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CFTC Charges Precious Metals Dealers in Elderly Fraud

CFTC Charges Precious Metals Dealers in Elderly Fraud
CFTC Charges Precious Metals Dealers in Elderly Fraud. Image: Adobe Stock / CoinWeek.

Commodity Futures Trading Commission (CFTC) ……
The Commodity Futures Trading Commission (CFTC) announced on Tuesday, April 25, 2023, it has filed a civil enforcement action in the U.S. District Court for the Eastern District of New York against two affiliated precious metals dealers located in Los Angeles, California: Fisher Capital LLC and AMS Consulting Solutions LLC d/b/a Fisher Capital (collectively Fisher Capital), and Fisher Capital’s principal, Alexander Spellane a/k/a Alexander Overlie, for perpetrating a precious metals investment fraud targeting elderly persons nationwide. The complaint charges the defendants with defrauding hundreds of elderly persons into investing more than $30 million in gold and silver coins worth far less than the defendants led victims to believe.

In its continuing litigation against the defendants, the CFTC seeks the return of ill-gotten gains, civil monetary penalties, restitution, permanent registration bans, and permanent injunctions against further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged. The CFTC also seeks to permanently bar the defendants from trading precious metals that are commodities, or from trading commodity interests.

“As alleged, the defendants operated as wolves in sheep’s clothing,” said Director of Enforcement Ian McGinley. “Under the guise of helping seniors to protect their retirement nest eggs, the complaint alleges that Fisher Capital and Spellane systematically fleeced retirees out of a significant chunk of their life savings. Protecting investors—particularly senior and vulnerable populations—is a core part of the Division’s and CFTC’s mission, and we will continue to work tirelessly to prosecute those that prey upon them.”

Precious Metals Fraud Case Background

The complaint alleges that from approximately June 2020 and continuing to the present, the defendants fraudulently persuaded hundreds of elderly persons throughout the United States to invest more than $30 million in precious metals, primarily using funds from customers’ retirement savings. As alleged, Fisher Capital solicited customers via high-pressure telephonic sales pitches that were permeated with material misrepresentations, misleading half-truths, and deceptive omissions designed to build trust with elderly customers; instill fear about the safety of traditional retirement and savings accounts; and deceive victims into purchasing grossly overpriced precious metals from Fisher Capital.

According to the complaint, the defendants deceptively marketed Fisher Capital as a wealth protection firm whose mission was to safeguard investors’ retirement savings and led customers to believe that Fisher Capital would offer safe and secure investments that were in its customers’ best interest. In reality, Fisher Capital was a boiler room-type operation orchestrated by Spellane to bilk elderly customers out of their retirement savings. As alleged, the defendants fraudulently induced investors to liquidate existing retirement accounts, transfer the proceeds into self-directed Individual Retirement Accounts (SDIRA), and invest the proceeds into gold and silver coins. The defendants directed the vast majority of customers’ investments into supposedly exclusive, collectible, or “semi-numismatic” coins at grossly inflated prices that frequently were double or even triple the prevailing market value of those coins.

The defendants also allegedly used false and misleading statements designed to stoke customers’ fear of economic collapse and scare customers into erroneously believing their retirement accounts could be frozen or seized in the event of a stock market decline. Due to the exorbitant and fraudulent markups charged by Fisher Capital, customers routinely lost the majority of the value of their investment immediately upon entering into transactions with Fisher Capital.

As the complaint alleges, when questioned by customers about the value of the precious metals they purchased, the defendants misleadingly reassured customers the gold and silver coins were rare or collectible and carried a premium far above the base melt value. In fact, the coins were significantly less valuable than the defendants claimed.

The CFTC appreciates the cooperation and assistance of the Financial Industry Regulatory Authority (FINRA) and the Mississippi Secretary of State.

The CFTC Division of Enforcement staff members responsible for this action are Jacob Mermelstein, David W. MacGregor, Alben Weinstein, Lenel Hickson, Jr., and Manal M. Sultan.

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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.

CoinWeek
CoinWeek
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