CHICAGO — U.S. postal inspectors are contacting hundreds of customers who purchased commodities through brokers, in a continuing government investigation of systematic cheating of investors and speculators at the Chicago Board of Trade and the Chicago Mercantile Exchange.
The canvas by postal investigators is the first effort by government prosecutors to gather evidence in the commodities investigation directly from customers who may have been defrauded in their purchases of futures contracts, sources close to the investigation said.
Up to now, Justice Department lawyers relied on evidence gathered by at least four undercover FBI agents who traded in the pits of the two exchanges wearing hidden tape recorders to document fraudulent practices. Some traders and brokers have also cooperated in the investigation and reportedly appeared as witnesses before a federal grand jury.
Two Plead Guilty
A lawyer who spoke with postal investigators said he was told that the survey is designed to determine investors' "satisfaction with trades" and that "there was a questionnaire that would take up to 45 minutes to fill out."
Government efforts to contact customers began last week after 46 traders and brokers at the two exchanges, the largest of their kind in the world, were indicted for participating in a variety of allegedly fraudulent schemes.
Those indicted, who worked in the soybean and Treasury bond pits of the Board of Trade and in the Japanese yen and Swiss franc pits at the Merc, were charged with crimes ranging from mail and wire fraud to tax evasion and racketeering.
Disclosure of this new phase in the four-year investigation came Thursday as two more Mercantile Exchange traders pleaded guilty to fraud charges and agreed to cooperate with government prosecutors.
The two, Mark E. Fuhrman, 39, of Wheeling, Ill., and William A. Walsh, 23, of Moline, Ill., each face up to six years in prison and fines of $350,000. Both said they engaged in sham transactions in the Mercantile Exchange's Swiss franc pits. Some of those trades involved charging customers more than Swiss franc contracts actually cost.
"I knew it was wrong," Walsh told U.S. District Court Judge Ann Claire Williams.
Asked by the judge if fraudulent trading was a regular occurence at the exchange, Walsh said in a quiet voice, "it's not (done) on a regular basis . . . only when the market is way out of line."
Another Swiss franc trader, Robert D. Mosky, 33, of Chicago, pleaded innocent Thursday to racketeering conspiracy charges, 26 counts of mail and wire fraud and 37 counts of violating the Commodity Exchange Act. Mosky is the 13th of the 46 indicted last week to plead innocent. Arraignments for the others will be held later this month.
The three are the only ones to be indicted so far for trading in Swiss francs, but Assistant U.S. Atty. James P. Fleissner said Thursday that "given developments, including the cooperation of people . . . there is a chance other individuals could be indicted."
Meanwhile, in the wake of the indictments and the widespread publicity they have received, the Chicago Board of Trade again Thursday worked to repair the damage to its image and to damp Washington enthusiasm for additional regulation.
The board arranged for business and farm reporters from around the country to question exchange officials via telephone following an announcement by Board of Trade Chairman Karsten Mahlmann that fines for each violation would be raised to $250,000 from $75,000.
"This demonstrates to our customers, to our federal regulators, the Commodity Futures Trading Commission, to Congress and to the world," Mahlmann said, "the commitment that our members have to maintaining the long tradition of integrity established at the Chicago Board of Trade. Nothing is more important."