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U.S. Commodity Futures Trading Commission v. Parker

United States District Court, D. Utah

May 19, 2017

U.S. Commodity Futures Trading Commission, Plaintiff,
v.
Kimball Parker; MakeYourFuture, LLC; Timothy Baggett; Changes Worldwide LLC; Changes Trading LLC, Defendants.

          Ashley J. Burden Sr. Trial Attorney

          Mark W. Pugsley Attorney for Make Your Future, LLC

          CONSENT ORDER FOR PERMANENT INJUNCTION, CIVIL MONETARY PENALTY, AND OTHER EQUITABLE RELIEF AGAINST DEFENDANTS KIMBALL PARKER AND MAKEYOURFUTURE, LLC

          Bruce S. Jenkins U.S. District Court Judge

         I. INTRODUCTION

         On September 21, 2016, Plaintiff Commodity Futures Trading Commission ("Commission" or "CFTC") filed a Complaint against Defendants Kimball Parker, MakeYourFuture, LLC, Timothy Baggett, Changes Worldwide LLC, and Changes Trading LLC, seeking injunctive and other equitable relief, as well as the imposition of civil penalties, for violations of the Commodity Exchange Act ("Act"), 7 U.S.C. §§ 1-26 (2012), and the Commission's Regulations ("Regulations") promulgated thereunder, 17 C.F.R. § 1.1 et seq. (2016). The Court entered a preliminary injunction against Defendants Parker and MakeYourFuture, Inc. ("MYF") on September 29, 2016. The Court entered a final judgment by default, permanent injunction, civil monetary penalties, and other statutory and equitable relief against Defendants Baggett, Changes Worldwide LLC ("Changes Worldwide"), and Changes Trading LLC ("Changes Trading") on February 1, 2017.

         II. CONSENTS AND AGREEMENTS

         To effect settlement of all charges alleged in the Complaint against Defendants Parker and MYF without a trial on the merits or any further judicial proceedings, Defendants Parker and MYF:

         1. Consent to the entry of this Consent Order for Permanent Injunction, Civil Monetary Penalty and Other Equitable Relief Against Defendants Parker and MYF ("Consent Order");

         2. Affirm that they have read and agreed to this Consent Order voluntarily, and that no promise, other than as specifically contained herein, or threat, has been made by the Commission or any member, officer, agent or representative thereof, or by any other person, to induce consent to this Consent Order;

         3. Acknowledge service of the summons and Complaint;

         4. Admit the jurisdiction of this Court over Defendants Parker and MYF and the subject matter of this action pursuant to Section 6c of the Act, 7 U.S.C. § 13a-l (2012);

         5. Admit the jurisdiction of the CFTC over the conduct and transactions at issue in this action pursuant to the Act, 7 U.S.C. §§ 1-26 (2012);

         6. Admit that venue properly lies with this Court pursuant to Section 6c(e) of the Act, 7 U.S.C. §13a-l(e) (2012);

         7. Waive:

a. Any and all claims that Defendant Parker and MYF may possess under the Equal Access to Justice Act, 5 U.S.C. § 504 (2012) and 28 U.S.C. § 2412 (2012), and/or the rules promulgated by the Commission in conformity therewith, Part 148 of the Regulations, 17 C.F.R. §§ 148.1 et seq. (2016), relating to, or arising from, this action;
b. Any and all claims that they may possess under the Small Business Regulatory Enforcement Fairness Act of 1996, Pub. L. No. 104-121, §§ 201-253, 110 Stat. 847, 857-868 (1996), as amended by Pub. L. No. 110-28, § 8302, 121 Stat. 112, 204-205 (2007), relating to, or arising from, this action;
c. Any claim of Double Jeopardy based upon the institution of this action or the entry in this action of any order imposing a civil monetary penalty or any other relief, including this Consent Order; and
d. Any and all rights of appeal from this action;

         8. Consent to the continued jurisdiction of this Court over them for the purpose of implementing and enforcing the terms and conditions of this Consent Order and for any other purpose relevant to this action, even if Defendants Parker or MYF now or in the future reside outside the jurisdiction of this Court;

         9. Agree that they will not oppose enforcement of this Consent Order on the ground, if any exists, that it fails to comply with Rule 65(d) of the Federal Rules of Civil Procedure and hereby waive any objection based thereon;

