Commodity Futures Trading Commission (CFTC), precious metals fraud and crime

Commodity Futures Trading Commission (CFTC) ……
 

On Wednesday, March 2, the Commodity Futures Trading Commission (CFTC) announced the U.S. District Court for the Middle District of Florida entered consent orders on March 1 for permanent injunction, monetary sanctions, and equitable relief against Marvin W. Courson III and Christopher A. Kertatos. Both Courson and Kertatos reside in Florida.

Previously, the U.S. District Court for the Middle District of Florida had entered an order of judgment against two other parties to the suit: The Alista Group, LLC of Orlando and Luis M. Pineda Palacios, a/k/a Luis Pineda, also of Orlando, Florida.

The court imposed fines and penalties totaling more than $1.6 million USD, which include a $560,152.60 civil monetary penalty as well as separate customer restitution of $560,152.60 on Courson, and a $274,988 civil monetary penalty as well as separate customer restitution of $274,988 on Kertatos. The orders also impose permanent trading and registration bans and a permanent injunction prohibiting the defendants from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged. The orders resolve the CFTC’s enforcement case filed on July 16, 2020. [See CFTC Press Release No. 8204-20]

Case Background

According to the orders, from July 2016 through approximately January 2018, Courson and Kertatos defrauded customers intending to engage in illegal, off-exchange retail commodity transactions involving precious metals by misappropriating their funds to speculate in precious metals for Alista’s own account; paid Alista’s business expenses; and made Ponzi-style payments to customers who attempted to cash out some of their purported holdings.

At all times during Alista’s operation, Courson was in control of its various bank accounts, business operations, and hiring decisions.

In addition, Kertatos individually defrauded some of Alista’s customers by using individual and/or corporate bank accounts under his personal control to accept Alista customer funds. He then misappropriated those funds to pay for personal and other expenses unrelated to leveraged precious metals transactions on behalf of Alista’s customers.

The CFTC cautions that orders requiring repayment of funds to victims may not result in the recovery of any 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.

The CFTC thanks the U.S. Secret Service, the Florida Office of Financial Regulation, and the Lee County (Florida) Sheriff’s Office for their assistance in this matter.

Division of Enforcement staff members responsible for this action are Alan Edelman, Michelle Bougas, Erica Bodin, Alison B. Wilson, 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.

The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found at NFA BASIC.

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10% and 30% of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.
 

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