By Commodity Futures Trading Commission …..
The Commodity Futures Trading Commission (CFTC) filed a civil enforcement action for CFTC Charges Omega Knight 2, LLC, Owner with $5.5 Million Precious Metals Fraud in the U.S. District Court for the Southern District of Florida against Defendants Omega Knight 2, LLC (Omega Knight), its owner and president, Aviv Michael Hen (Aviv Hen) of Great Neck, New York.
The CFTC’s Complaint charges Defendants with fraud and engaging in illegal, off-exchange transactions in precious metals. The Complaint also charges Omega Knight with failing to register with the CFTC as a Futures Commission Merchant (FCM), as required, and alleges that Aviv Hen, as controlling person for Omega Knight, is liable for Omega Knight’s violations of the Commodity Exchange Act (CEA).
Specifically, from March 2013 and continuing through at least June 2017, Omega Knight allegedly engaged in a scheme to defraud customers located throughout the United States in connection with precious metals transactions. The Complaint alleges that Defendants made numerous false statements to induce customers to enter into leveraged, financed, and fully-paid precious metals transactions, and they received at least $5.5 million from at least 90 customers in connection with these transactions.
According to the Complaint, Defendants failed to use all of the customer funds they collected to purchase metal for their customers’ precious metals transactions. Instead, Defendants allegedly misappropriated customer funds to pay personal expenses, to distribute purported “profits” and disbursements to other customers, and to fund Omega Knight’s operations. Through the issuance of false trade confirmations and account statements and other communications to customers, Defendants allegedly concealed their misappropriation and the fraudulent scheme.
Moreover, the Complaint alleges that Defendants’ leveraged or financed precious metals transactions constituted illegal, off-exchange retail commodity transactions. Notably, Defendants’ leveraged or financed precious metals transactions never resulted in actual delivery of the full amount of metal purchased to customers, according to the Complaint. The Complaint also alleges that Omega Knight accepted customer orders and funds in connection with those transactions and therefore acted as an FCM, but failed to register with the CFTC as an FCM, as required.
In its continuing litigation against Omega Knight, Aviv Hen, and Erez Hen, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the CEA, as charged.
CFTC Division of Enforcement staff members responsible for this action are Patricia Gomersall, Jason Wright, Kassra Goudarzi, A. Daniel Ullman II, and Paul G. Hayeck.
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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.