SOME CONSUMERS HARMED BY BUYING PRECIOUS METALS TO RECEIVE PARTIAL REFUND

FROM:  FEDERAL TRADE COMMISSION
FTC Sends More Than $2.4 Million in Refunds to Consumers Harmed by Investment Scam

The Federal Trade Commission has sent more than $2.4 million in refund checks to just over a hundred consumers harmed by the Premier Precious Metals scheme, which bilked millions of dollars from investors, including many senior citizens.

In February 2014, the defendants were permanently banned from selling any investment opportunities under a settlement with the FTC. They conned consumers into buying precious metals on credit without clearly disclosing significant costs and risks, including the likelihood that consumers would subsequently have to pay more money or lose their investments.

Affected consumers will recover nearly 70 percent of the amount they lost. Consumers who receive checks from the distribution should cash them within 60 days of the mailing date. The FTC never requires consumers to pay money or to provide information before refund checks can be cashed.

CFTC ANNOUNCES COURT ORDERED SANCTIONS AGAINST PRECOCIOUS METALS COMPANY

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 

Federal Court Orders More than $1.3 Million in Sanctions and Enters a Default Judgment Order against Florida-Based Gold Distributors, Inc. and Its Owner, Jordan Cain, for Engaging in Illegal, Off-Exchange Commodity Transactions

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge William J. Zloch of the U.S. District Court for the Southern District of Florida entered an Order of default judgment against Defendants Gold Distributors, Inc. (GDI) of Hallandale Beach, Florida, and its sole owner Jordan Cain of Miami, Florida. The Order requires the Defendants to pay restitution in the amount of $337,266 and a civil monetary penalty of $1,011,800. The Order also imposes permanent trading, solicitation, and registration bans against the Defendants and prohibits them from violating provisions of the Commodity Exchange Act (CEA), as charged.

The Order, entered on November 24, 2014, stems from a CFTC Complaint filed on March 19, 2014, that charged the Defendants with engaging in illegal, off-exchange transactions in precious metals with retail customers on a leveraged, margined, or financed basis (see CFTC Press Release 6884-14).

Specifically, the Order finds that between January 2012 and February 2013, the Defendants offered to enter into, executed, and confirmed the execution of financed gold and silver transactions with persons who were not eligible contract participants as defined by the CEA. The Order further finds that the Defendants introduced 27 customers to AmeriFirst Management, LLC (AmeriFirst), a precious metals wholesaler and clearing firm that financed and purported to confirm the execution of customer precious metals transactions. The Defendants transferred at least $797,577 to AmeriFirst for the purchase of precious metals and received commissions and fees totaling at least $337,266 for the retail financed precious metals transactions executed through AmeriFirst, according to the Order. The Order also finds that Cain was liable, as GDI’s controlling person, for GDI’s violations of the CEA.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, financed transactions such as those conducted by GDI, are illegal off-exchange transactions unless they result in actual delivery of metal within 28 days. According to the Order, the Defendants and AmeriFirst never actually delivered any precious metals to any of the Defendants’ customers.

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 and to ensure the wrongdoers are held accountable.

On July 29, 2013, the CFTC, in a separate action in the U.S. District Court for the Southern District of Florida, charged AmeriFirst and its principals with fraud and other violations of the CEA. On September 18, 2013, the court found AmeriFirst and its principals liable for illegal, off-exchange precious metals transactions and fraud, and on, July 24, 2014, the court imposed sanctions of over $35 million against AmeriFirst and its principals (see CFTC Press Releases 6655-13 and 6973-14).

FTC TESTIFIES BEFORE SENATE COMMITTEE REGARDING PRECIOUS METALS INVESTMENT SCAMS

FROM:  FEDERAL TRADE COMMISSION 

FTC Testifies on Precious Metals Investment Scams Before Senate Special Committee on Aging

In testimony before Congress, the Federal Trade Commission described its efforts to stop precious metals investment scams and inform consumers how to avoid them.

Testifying on behalf of the Commission before the Senate Special Committee on Aging, Dama Brown, Director of the FTC’s Southwest Region, said the agency is committed to protecting consumers from investment schemes that swindle money from people and often prey on older Americans’ concerns about the security of their retirement savings, particularly during periods of economic uncertainty.

Following the economic downturn in 2008, the testimony states, the FTC observed a proliferation of schemes that targeted financially-distressed consumers, including telemarketers offering precious metals as purported high-profit, low-risk investments. FTC cases have alleged that, to lure consumers into purchasing these investments, telemarketers claimed that the precious metals investments were certain to rise in price and the investments were safe because they were backed by physical metal.

According to the Commission, in reality, the telemarketers offered a highly leveraged, high-risk investment. Telemarketers allegedly failed to disclose that consumers were financing most of the investments’ purchase price and they were required to pay hefty fees. The terms of the investments rendered them highly risky and largely unprofitable.

The Commission recently filed three law enforcement actions involving precious metals investment schemes, the testimony states. In addition to stopping the alleged scams, the Commission expects to return approximately $5 million to consumer victims. The testimony describes the schemes, the agency’s law enforcement actions, and its consumer education efforts, including providing information about how to avoid scams, what to know before investing in precious metals, coins, or other investments, and practical investment advice.

The Commission vote approving the testimony and its inclusion in the formal record was 4-0.

