May 28, 2004 (The Palm Beach Post - Knight Ridder/Tribune Business News via COMTEX) -- Gas prices are soaring and the Middle East is anything but tranquil, two factors that might lead investors to be persuaded that there are easy profits in oil futures.

Don't be fooled, federal regulators warn.

The U.S. Commodity Futures Trading Commission is seeing a growing number of scams that equate the war in Iraq and rising oil prices with sure profits.

"It's very risky, and that's exactly what they don't tell people," said Paul Hayeck, associate director of the commission's Division of Enforcement.

As if to underscore the point, the commission Thursday announced that the two principals of a Delray Beach firm have been ordered to pay $600,000 to settle charges that they defrauded speculators of $7.5 million.

William Scott Cordo of Delray Beach was ordered to pay $480,000, while Mitchell Stephen Davis of Boynton Beach must cough up $120,000. They owned First Investors Group of the Palm Beaches Inc., which used misleading television infomercials and cold calls to persuade investors they could make money by predicting seasonal changes in supply and demand for unleaded gasoline and natural gas, the commission said.

The company told investors they could profit from rising demand for gas during the summer vacation season, but it didn't mention that the market already accounts for such fluctuations. Such claims could sound reasonable to someone who doesn't know much about the commodities market.

While Cordo and Davis were making their pitch in 1998, 1999 and 2000, they used logic that could sound equally tempting today. Their hard-sell come-ons included revelations that OPEC had just cut production and that tougher enforcement of the Clean Air Act would cause volatility in fuel prices.

Most of First Investors Group's customers closed accounts after losing all or much of their investments, regulators said. Half of the $7.5 million the company raised was used to pay commissions to sales agents.

When the Commodity Futures Trading Commission first charged Cordo and Davis in 2001, their attorney, Gary Feder, said the pair had done nothing wrong. Feder said Thursday he no longer represents the pair, and their attorney couldn't be reached.

Palm Beach County commodities firms regularly are the target of commission crackdowns, although most of them hawk currency options rather than oil futures.