UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION

In the Matter of

ELLERY COLEMAN, individually and doing business as GRANITE INVESTMENTS.

DOCKET NO.

COMPLAINT

The Federal Trade Commission, having reason to believe that Ellery Coleman ("respondent"), individually and doing business as Granite Investments, has violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges:

1. Respondent Ellery Coleman is the sole proprietor of Granite Investments, a Georgia company with its principal office or place of business at 133 Bunkers Trail, Warner Robins, GA 31088. Individually or in concert with others, he formulates, directs, or controls the policies, acts, or practices of the company, including the acts or practices alleged in this complaint.

2. Respondent has advertised, offered for sale, sold, and distributed S&P futures trading computer programs and training to the public. Respondent advises his clients to buy and sell specific S&P futures contracts on a daily basis. Respondent sells "RPM" or "Reliable Pattern Match," "S&P Savvy," and "Choice Daytrades" computer programs. Respondent sells his programs and training through his Internet Website, www.choicedaytrades.com.

3. The acts and practices of respondent alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act.

4. Respondent has disseminated or has caused to be disseminated Internet advertisements for his S&P futures computer trading programs and training, including but not necessarily limited to the attached Exhibits A through G. These advertisements contain the following statements:

A.

"Highly effective daytrading based on a very powerful methodology which has worked for decades . . . Daytrading systems that consistently identify winning day trades in the stock market."

. . . .

"RPM delivers a solid $10,350 profit for June."

"S&P Savvy up $40,750 for June99 contract."

"S&P Savvy up $44,050 for March99 contract."

"S&P Savvy up $62,425 for December98 contract."

"S&P Savvy has made at least $25,000 for each contract period for the last three years."

"Learn to Daytrade the S&P 500 like a pro!"

. . . .

"Are you . . .

Still searching for the holy grail of trading?

Unhappy with the money you made trading last year?

Sick of that empty knot in your stomach because you missed another big trade?

Tired of not being among the 10% of traders who win consistently?

Then take a look at our products and training!"

. . . .

"While many of the trades shown were taken in real time with real money, since not all of them were taken:

The CFTC requires that we state: NOTICE:

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED THE RESULTS MAY HAVE UNDER OR OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. SIMULATED RESULTS DO NOT NECESSARILY IMPLY FUTURE PROFITS. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION."

[This notice appears in fine print near the bottom of the Web page attached as Exhibit A.]

B.

"'I have been a professional trader for many years . . . . After reading most of the books on trading and personally studying with some of the biggest names in the business, I subjected these methods to rigorous computer testing and discovered that most of these methods do not generate the kinds of profits one might expect, and many do not work at all. However, the research did uncover the real gems. It will open your eyes and you will understand what is really going on.' Ellery Coleman."

. . . .

"Comments from students:

'I can't say enough great things about my visit with you. The time I spent watching you trade the S&P was extremely valuable. Your method of trading has provided me some excellent profits.' L.S. Wisconsin - A former broker who now trades for a living.

. . . .

'You told me that there would be no reason why I should not be profitable right from day one. In the first two and a half weeks of trading your methodology, my expectations have been completely surpassed.'

'I never thought I could make $8,500.00 in 13 trading days just by trading one contract. But I did it.' (Exhibit B)

C.

"S&P Savvy . . . . Up $154,725 for 1998"

. . . .

"S&P Savvy DSP8Z- 09/10/98 - 12/02/98

Performance Summary: All Trades

Total net profit $ 62425.00 . . .

Gross profit $ 108425.00 Gross loss $ -46000.00

Total # of trades 430 Percent profitable 61%

. . . .

Return on account 2041 %"

. . . .

"Take advantage of the markets [sic] volatility. S&P Savvy thrives on it while using tight stops. I thought this was a great system when I developed it for my own use three years ago, and it just keeps getting better. Since I still trade this program, a very limited number of copies will be made available."

. . . .

[Consumer endorser:] "'I made enough my first day trading S&P Savvy to pay for it.'"

. . . .

"If you want something that works, this is it!"

