By Commodity Futures Trading Commission ….
On June 12, the Commodity Futures Trading Commission (CFTC) filed a civil enforcement action charging Florida-based Defendants Mark Olsen Mining Company (MOMC) and Betty Lea Grimes with engaging in illegal, off-exchange transactions in precious metals with retail customers on both a fully paid as well as a leveraged, margined, or financed basis. Grimes is MOMC’s president, controlling person, and managing member. Grimes has used the following names, and/or combinations of these names, in various legal documents: Betty Grimes, Lea Grimes, Lea Lauren, Betty Nehme, and Lea Nehme. Neither MOMC nor Grimes has ever been registered with the CFTC.
The CFTC Complaint, filed in in the U.S. District Court for the Southern District of Florida, further alleges that Grimes, as controlling person for MOMC, is liable for MOMC’s violations of the Commodity Exchange Act (CEA).
According to the Complaint, from at least April 2013 and continuing through at least February 2014, MOMC, by and through its employees, including Grimes, solicited retail customers by telephone to engage in fully paid as well as leveraged, margined, or financed precious metals transactions. During that period, MOMC collected more than $870,000 from three customers for the purported purpose of investing in precious metals. Instead, as alleged, MOMC customers never received precious metals, and the Defendants misappropriated all MOMC customer funds. The Defendants used the misappropriated funds to pay for Grimes’ personal expenses, with the remaining funds wire transferred to a person purporting to be Mark Olsen in South Africa, according to the Complaint.
Defendants Made Material False and Misleading Representations and Omissions
The Defendants in their solicitations to actual and potential customers allegedly used a website and marketing materials that contained false representations to defraud customers who wished to purchase precious metals from MOMC. Also, the Defendants allegedly made additional misrepresentations in direct oral and written communications with customers.
In its continuing litigation against the Defendants, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction from future violations of the CEA, as charged.
This is not Grimes’ first violation of the CEA. In 2007, using the fictitious name Lea Lauren, Grimes signed a Consent Order with the CFTC. CFTC v. Madison Forex LLC, No. 05-61672 (S.D. Fla. July 16, 2007). The Consent Order found that Defendants fraudulently solicited more than $4.5 million from customers, in connection with the trading of forex options. As a salesperson for one of the Defendants, Grimes was similarly charged with making false statements and omissions.
The CFTC thanks and acknowledges the assistance of the Financial Sector Conduct Authority (FSCA), formerly known as the Financial Services Board (FSB), of South Africa for its assistance in this matter.
CFTC Division of Enforcement staff members responsible for this action are Maura Viehmeyer, Aimée Latimer-Zayets, 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.