Charles O. Morgan, Jr., as Personal Representative of the Estate of Frederick J. Kunen, et al.: Lit. Rel. No. 20253 / August 24, 2007
Charles O. Morgan, Jr., as Personal Representative of the Estate of Frederick J. Kunen, et al.
The Securities and Exchange Commission (SEC or the Commission) announced that on August 23, 2007, it filed an emergency civil action against Charles O. Morgan, Jr., as personal representative of the Estate of Frederick J. Kunen (Kunen's Estate), in connection with a fraudulent options trading scheme orchestrated by Frederick J. Kunen (Kunen). Kunen died on July 11, 2007 at age 55, and resided in Coconut Creek, Florida. On August 23, 2007, the Honorable Alan S. Gold, United States District Judge for the Southern District of Florida entered, among other things, an emergency order temporarily freezing the assets of Kunen's Estate.
The Commission's complaint (Complaint) alleges that from at least January 2007 until his death on July 11, 2007, Kunen raised over $2 million through a fraudulent index options trading program. The Complaint further alleges that Kunen falsely represented to investors that they were guaranteed a 10-20%, risk-free monthly return on their investment, that their principal was safe, and that the options trading program had a successful eight-year track record. The Complaint also alleges that Kunen effected transactions in individual investors' accounts once the investors had funded the accounts, and after effecting the trades, Kunen falsely told investors that the trading had resulted in profits and instructed investors to send him his portion of the profits. Finally, the Complaint alleges that Kunen received approximately $1 million in fraudulently obtained compensation from investors and that none of the investors' accounts show profits from Kunen's trading.
The Court appointed Scott M. Dimond, an attorney in the law firm of Dimond Kaplan & Rothstein P.A., as Receiver over Kunen's Estate. Among other things, Mr. Dimond is responsible for marshaling and safeguarding assets held by Kunen's Estate.
From the SEC Complaint, "2. In addition to the material misrepresentations and omissions described above, Kunen defrauded investors into transferring funds to him-as compensation by misrepresenting he had made profitable trades on their behalf. Finally, Kunen failed to disclose to investors he was convicted of securities fraud, and subsequently incarcerated for violating his probation by committing bank fraud."
I guess that we don't have to worry about whether the jail sentence will have an deterrent value.
