According to the U.S. Securities and Exchange Commission (“SEC”) on May 14, 2009, the SEC obtained a court order halting a $14 million Ponzi scheme that defrauded more than 100 investors in the United States and Canada. The SEC's complaint, filed in federal court in Los Angeles, alleges that Gordon A. Driver ("Driver") and his company Axcess Automation, LLC ("Axcess") raised $14.1 million from investors since approximately February 2006 by promising them a weekly return of up to 5 percent from trading in futures. The SEC alleges that Driver operated Axcess as a Ponzi scheme and misappropriated over $1 million to pay his personal expenses. The court order obtained by the SEC freezes the assets of both the firm and Driver, who resides in Las Vegas, Nevada, and Hamilton, Ontario.

Specifically, the SEC's complaint alleges that Driver and Axcess represented to the investors that their funds would be used to trade futures using a "proprietary software program" that Driver developed and that they would receive returns of 1 percent to 5 percent per week from the trading. According to the complaint, Driver and Axcess actually used only $3.7 million of the $14.1 million raised for futures trading and lost nearly all of it in trading. The complaint further alleges that Driver and Axcess operated a Ponzi scheme by using $10.7 million to pay investors and another $1.1 million to pay Driver's personal expenses.

The SEC alleges that Driver and Axcess have violated the registration and antifraud provisions of the federal securities laws, Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The court order obtained by the SEC temporarily enjoins Driver and Axcess from future violations of these provisions, freezes their assets, prevents the destruction of documents; grants expedited discovery; and requires them to provide accountings. The SEC also seeks preliminary and permanent injunctions, disgorgement, and financial penalties against both defendants. A hearing on whether a preliminary injunction should be issued against the defendants is scheduled for May 22, 2009, at 2 p.m. PDT.

The Commodity Futures Trading SEC ("CFTC") also filed an emergency action yesterday against Driver and Axcess, alleging violations of the antifraud provisions of the Commodity Exchange Act. The SEC acknowledges the assistance of the CFTC and the Ontario Securities SEC in this matter.