Investment Fraud and Misrepresentation Litigation and FINRA Arbitration Attorney, Russell L. Forkey, Esq.
Securities and Exchange Commission v. New Futures Trading International Corporation and Henry Roche (United States District Court for the District of New Hampshire, Civil Action No. 11-CV-532-JL, Complaint Filed November 16, 2011)
Court Enters Final Judgments Against New Hampshire Futures Day-Trading Business and Canadian Resident In Ponzi Scheme Case
The Securities and Exchange Commission recently announced that, on May 24, 2012, the U.S. District Court for the District of New Hampshire entered final judgments by default against New Futures Trading International Corporation (“New Futures”), a New Hampshire business and Henry Roche, a Canadian resident who directed New Futures, in a Ponzi scheme action the Commission filed in November 2011. Among other things, the court ordered the parties to pay a total of over $2.8 million.
In its complaint, filed on November 16, 2011, the Commission alleged that Roche, through New Futures, had been engaged in an ongoing unregistered offering of securities in the United States through operations in New Hampshire and Ontario, Canada. The Commission alleged that, since December 2010, Roche had raised over $1.3 million from at least 14 investors in nine states through the offer and sale of high yield promissory notes purportedly yielding either 5-10% per month, or a 200% return within 14 months. According to the Commission’s complaint, Roche represented to some investors that funds supplied would be invested in bonds, Treasury notes and/or 10-year Treasury note futures contracts, and to others that the funds would be invested directly in New Futures, purportedly an on-line futures day-trading training business Roche was operating from Canada. The complaint alleged that, instead of using the funds for either purpose, Roche used approximately $937,000 provided by New Futures investors to make Ponzi “interest” payments to investors in prior Roche-controlled entities. According to the Commission’s complaint, Roche also misappropriated at least another $359,000 to support his lifestyle, to operate a horse breeding venture, and to buy horses. At the time the action was originally filed by the Commission, the court issued a temporary restraining order (later converted to a preliminary injunction) that, among other things, froze the assets of New Futures and Roche and prohibited them from continuing to solicit or accept investor funds.
The court, acting on the Commission’s motion for default judgments, entered final judgments: (1) imposing permanent injunctions against both New Futures and Roche enjoining them from future violations of 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; (2) ordering them each to pay disgorgement of their ill-gotten gains in the amount of $1,242,972 plus prejudgment interest of $40,917.47; and (3) ordering Roche to pay a monetary penalty in the amount of $150,000 and New Futures to pay a monetary penalty in the amount of $150,000.