The CFTC has filed a civil injunctive enforcement action in US District Court against 12 commodities firms for allegedly selling phantom precious metals to clients.  The CFTC complaint states that:  The defendants claim to sell physical metals, including gold, silver, platinum, palladium, and copper, to retail customers in retail commodity transactions. Under the defendants’ retail commodity transactions investment contract, customers allegedly make a down payment on certain quantities of physical metals, usually 25 percent of the total purchase price. Defendants allegedly claim to arrange loans for the balance of the purchase price, and advise customers that their physical metals will be stored in a secure depository.

The complaint further alleges that these statements were false, and that the defendants do not purchase any physical metals, arrange loans for their customers to purchase physical metals, or arrange for storage of physical metals for any customers participating in their retail commodity transactions. Instead, all the transactions are just paper transactions.

Sounds remarkably like the COMEX.

The Consumer Fraud Advisory further cautioned consumers that leveraged commodity transactions are unlawful unless executed on a regulated exchange.

Ah, it is remarkably like the COMEX, except the 12 firms charged are not a part of the good ole boys club.


 

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From the CFTC:

CFTC Charges Hunter Wise Commodities, Lloyds Commodities, C.D. Hopkins Financial, United States Capital Trust, Newbridge Alliance, Blackstone Metals Group, and their Principals in Multi-Million Dollar Fraudulent Precious Metals Scheme
CFTC alleges that defendants conducted illegal, off-exchange commodity transactions, and deceived customers in connection with financed transactions in precious metals

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that on December 5, 2012, it filed a civil injunctive enforcement action in the U.S. District Court for the Southern District of Florida against Hunter Wise Commodities, LLC; Hunter Wise Services, LLC; Hunter Wise Credit, LLC; Hunter Wise Trading, LLC; Lloyds Commodities, LLC; Lloyds Commodities Credit Company, LLC; Lloyds Services, LLC; C.D. Hopkins Financial, LLC; Hard Asset Lending Group, LLC; Blackstone Metals Group, LLC; Newbridge Alliance, Inc.; United States Capital Trust, LLC; Harold Edward Martin, Jr.; Fred Jager; James Burbage; Frank Gaudino; Baris Keser; Chadewick Hopkins; John King; and David A. Moore. The complaint charges these entities and individuals with fraudulently marketing illegal, off-exchange retail commodity contracts. The complaint alleges that Hunter Wise Commodities, the orchestrator of the fraud, has taken in at least $46 million in customer funds since July 2011.

According to the CFTC complaint, the defendants claim to sell physical metals, including gold, silver, platinum, palladium, and copper, to retail customers in retail commodity transactions. Under the defendants’ retail commodity transactions investment contract, customers allegedly make a down payment on certain quantities of physical metals, usually 25 percent of the total purchase price. Defendants allegedly claim to arrange loans for the balance of the purchase price, and advise customers that their physical metals will be stored in a secure depository.

The complaint further alleges that these statements were false, and that the defendants do not purchase any physical metals, arrange loans for their customers to purchase physical metals, or arrange for storage of physical metals for any customers participating in their retail commodity transactions. Instead, all the transactions are just paper transactions, according to the complaint. Defendants allegedly do not own or sell metals to customers; customers are charged storage and insurance fees on metals that do not exist; and are charged interest on loans, which are never made by the defendants.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) of 2010 expanded the CFTC’s jurisdiction over transactions like these, and requires that such transactions be executed on or subject to the rules of a board of trade, exchange or commodity market, according to the complaint. This new requirement took effect on July 16, 2011. The complaint alleges that all of the defendants’ financed commodity transactions after July 16, 2011, were illegal. The complaint also alleges that the defendants defrauded customers in all of these financed commodity transactions.

David Meister, the CFTC’s Director of Enforcement stated: “Here is a prime example of how the Dodd-Frank Act provided the Commission with additional strong authority to go after wrong-doers, such as, as alleged in the complaint, individuals who prey on people looking to make retail investments in commodities like gold and silver. We will use this new authority to the fullest extent possible.”

In January 2012 the CFTC issued a Consumer Fraud Advisory (see Advisory under Related Links) regarding precious metals fraud, saying that it had seen an increase in the number of companies offering customers the opportunity to buy or invest in precious metals. The CFTC’s Consumer Fraud Advisory specifically warned that frequently companies do not purchase any physical metals for the customer, instead simply keeping the customer’s funds. The Consumer Fraud Advisory further cautioned consumers that leveraged commodity transactions are unlawful unless executed on a regulated exchange.

In its continuing litigation against the defendants, the CFTC is seeking preliminary and permanent civil injunctions in addition to other remedial relief, including restitution to customers.

The CFTC thanks the Florida Office of Financial Regulation, the Florida Department of Agriculture and Consumer Services, and the United Kingdom Financial Services Authority for their assistance.

The CFTC Division of Enforcement staff responsible for this action are Carlin Metzger, Joseph Konizeski, Heather Johnson, Stephanie Reinhart, Jennifer Smiley, Judith McCorkle, Jeff LeRiche, Peter Riggs, Jennifer Chapin, Steven Turley, Brigitte Weyls, Joseph Patrick, Susan Gradman, Theodore Glotfelty, William Janulis, Scott Williamson, Rosemary Hollinger, and Richard Wagner.

