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Federal Court Orders Alabama Man to Pay More Than $16 Million in Precious Metals Fraud

Bullion Dealer Charles McAllister of BullionDirect Charged with Fraud, Money Laundering

Commodity Futures Trading Commission (CFTC) ……
The Commodity Futures Trading Commission (CFTC) announced today, Mondy, August 23, that the U.S. District Court for the Southern District of Texas entered a consent order against Charles McAllister of Alabama. The order requires McAllister to pay $16,186,212.56 USD in restitution and permanently enjoins McAllister from engaging in conduct that violates the Commodity Exchange Act (CEA), from registering with the CFTC, and from trading in any CFTC-regulated markets.

Case Background

The order stems from a complaint the CFTC filed against McAllister on April 26, 2018. The order finds that from August 15, 2011, through July 20, 2015, McAllister and his defunct and bankrupt company BullionDirect, Inc. (BDI) defrauded thousands of customers throughout the United States who purchased precious metals from or through BDI through various misrepresentations and omissions.

According to the order, BDI customers sent money to McAllister and BDI for the purported purchase of gold, silver, palladium, and platinum that was to either be immediately delivered or stored on the customers’ behalf. Contrary to their promises, McAllister and BDI did not purchase or store metal for customers but instead misappropriated the customer funds to pay back other customers, cover BDI business expenses, and invest in other businesses. The order also finds that McAllister and BDI issued false account statements to these customers, showing balances of precious metals and cash that were not in McAllister’s or BDI’s possession.

Criminal Conviction

In a separate, parallel criminal action, on October 4, 2019, after a trial, a jury found McAllister guilty of two counts of wire fraud and one count of engaging in monetary transactions in criminally derived property. The court ordered McAllister to pay $16,186,212.56 in restitution to his victims (consistent with its order in the CFTC action) and to serve 10 years in federal prison.

The CFTC cautions that orders requiring repayment of funds to victims may not result in the recovery of any money lost because the wrongdoer may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure wrongdoers are held accountable.

The CFTC appreciates the cooperation and assistance of the U.S. Attorney’s Office for the Western District of Texas, the Federal Bureau of Investigation (FBI), and the Internal Revenue Service (IRS), all located in Austin, Texas.

CFTC Division of Enforcement staff members responsible for this case are Stephen Turley, J. Alison Auxter, Christopher Reed, and Charles Marvine, as well as former staff member Jo Mettenburg.

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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
CoinWeekhttps://coinweek.com
Coinweek is the top independent online media source for rare coin and currency news, with analysis and information contributed by leading experts across the numismatic spectrum.

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