         10. Agree that neither they nor any of their agents or employees under their authority or control shall take any action or make any public statement denying, directly or indirectly, any allegation in the Complaint or the Findings of Fact or Conclusions of Law in this Consent Order, or creating or tending to create the impression that the Complaint and/or this Consent Order is without a factual basis; provided, however, that nothing in this provision shall affect their: (a) testimonial obligations, or (b) right to take legal positions in other proceedings to which the CFTC is not a party. Defendants Parker and MYF shall undertake all steps necessary to ensure that all of their agents and/or employees under their authority or control understand and comply with this agreement;

         11. By consenting to the entry of this Consent Order, neither admit nor deny the allegations of the Complaint or the Findings of Fact and Conclusions of Law in this Consent Order, except as to jurisdiction and venue they admit. Further, Defendants Parker and MYF agree and intend that the allegations contained in the Complaint and all of the Findings of Fact and Conclusions of Law contained in this Consent Order shall be taken as true and correct and be given preclusive effect, without further proof, in the course of: (a) any current or subsequent bankruptcy proceeding filed by, on behalf of, or against Defendant Parker or MYF; (b) any proceeding pursuant to Section 8a of the Act, 7 U.S.C. § 12a (2012), and/or Part 3 of the Regulations, 17 C.F.R. §§ 3.1 - 3.75 (2016); (c) any proceeding to enforce the terms of this Consent Order; and/or (d) any action against a potential relief defendant or to set aside transfers, including any future action against any person to whom such transfers were made by or at the behest of Defendant Parker or MYF. Defendants Parker and MYF do not consent to the use of this Consent Order, or the Findings of Fact and Conclusions of Law in this Consent Order, as the sole basis for any other proceeding brought by the Commission, except for an action against a relief defendant or to set aside transfers, pursuant to the Fair Debt Collection Practices Act ("FDCPA"), 15U.S.C. §§ 1692 et seq., or other statute, where such transfers were made by or at the behest of Defendant Parker or MYF;

         12. Agree to provide immediate notice to this Court and the CFTC by certified mail, in the manner required by paragraph 102 of this Consent Order, of any bankruptcy proceeding filed by, on behalf of, or against them, whether inside or outside the United States;

         13. Agree that no provision of this Consent Order shall in any way limit or impair the ability of any other person or entity to seek any legal or equitable remedy against Defendants Parker or MYF in any other proceeding.

         III. FINDINGS AND CONCLUSIONS

         The Court, being fully advised in the premises, finds that there is good cause for the entry of this Consent Order and that there is no just reason for delay. The Court therefore directs the entry of the following Findings of Fact, Conclusions of Law, permanent injunction and equitable relief pursuant to Section 6c of the Act, 7 U.S.C. § 13a-l (2012), as set forth herein. The findings and conclusions in this Consent Order are not binding on any other party to this action.

         THE PARTIES AGREE AND THE COURT HEREBY FINDS:

         A. Findings of Fact

         Parties to this Consent Order

         14. Plaintiff Commodity Futures Trading Commission is an independent federal regulatory agency that is charged by Congress with administering and enforcing the Act, 7 U.S.C. §§ 1-26 (2012), and the Regulations promulgated thereunder, 17 C.F.R. §§1.1, et seq. (2016).

         15. Defendant MakeYourFuture, LLC ("MYF") is a Utah limited liability corporation with its principal place of business in Lehi, Utah. MYF has never been registered with the Commission in any capacity.

         16. Defendant Kimball Parker is a natural person and resides in Lehi, Utah. Parker is the owner and controlling person of MYF. Parker has never been registered with the Commission in any capacity.

         Non-Parties to the Consent Order

         17. Defendant Changes Worldwide LLC ("Changes Worldwide") is a Florida limited liability corporation with its principal place of business in Lakeland, Florida. Changes Worldwide has never been registered with the Commission in any capacity.

         18. Defendant Changes Trading LLC ("Changes Trading") is a Florida limited liability corporation with its principal place of business in Lakeland, Florida. Changes Trading is a wholly-owned subsidiary of Defendant Changes Worldwide. Changes Trading has never been registered with the Commission in any capacity.

         19. Defendant Timothy Baggett is a natural person and resides in Lakeland, Florida. Baggett is the owner and controlling person of Changes Worldwide, and through Changes Worldwide is the indirect owner of Changes Trading. Baggett is the controlling person of Changes Trading. Baggett has never been registered with the Commission in any capacity.

         20. Changes Worldwide and Changes Trading (collectively, "Changes") operated as a common enterprise during all periods relevant to the Complaint.

