CFTC corrals millions in FLA precious metals scams
by Dorothy Kosich, MineWeb Goldman, Catronio and Paramount are permanently banned from trading by the CFTC. During the past ten days the U.S. Commodity Futures Trading Commission (CFTC) has levied millions of dollars in sanctions against Florida-based individuals and their companies reportedly involved in illegal, off-exchange precious metals trading. In the latest development on Thursday, the CFTC settled charges against Isaiah Goldman of Boca Raton, Florida, and Brock Catronio of Delray Beach, Florida, individually, and their companies, Paramount Metals Exchange, LLC and Paramount Credit, LLC, both of Delray Beach, in exchange for payment of restitution of $1,595,946 to their customers and to jointly pay a $1 million civil penalty. In addition Goldman, Catronio and Paramount are permanently banned from trading by the CFTC. The CFTC order found that, from December 2011 to February 2013, Goldman Catronio, and Paramount solicited retail customers to engage in the cash purchase of precious metals, “falsely claiming to sell and transfer title of physical metals to customers and to arrange for the transfer and storage of the physical metals in independent depositories where such metal was purportedly held on the customers’ behalf.” According to the CFTC, Paramount’s customers paid a total of $3,306,032 and lost $1,595,946 of their funds to trading losses, commissions, interest charges, and other fees to Paramount and other companies. Goldman, Catronio and Paramount received $853,279 of these commissions and fees. On Wednesday, the CFTC issued an order and settled charges against Brian S. Ekasala of Lake Worth, Florida – and his company Midwest Metals Exchange of Fort Lauderdale, Florida – for engaging in illegal, off-exchange precious metals transactions. The order finds that, from July 2011 through March 2013, Midwest solicited retail companies to buy and sell precious metals, which were executed through Hunter Wise Commodities, LLC. Midwest telemarketers represented that a customer could purchase precious metals with a 30% deposit, and that the customer would receive a loan for the remaining 70%, according to the order. “Neither Midwest nor Hunter Wise actually delivered any precious metals to any customer,” said the CFTC order. The CFTC sued Midwest’s clearing firm, Hunter Wise, on Dec. 5, 2012. The order requires Ekasala and Midwest jointly to pay restitution totaling $322,852.71 and a $200,000 monetary penalty. The CFTC also imposed permanent trading and registration bans against Ekasala and Midwest. Finally on January 26, the CFTC ordered Anthony Lauria and his company Gold Coast Bullion, Inc. (GBC), operating out of Fort Lauderdale, to jointly pay restitution totaling $5,940,124.16 and a civil monetary penalty of $3.75 million. The CFTC order finds that, from at least January 2012 to February 2013, GBC was a telemarketing firm that solicited retail customers to engage in financed precious metals transactions. The order also finds Lauria directly solicited customers and supervised other telemarketers engaged in solicitation. When soliciting customers, Lauria and other GCB telemarketers said that to purchase a certain quantity of precious metals, the customer typically needed to deposit a payment representing 25% of the total metal value; that GCB would arrange for the customer to receive a loan for the remaining 75%, and that the customer would have to pay a finance charge and service charge on the loan, according to the CFTC order. The CFTC said GCB did not purchase or sell any physical metals, but instead contacted another company, AmeriFirst Management LLC, to execute the customers’ buy or sell orders. AML also did not purchase or sell any physical metals in connection with these transactions, the agency noted. “AML managed its own exposure on these transactions using derivatives in margin trading accounts with several entities, and made book entries which track the value of the customer’s account,” according to the CFTC order. On July 30, 2013, the CFTC sued AML in federal court in Florida. On July 24, 2014, the court entered an order against AML and three individual defendants in that case, requiring them to pay more than $25 million in restitution and $10 million in civil monetary penalties.