For information about investing in precious metals, read Investing in Gold, Investing in Bullion and Bullion Coins, and Investing in Collectible Coins.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

CFTC CHARGES COMPANY, OWNER WITH ILLEGAL, OFF-EXCHANGE TRANSACTIONS

FROM:  COMMODITY FUTURES TRADING COMMISSION 
CFTC Charges Florida-Based Gold Distributors Inc. and Its Owner, Jordan Cain, with Engaging in Illegal, Off-exchange Commodity Transactions

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it filed a civil injunctive enforcement action in the U.S. District Court for the Southern District of Florida against Defendants Gold Distributors Inc. (GDI) of Hallandale Beach, Florida, and its sole owner, Jordan Cain of Miami, Florida. The CFTC Complaint charges the Defendants with engaging in illegal, off-exchange financed transactions in precious metals with retail customers.

According to the Complaint, between January 2012 and February 2013, GDI and Cain solicited retail customers by telephone and in person to buy physical precious metals, such as gold and silver, in off-exchange leverage transactions. Customers paid GDI a portion of the purchase price for the metals, and another entity, AmeriFirst Management, LLC (AmeriFirst), financed the remainder of the purchase price, while charging the customers interest on the amount they purportedly loaned to customers, the Complaint alleges.

Retail customers engaging in financed transactions with GDI were told that they were borrowing money to purchase precious metals, according to the Complaint. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank), financed transactions such as those conducted by GDI, are illegal off-exchange transactions unless they result in actual delivery of metal within 28 days. The Complaint alleges that GDI’s customers never took delivery of the precious metals they purportedly purchased.

The Complaint further alleges that when GDI engaged in these illegal transactions it was acting as a dealer for metals merchant AmeriFirst, which the CFTC charged with fraud and other violations in federal court in Florida on July 30, 2013 (see CFTC Press Release 6655-13). As alleged in the CFTC Complaint against AmeriFirst and the Complaint in this case, neither GDI nor AmeriFirst purchased or held metal on the customers’ behalf. The Complaint alleges that Defendants’ customers thus never owned, possessed, or received title to the physical commodities that they believed they purchased. Cain, as the owner, operator and controlling person of GDI, is liable for GDI’s violations of the Commodity Exchange Act and CFTC Regulations, according to the Complaint.

In its continuing litigation, the CFTC seeks disgorgement of ill-gotten gains, restitution for the benefit of defrauded customers, civil monetary penalties, permanent registration and trading bans, and a permanent injunction from future violations of federal commodities laws, as charged.

CFTC Division of Enforcement staff members responsible for this action are Nathan B. Ploener, Christopher Giglio, Lenel Hickson, Jr., and Manal M. Sultan.

COBALT MAY REPLACE PRECIOUS METALS AS AN INDUSTRIAL CATALYST

Photo:  Platinum Necklace.  Credit:  U.S. Marshals Service.

FROM: LOS ALAMOS NATIONAL LABORATORY

Cobalt Discovery Replaces Precious Metals as Industrial Catalyst
Transforming the chemistry of catalysis
LOS ALAMOS, NEW MEXICO, November 26, 2012—Cobalt, a common mineral, holds promise as an industrial catalyst with potential applications in such energy-related technologies such as the production of biofuels and the reduction of carbon dioxide. That is, provided the cobalt is captured in a complex molecule so it mimics the precious metals that normally serve this industrial role.

In work published Nov. 26 in the international edition of the chemistry journal Angewandte Chemie, Los Alamos National Laboratory scientists report the possibility of replacing the normally used noble metal catalysts with cobalt.
Catalysts are the parallel of the Philosopher’s Stone for chemistry. They cannot change lead to gold, but they do transform one chemical substance into another while remaining unchanged themselves. Perhaps the most familiar example of catalysis comes from automobile exhaust systems that change toxic fumes into more benign gases, but catalysts are also integral to thousands of industrial, synthetic, and renewable energy processes where they accelerate or optimize a mind-boggling array of chemical reactions. It’s not an exaggeration to say that without catalysts, there would be no modern industry.

But a drawback to catalysts is that the most effective ones tend to be literally precious. They are the noble metal elements such as platinum, palladium, rhodium, and ruthenium, which are a prohibitively expensive resource when required in large quantities. In the absence of a genuine Philosopher’s Stone, they could also become increasingly expensive as industrial applications increase worldwide. A push in sustainable chemistry has been to develop alternatives to the precious metal catalysts by using relatively inexpensive, earth-abundant metals. The chemical complexities of the more common metals have made this research a challenge, but the Los Alamos paper holds out hope that the earth-abundant metal cobalt can serve in place of its pricier relatives.

Cobalt, like iron and other transition metals in the Periodic Table, is cheap and relatively abundant, but it has a propensity to undergo irreversible reactions rather than emerging unchanged from chemical reactions as is required of an effective catalyst. The breakthrough by the Los Alamos team was to capture the cobalt atom in a complex molecule in such a way that it can mimic the reactivity of precious metal catalysts, and do so in a wide range of circumstances.

The findings of the Los Alamos team have major ramifications and suggest that cobalt complexes are rich with possibility for future catalyst development. Due to the high performance and low cost of the metal, the cobalt catalyst has potential applications in energy-related technologies such as the production of biofuels, and the reduction of carbon dioxide. It also has implications for organic chemistry, where hydrogenation is a commonly practiced catalytic reaction that produces important industrial chemical precursors.

The research was funded by the LANL Laboratory Directed Research and Development Early Career program. "Mild and Homogeneous Cobalt-Catalyzed Hydrogenation of C=C, C=O, and C=N Bonds." Angewandte Chemie International Edition. DOI: 10.1022/anie.201206051. Guoqi Zhang, Brian L. Scott, and Susan K. Hanson* Guoqi Zhang, Kalyan Vasudevan.