The U.S. Commodity Futures Trading Commission (CFTC) today announced that a federal court in Ft. Lauderdale, Florida issued a Consent Order against Defendants Inter-Global Currency & Precious Metals, LLC (IGCPM) of Pompano Beach, Florida, and its owner, manager, and controlling person Stavros Papastavrou, of Delray Beach, Florida. The Order, issued by the Honorable Judge Donald M. Middlebrooks of the U.S. District Court for the Southern District of Florida, assesses a civil monetary penalty of $100,000 and a restitution award of $447,342, and permanently bans IGCPM and Papastavrou from registering, trading, soliciting, and engaging in other CFTC-regulated activities.
According to the Order, since at least August 2011 and continuing through at least May 2013, IGCPM, by and through its employees including Papastavrou, solicited retail customers by telephone to engage in leveraged, margined, or financed precious metals (including gold, silver, platinum, and palladium) transactions. During that period, the Order finds that IGCPM’s customers paid at least $1 million to IGCPM in connection with precious metals transactions and that IGCPM received commissions and fees totaling at least $447,342 in connection with these precious metals transactions.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, leveraged, margined, or financed transactions such as those conducted by IGCPM, are illegal off-exchange transactions unless they result in actual delivery of metal within 28 days. The Order finds that metals were never actually delivered in connection with the leveraged, margined, or financed precious metals transactions made on behalf of IGCPM’s customers.
The Order further finds that IGCPM executed the illegal precious metals transactions through Lloyds Commodities, LLC (Lloyds), Hunter Wise, LLC (Hunter Wise) and AmeriFirst Management LLC (AmeriFirst). The CFTC filed enforcement actions against, among others, Lloyds and Hunter Wise in December 2012 and AmeriFirst in July 2013, charging each with engaging in illegal, off-exchange precious metals transactions, and charging AmeriFirst and Hunter Wise with fraud and other violations (see CFTC Press Releases 6447-12 and 6655-13).
On September 18, 2013, the court entered a consent order resolving the Commission’s claims against AmeriFirst, finding it liable for illegal, off-exchange precious metals transactions and fraud (see CFTC Press Release 6973-14).
On February 5, 2014, in a consent order resolving the Commission’s claims against Lloyds, the court ordered Lloyds Commodities to pay over $5 million in restitution and penalties (see CFTC Press Release 6850-14).
On February 19, 2014, the court found that Hunter Wise had no actual metal to deliver to customers and held that Hunter Wise engaged in illegal precious metals transactions and was required to register as a futures commission merchant but did not do so and therefore violated Sections 4(a) and 4d of the CEA (see CFTC v. Hunter Wise Commodities, LLC, et al., 12-81311-CIV (Order on the Parties’ Motions for Summary Judgment)). On April 15, 2014, the U.S. Court of Appeals for the Eleventh Circuit affirmed the court’s issuance of a preliminary injunction and held that the Commission’s jurisdiction under Section 2(c)(2)(D) of the CEA extends to the precious metals transactions at issue in the case and that no exception to the Commission’s jurisdiction applied. And, on May 16, 2014, after a bench trial on the remaining claims, including fraud, the court entered an order finding that Hunter Wise fraudulently misrepresented the nature of precious metals transactions that resulted in millions of dollars in customer losses (see CFTC Press Release 6935-14).
The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
CFTC Division of Enforcement staff members responsible for this action are Kevin S. Webb, Michelle Bougas, James H. Holl, III, and Rick Glaser.
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CFTC’s Precious Metals Customer Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Precious Metals Fraud Advisory, which alerts customers to precious metals fraud and lists simple ways to spot precious metals scams.
Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.
To view the official release, click here.