    • The CFTC exists to defer its responsibilities and perpetuate precious metals fraud, period.

      Read CFTC Judge Painter on how then Chairperson Wendy Gramm (yes, wife of GlassSteagal deregulator Phil Gramm) told new CFTC Adminstrative Judge never to rule in favor of a manipulation claimant. Apparently the CFTC is really THAT corrupt.

      Jill Sommers fought against even letting the public address the CFTC on position limits. Jill Sommers oversaw Corizine’s CFTC hearing, and apparently saw nothing worthy of censure, if you can imagine.

      Scott OMalia complained about position limits legislation overturn being appealed

      Bart Chilton talks genially about silver but never does anything to alleviate this ”crime in progress”, while the CFTC Silver Investigation goes on for years.

      Commisioner Jill Sommers jsommers@cftc.gov
      Commisioner Scott OMalia somalia@cftc.gov
      Commisioner Bart Chilton bchilton@cftc.gov
      Commisioner Mark Wetjen mwetjen@cftc.gov
      Chairman Gary Gensler ggensler@cftc.gov

    • The cartel is the banks’ minions which is why the CFTC cares about them since they are in favor for the banks and the elites. Those twelve commodities firms aren’t part of the banks.

  1. I’m sure glad that we can all sleep well at night now that the cftc is now making sure that minuscule metal security firms can no longer do harm to their very important customers. Too bad for the metal firms, they don’t own a printing press like some other (metal firms) do so they could buy a few members of the cftc and be ignored. Justice in this country is one sick joke !!!!

    • There is NO justice anymore… only the “JUST US” of the extremely wealthy and powerful.  History will record that the regime of Barrack Hussein Obama (aka Barry Soetoro in Kenya) single-handedly converted the USA from a nation of laws to a nation of men; men who make the law and are above it, unlike the rest of us.
       

    • The CFTC can’t do that because it is in favor of the banks that own the cartel. We have to shut down the super huge scumbags by ourselves by buying physical silver to destroy all paper currencies and all paper wealth.

  2. Hell is on the Horizon

    Withdraw all funds ftom your bank, and no longer pay income taxes, limit spending for neccesities with one credit card and cash
    Buy a reasonably sized safe and bolt to your closet floor, dead bolt the door keep your metals, cash, guns and ammo in the safe…TELL NO ONE!!!!!!
    Stock up on beans, bullets and band aids, water and dehydrated foods and medical supplies. The USA will be engaging in the perfect storm Second Civil War, coming to a street near you sooner than you may think. Train your loved ones on home defense! Now you have your Safe holding your cash, hard assets etc., for survival and Sorry to say that when your friends and distant familiy members ask for your help, that there can be no help from your end, it will virtually be every family for themself.
    I recommend a years worth of dehydrated foods and water purification pills 600 gallons of water minimum, also fill all bathtubs for water storage used only for backing up cooking and flushing commodes. An 8500 watt generator that runs on natural gas, not propne tanks but a natural hook up from in bound gas line into your home Storing large quantities of gasoline is not safe.

    This just skims the surface for survival ideas, in otherwords a basic necessity for survival. Start getting prepared as soon as you
    can. The Shit will hit the fan so quickly that the unprepared will panic and mostly die later as a result

    • I always withdraw from my bank account whenever I receive some dollars inside it and I only keep 20$ in it. I use all the dollars to to buy gold, silver, copper and nickel that are all physical. My wealth is mostly made out of silver.

  3. Thank you team.

    We should all thank and support this brave team for their efforts.  Theirs is a good strategy. Set a legal precedence against a weaker foe before going after harder targets.
    The CFTC thanks the Florida Office of Financial Regulation, the Florida Department of Agriculture and Consumer Services, and the United Kingdom Financial Services Authority for their assistance.
    Thank you: Carlin Metzger, Joseph Konizeski, Heather Johnson, Stephanie Reinhart, Jennifer Smiley, Judith McCorkle, Jeff LeRiche, Peter Riggs, Jennifer Chapin, Steven Turley, Brigitte Weyls, Joseph Patrick, Susan Gradman, Theodore Glotfelty, William Janulis, Scott Williamson, Rosemary Hollinger, and Richard Wagner. We are with you and support you. 

  4. What if this is just a ploy and a way to get people back into ETFs and Futures contracts?  Reading this story, people will be left with two options:
     
    A. Buy and store physical metals themselves (not so easily done for those who can afford substantial amounts of metals).
    B. Invest in ETFs and Futures (paper metals), which are easy to transact in (and charge practically no storage fees).
     
    Buying and storing metals with others should be a viable option (ie, this is a service that would help lots of people if done honestly), but now it’s very suspect because of stories like this coming out.  Maybe some people will go back to ETFs and Futures, and unallocated accounts (where the storage fees are practically ‘Zero’).

    • I think we should keep physical precious metals in our own possessions inside of buying and putting paper precious metals inside others possessions.

  5. “Maybe some people will go back to ETFs and Futures, and unallocated accounts (where the storage fees are practically ‘Zero’).”

    Perhaps they will but they should recall the banksters out there who claimed to be buying PMs for their clients accounts but did not and then charged them storage fees on PMs that they never bought!  In that case, the PMs were zero but the fees were not.  :-(
     

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