Aurifex Commodities Research Co. Case 03/07/2006

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Company Name(s): 
Aurifex Commodities Research Co.
Case Name: 
Aurifex Commodities Research Co. Case 03/07/2006
Case Status: 
Lawsuit Filed
Case Status: 
Judgment Issued
Lawsuit Overview
Type of Lawsuit: 
CFTC Action
Date Filed: 
03/07/2006
Summary: 

According to the U.S. Commodity Futures Trading Commission (”CFTC”), the CFCT obtained a judgment against Aurifex Commodities Research Company of Mason, Michigan, requiring the company to pay $30,000 in restitution and a $120,000 civil monetary penalty to resolve CFTC charges of hedge fund fraud (see CFTC Press Release 5169-06, March 17, 2006).
 
The consent order of permanent injunction, entered on November 24, 2008, by the Honorable Judge Robert Holmes Bell of the U.S. District Court for the Western District of Michigan, ends all litigation against the named defendants in the CFTC action CFTC v. Aurifex Commodities Research Co., et al., NO. 06-CV-0166 (W.D. Mich.).
 
Defendants Charged with Fraud and Operating a Ponzi Scheme
 
On March 7, 2006, the CFTC charged Ty and Monette Klotz and their two companies, Aurifex Commodities Research Company and Aurifex Research L.L.C., with fraud in operating a Ponzi-like scheme while operating and soliciting participants for what they called a “private hedge fund.” On February 1, 2008, Judge Bell ordered Ty and Monette Klotz to pay more than $3.1 million in sanctions for their fraudulent conduct, which injured approximately 352 individuals who invested at least $2.2 million (see CFTC News Release 5451-08, February 8, 2008).
 
Shortly thereafter, on February 15, 2008, Judge Bell entered a default judgment against Aurifex Research L.L.C., one of the companies utilized by the Klotzes to perpetuate their fraudulent investment scheme. In resolving the CFTC’s claims against this company, the court held that the company: misappropriated investor funds; made material misrepresentations to the hedge fund participants; and was responsible for Ty Klotz’s issuance of fraudulent statements to investors reporting false profits. Aurifex Research L.L.C. was ordered to pay $1,826,708.16 in restitution, the amount owed to the 353 defrauded investors, and an additional $960,000 in penalties for its role in the fraud.