         21. The Court entered a final judgment by default, permanent injunction, civil monetary penalties, and other statutory and equitable relief against Defendants Baggett, Changes Worldwide, and Changes Trading on February 1, 2017. (Doc. 33)

         The Trading System

         22. Beginning in March 2014, Defendants Parker, MYF, Baggett, Changes Worldwide, and Changes Trading (collectively, "Defendants") offered to sell customers a system for trading the e-mini S&P 500 futures contract ("ES") on the Chicago Mercantile Exchange ("CME").

         23. The trading system consists of "signals" that purportedly provide customers with "exact entrance and exit points" for trades. Defendants advertised the system as being "designed for both the new, inexperienced trader as well as the seasoned professional."

         24. In order to use the system, customers must download trading software from a third-party software developer and open a brokerage account. The signals generated by Defendants' trading system "ride" on top of the third-party trading software as an add-on. According to Defendants, the signals "show you when to make the trades."

         25. The signals generated by Defendants' trading system are not available to the general public. They are only available to customers who purchase the system. The signals are sent to customers' computers over the internet.

         26. Defendants offer the trading system for a one time, up-front payment which typically ranges from $1, 995 to $2, 495. In order to continue receiving the signals, customers also have to pay a monthly fee of $100.

         Relationship Among Defendants

         27. Defendant Parker is the developer of the trading system sold by Defendants. Before meeting Defendant Baggett, Parker sold his trading system through a small handful of distributors, and through MYF's website at www.lmyf.com.

         28. Baggett's company, Changes Worldwide, was a multi-level marketing ("MLM") company engaged in selling various products, including vitamins, dietary supplements, insurance, and vacations, through a network of affiliates. Affiliates are independent contractors who work to promote a product in return for commissions. They may promote the product on the internet, or they may promote it at in-person seminars, or they may simply try to sell a product to their family or friends.

         29. Parker and Baggett met at an MLM conference in Las Vegas in late 2013. They discussed the possibility of using Baggett's affiliate network to sell the trading system, which promised Baggett a higher profit margin than vitamins or insurance.

         30. In January 2014, Parker and Baggett entered into an arrangement for Changes Worldwide to become the primary marketer and distributor of Parker's trading system. Parker would provide the trading system, materials for the company's website, and customer support.

         31. Baggett began marketing the trading system no later than March 2014. Around that time, Baggett founded Changes Trading to serve as the primary vehicle through which the trading system would be marketed.

         32. Changes Worldwide and Changes Trading marketed the trading system via their websites, www.changesworldwide.net, www.trading4change.com, and www.changestrading.com. Parker provided all trading system-related content for the websites, subject to Baggett's approval. Parker also continued to market his system through MYF's website at www.lmyf.com, which was separate from the Changes websites.

         33. Defendants also marketed the trading system via sales presentations. Some of these sales presentations occurred in-person at meetings or conferences. Other presentations, referred to as "webinars, " were broadcast over the internet. Defendants also marketed the trading system using Changes's network of more than 100 affiliates.

         34. In November 2014, Baggett ceased his marketing efforts with respect to the trading system. Nonetheless, Baggett continued to allow Parker to use the Changes websites, which were still registered to and owned by Baggett, as well as the Changes Trading name, to market the trading system.

         "Documented and Verifiable Results"

         35. Defendants marketed the trading system via their websites, located at www.changesworldwide.net, www.changestrading.com, www.trading4change.com, and www.lmyf.com. Defendants' websites contained numerous fraudulent misrepresentations and omissions designed to mislead customers and prospective customers into believing that the trading system was profitable and effective.

         36. The websites claimed that Defendants' trading system has "a documented and verifiable track record of unmatched performance in trading futures contracts (commodities)." On a page titled "Results, " Defendants invited visitors to "click the monthly charts below to see an expanded detailed view of actual results using the Changes Trading System." 37. The monthly charts purported to show returns of between 11% to 68% per month between January and December 2014, and profits of between $2, 830 and $17, 037.50 per month on a $25, 000 trading account. The monthly charts also purported to show the percentage of "winning trades" generated by the system each month; these percentages ranged from 88% to 93%.

         38. Defendants made similar misrepresentations in eBooks that they distributed to customers and prospective customers. In the eBooks, Defendants claimed that:

Virtually every system recommended trade for over four years has been documented and recorded and the performance of this proprietary trading system is without equal in the industry. Over 300% annual return has been documented through 2014 and interested individuals can go to the archived records of CTS [Changes Trading] and verify every trade.

         39. According to the eBooks, "CTS shows subscribers and clients every system indicated trade for the past four years, with percentages of success ranging from 83% to 93% efficiency."

         40. Defendants made similar misrepresentations during presentations to customers and prospective customers. In these presentations, Defendants claimed falsely that, "In our first 50 months, since ...


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