By Commodity Futures Trading Commission ….
The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court default judgment Order Adopting the Report and Recommendation (Order) against Defendants The Yorkshire Group, Inc. (Yorkshire) and its principal Scott Platto. The Order stems from a CFTC Complaint, filed on September 25, 2013, that charged the Defendants with engaging in illegal, off-exchange transactions in precious metals with retail customers on a leveraged, margined or financed basis. At the time the CFTC filed the Complaint, Platto’s residence and Yorkshire’s offices were in Staten Island, New York.
The Order, entered by United States District Judge Ann M. Donnelly on October 12, 2016, requires Yorkshire and Platto, jointly and severally, to pay a $1.54 million USD civil monetary penalty and to disgorge $29,801.64 in ill-gotten gains. The Order also imposes permanent trading and registration bans against Yorkshire and Platto, and prohibits them from violating the Commodity Exchange Act (CEA) and CFTC Regulations, as charged in the Complaint.
The Order states that the Court has reviewed the Report and Recommendation issued on August 19, 2016 by United States Magistrate Judge Steven L. Tiscione and finds no error with his “thorough and well-reasoned opinion.” The Report and Recommendation finds that from September 2011 to August 2012, Yorkshire and Platto illegally solicited and accepted $93,700 from eleven retail customers to purchase physical precious metals, such as gold, silver, platinum, and palladium, on a leveraged, margined or financed basis, and that Yorkshire and Platto received commissions totaling $29,801.64 in connection with those transactions.
In addition, the Report and Recommendation finds that Platto, as controlling person for Yorkshire, is liable for Yorkshire’s violations of the CEA as well as his own violations, and that Yorkshire is liable as principal for the CEA violations committed by its officers, employees, and agents, including Platto.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, off-exchange leveraged, margined, or financed transactions are illegal unless they result in actual delivery of metal within 28 days. According to the Order, precious metals were never actually delivered to the Defendants’ customers either by the Defendants or by the wholesaler through which the Defendants conducted their customers’ transactions, namely Hunter Wise Commodities, LLC (Hunter Wise).
The CFTC previously brought an enforcement action against Hunter Wise in the U.S. District Court for the Southern District of Florida, charging it and other defendants with engaging in illegal, off-exchange precious metals transactions and other violations. In May 2014, following trial, the Court found that Hunter Wise neither purchased precious metals on the retail customers’ behalf nor delivered metals to the retail customers, and entered a permanent injunction and imposed a civil monetary and other relief against Hunter Wise.
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.
CFTC Division of Enforcement staff members responsible for this action are Karin N. Roth, Christopher Giglio, David W. MacGregor, 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.
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.
Crooks in the bullion business? Say it ain’t so, Joe. [Can you smell the sarcasm oozing from your screen? Good.]