Two weeks ago, Boston-based Lloyd, Carr & Co. held the reputation of a company that refused to die.
This week, telephones in its offices in 15 major cities went unanswered or were disconnected "at the customer's request," according to recorded messages that greeted callers.
Yesterday, attorneys for the federal government went into federal court in Michigan with a request to shut the company down and have its assets placed in receivership.
Lloyd Carr was a controversial leader in the $200-million- to $300 million-a-year London commodity options industry.
Meanwhile, the FBI and other U.S. investigators are continuing their search for James A. Carr, one of the founding partners of the company. Carr, who was released on $100,000 bond after his arrest last week at his Massachusetts home, reportedly has fled the country. Government officials speculate that Carr has joined his hefty bank deposits in the Caribbean, where he reportedly placed $1.7 million of the firm's funds this fall. Carr also was said to have deposited $1.3 million in Canadian banks.
Yesterday's action was the latest in an 18-month-long battle by the Commodity Futures Trading Commission, which regulates commodity futures and commodity options trading, to put an end to the allegedly fraudulent and deceptive sales practices of Lloyd Carr partners and its sales force.
The firm reportedly employed between 600 and 1,000 persons at its peak and boasted of annual sales of more than $50 million. It promised its sales persons annual commissions between $26,000 and $138,000 in its employment advertisements in major U.S. newspapers.
Lloyd Carr has been targeted by government investigators and prosecutors as one of the most flagrant of the high-pressure, boiler-room telephone sales operations in London options. Using a private communications system to make hundreds of thousands of long distance calls to potential customers, persuasive salesmen talked unsuspecting persons out of thousands of dollars in options premiums with the promise of windfall profits from initial small investments.
What Lloyd Carr salesmen neglected to tell their clients - according to court documents filed by the CFTC and other state and local law enforcement agencies - was that the firm "marked up" the actual cost of the options premiums and normal commissions by several thousands of dollars.
For example, an option on a sugar futures contract on a London exchange with a hypothetical premium of $2,000 might have been sold to U.S. buyers for $6,000 or $7,000, officials said. The case against Lloyd Carr is not based on its sales of the options at such high prices, but on its failure to tell its customers the actual option premium charged in London and the total of commissions and fees on the transaction.
Using this and other allegedly "deceptive" techniques, the firm snowballed its operations and profits.
Within the past month, state attorneys general - who were pre-empted from most action against Lloyd Carr because of the CFTC's jurisdiction - have moved to put the company out of oeration and to seize its assets in Massachusetts, Missouri and Texas.
The company, which the CFTC described as "feisty," has fought the agency and state officials in administrative and court proceedings in attempts to delay enforcement actions against it.
These state actions, as well as the CFTC investigation, turned up the information that Carr and other officials had drained the firm of millions of dollars in assets in recent months.
An assistant attorney general in Missouri yesterday confirmed that, when the state put an attachment on the St. Louis bank account of the firm's office there, they found that the funds - about $400,000 - had been withdrawn from the bank.
This week, according to an assistant attorney general in Austin, Texas officials moved to shut down the company's Dallas operation. He said the firm's files would be turned over to the FBI and the state's specialized crime unit for use in prosecuting Lloyd Carr.
CFTC attorneys said yesterday that the agency had filed a motion with Chief Judge Noel P. Fox in U.S. District Court for the Western District of Michigan to amend the preliminary injunction issued against the company last month. The new order would close down the company completely and put any assets still remaining in the United States under control of a court-appointed receiver.
The CFTC said it expects the order to be signed by Judge Fox late yesterday or today.
Meanwhile, attorney F. Lee Bailey, who is handling Carr's defense, reportedly was "in court" in Boston on the case yesterday.