. . . .

"While many of the trades shown are taken in real time with real money, since not all of them were taken:

The CFTC requires that we state: NOTICE:

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED THE RESULTS MAY HAVE UNDER OR OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. SIMULATED RESULTS DO NOT NECESSARILY IMPLY FUTURE PROFITS. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION."

[This notice appears in fine print at the bottom of the Web page attached as Exhibit C.]

D.

"Choice Daytrades

....

$331,850.00

per 2 contracts in 1998

Day trading S&P 500." (Exhibit D)

E.

"Testimonials

. . . .

'I have meant to tell you for a long time, you're the greatest. No question about it. Your figures are amazingly close; mind boggling to me.' W.S. Ohio

. . . .

'Thank you so much for the training you gave me. For the first time I am making money consistently and not giving it back . . .' M.S. Canada.

We get fan mail like this every day." (Exhibit E)

F.

"Want Proof?

People are always asking for my account statements to prove that I am really a trader. Would you show your tax returns to strangers? I don't think so. But to demonstrate that I know how to trade, here are two account statements from one of my three accounts." (Exhibit F)

G.

"RPM makes the S&P as readable as a road map each day. It keeps your risk low because it never holds overnight."

. . . .

[Respondent's RPM program] "was an immediate success because nothing stacks the odds in your favor like RPM."

. . . .

"What RPM can do for you:

Give you precise buy and sell signals with low risk stops

Take the stress out of your trading decisions

Give you the discipline needed for success

Provide you with a complete trading manual showing past recommendations and results

Provide a proven system that takes the doubt and frustration out of your trading"

. . . .

"Join our fan club!

'Your RPM is uncanny in its accuracy. Anyone using this system has to make money.'

'Wow! You nailed it. I made more money in one trade than I have in a long time.'

'RPM is very consistent, precise and easy to use. I strongly recommend it.'

'RPM gives me the extra edge I need to win consistently.'" (Exhibit G)

5. Through the means described in Paragraph 4, respondent has represented, expressly or by implication, that:

a. Users of respondent's S&P futures trading programs can reasonably expect to achieve substantial profits on a consistent basis (e.g., $25,000 per futures contract).

 

b. The specific trades or investments enumerated in the advertisements were actually made and resulted in the substantial profits stated in the advertisements.

 

c. Testimonials appearing in the advertisements for respondent's S&P futures trading programs reflect the typical or ordinary experience of members of the public who use the programs.

6. Through the means described in Paragraph 4, respondent has represented, expressly or by implication, that he possessed and relied upon a reasonable basis that substantiated the representations set forth in Paragraph 5, at the time the representations were made.

7. In truth and in fact, respondent did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 5, at the time the representations were made. Therefore, the representation set forth in Paragraph 6 was, and is, false or misleading.

8. Through the means described in Paragraph 4, respondent has represented, expressly or by implication, that:

a. Users of respondent's S&P futures trading programs can reasonably expect to trade profitably with little financial risk.

 

b. Testimonials appearing in the advertisements for respondent's S&P futures trading programs reflect the actual experiences of consumers who have used the programs.

 

c. Respondent personally uses his S&P futures trading programs to trade profitably on his own behalf.

 

d. The trades recommended by respondent's S&P futures trading programs, as enumerated in the advertisements, were actually made in many cases.

9. In truth and in fact,

a. Users of respondent's S&P futures trading programs cannot reasonably expect to trade with little financial risk.

 

b. Testimonials appearing in the advertisements for respondent's S&P futures trading programs do not reflect the actual experiences of consumers who have used the programs.

 

c. Respondent does not personally use his S&P futures trading programs to trade on his own behalf.

 

d. None of the trades recommended by respondent's S&P futures trading programs was actually made.

 

Therefore, the representations set forth in Paragraph 8 were, and are, false or misleading.

10. The acts and practices of respondent as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

THEREFORE, the Federal Trade Commission this day of , 2000, has issued this complaint against respondent.

By the Commission.

Donald S. Clark
Secretary

SEAL