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Canadian trio fined USD2.2m in commodity pool anti-fraud action

Date: Thursday, November 12, 2009
Author: Emily Perryman, Hedgeweek.com

A federal court has entered default judgment orders against defendants Robin States and his wife Bernadette Bowden, both of Nova Scotia, Canada, and relief defendant Paul States, of British Columbia, Canada, in an action charging them with fraudulent solicitation and misappropriation in the operation of commodity pool known as Infinity Online Investors Group.

The orders, entered by the Honorable Donald L. Graham of the US District Court for the Southern District of Florida, require the trio to pay more than an equivalent of USD2.2mi in fines and equitable relief.

States and Bowden are ordered to jointly and severally pay CAD643,047 in restitution, States a USD910,000 civil monetary penalty and Bowden a USD520,000 civil monetary penalty. In addition, the court ordered Paul States, brother of Robin States, to disgorge CAD230,481 in ill-gotten gains.

The orders also prohibit States and Bowden from engaging in any commodity-related activity, including registering with the Commodity Futures Trading Commission in any capacity.

The default orders find that States and Bowden fraudulently solicited approximately CAD643,047 from approximately 900 individuals in the US, Canada and elsewhere to participate in Infinity, a commodity pool that purported to invest in commodity futures, options, foreign exchange and precious metals.

According to the orders, Infinity never did any trading. Instead, States and Bowden misappropriated the participantsí funds and used them to pay purported profits to participants and to pay for personal expenses, goods and services. The orders also find that the defendants funnelled pool participantsí funds to relief defendant Paul States, who had no legitimate interest or entitlement to the funds.