivering a copy to Elizabeth N. Pendleton,
Senior Trial Attorney, Division of Enforcement, Commodity Futures Trading
Commission, 525 W. Monroe Street, Suite 1100, Chicago, Illinois 60661
and/or by filing such pleadings or other materials electronically with the
Court.
VIII. COURT MAINTAINS JURISDICTION
IT IS FURTHER ORDERED that this Order shall remain in full force
and effect until further Order of this Court upon application, notice, and an
opportunity to be heard, and that this Court shall retain jurisdiction of this
matter for all purposes.
IX.

FURTHER COURT HEARINGS
IT IS FURTHER ORDERED that should any defendant wish to file a

memorandum of law or other papers in opposition to Plaintiff’s Motion for a
Preliminary Injunction, all papers shall be filed and served on or before
August 11, 2014.

Any reply by Plaintiff shall be filed and served on or

before August 14, 2014.
IT IS FURTHER ORDERED that Plaintiff’s Motion for a Preliminary
Injunction is set for hearing on August 15, 2014 at 3:30 p.m.
IT IS SO ORDERED.
Signed: August 1, 2014

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