A federal court in Chicago has dismissed charges against Frank Cowles, one of three men accused last November of engaging in a conspiracy to defraud an unnamed Chicago-area fund of $25 million with promises of weekly 10% returns. When charged last fall, Cowles – a former marine and policeman – resigned from the board of Virginia Commerce Corp. The government is continuing its case against his former co-defendants, Richard Warren and David Myatt.

In other hedge-fund related legal news, John Kim, a former principal at Palm Beach, Fla.-based KL Group has settled fraud charges brought by the Securities and Exchange Commission without admitting or denying the charges and without paying a fine. Also, the Commodity Futures Trading Commission has charged Ty and Monette Klotz of Mason, Mich., and their two companies, Aurifex Commodities Research Co. and Aurifex Research, with hedge fund fraud by engaging in a Ponzi scheme while soliciting investors and operating what they described as a "private hedge fund." The couple allegedly raised some $150,000 from an estimated 200 investors.