By Commodity Futures Trading Commission….
On Wednesday, September 30, the U.S. Commodity Futures Trading Commission (CFTC) filed a civil injunctive enforcement action in the U.S. District Court for the Southern District of Florida against Defendants Guardian Asset Group, LLC and its owner and principal, Andrew Kurzbard, both of West Palm Beach, Florida. The CFTC Complaint charges the Defendants with engaging in illegal, off-exchange transactions in precious metals with retail customers on a leveraged, margined, or financed basis. The Complaint further alleges that Kurzbard, as controlling person for Guardian, is liable for Guardian’s violations of the Commodity Exchange Act (CEA).
According to the Complaint, since at least February 2012, and continuing through at least February 2013, Guardian, by and through its employees, including Kurzbard, solicited retail customers by telephone to engage in leveraged, margined, or financed precious metals transactions. During that period, Guardian collected at least $1.7 million from its customers in connection with precious metals transactions and received commissions and fees totaling at least $434,413. The Complaint also alleges that Guardian accepted customer orders and funds and therefore acted as a Futures Commission Merchant (FCM), but failed to register with the CFTC as an FCM, as required.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, leveraged, margined, or financed transactions such as those conducted by Guardian, are illegal off-exchange transactions unless they result in actual delivery of metals within 28 days. The Complaint alleges that metals were never actually delivered in connection with the leveraged, margined, or financed precious metals transactions made on behalf of Guardian’s customers.
The Complaint also alleges that Guardian executed the illegal precious metals transactions through AmeriFirst Management LLC. The CFTC filed an enforcement action against AmeriFirst in July 2013, charging it and other Defendants with engaging in illegal, off-exchange precious metals transactions, and charging AmeriFirst with fraud and other violations.
On September 17, 2013, the Court entered a consent Order resolving the CFTC’s claims against AmeriFirst, finding it liable for illegal off-exchange precious metals transactions and fraud.
In its continuing litigation against Guardian and Kurzbard, 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.
The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers to ensure the wrongdoers are held accountable.
CFTC Division of Enforcement staff members responsible for this action are Peter L. Riggs, Thomas L. Simek, James M. Humphrey IV, Elsie Robinson, Stephen Turley, and Charles Marvine.
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.