CFTC files complaint in yet another FLA precious metals scheme
The CFTC has targeted precious metals consumer fraud in Florida, which may be a haven for telemarketers offering illegal, off-exchange financed commodity transactions to retail customers.
Posted: Wednesday , 31 Jul 2013
RENO (MINEWEB) -
For the second time in as many days, the U.S. Commodities Commission announced it has filed a civil injunctive enforcement action against a Florida-based company in a multi-million dollar fraudulent precious metals scheme.
A complaint filed Monday in the U.S. District Court for the Southern District of Florida accuses AmeriFirst Management LLC (AML) and its owners, John P. D’Onofrio of Fort Lauderdale, George E. Sarafianos of Lighthouse Point, Florida, and Scott D. Piccininni of Fort Lauderdale with operating a precious metals scheme which took in at least $9.7 million in customer funds.
“AML held itself out as a precious metals wholesaler and clearing firm, operating through a network of more than 30 precious metals dealers,” said the CFTC complaint. The dealers allegedly solicited retail customers to invest in illegal, off-exchange financed commodity transactions in gold, silver and platinum.
However, D’Onofrio denied any wrongdoing, telling the Sun-Sentinel that AmeriFirst Management went out of business in January and returned all gold or cash to dealers. “All we did is buy metal and put it in the names of dealers,” he told the newspaper, “We didn’t solicit the public. We were wholesale dealers providing a service” to the precious metals dealers.”
However, the CFTC said the dealers solicited retail customers to invest in financed precious metals transactions, “where a customer gave a percentage deposit of the total value of the metal, typically 20%, and the dealer supposedly made a loan to the customer for the remaining 80%, supposedly sold the customer the total metal amount, and supposedly allocated the total metal amount at a depository to be held for the customer.”
AML allegedly created customer documents that represented that the dealer in fact had made such a loan and sold and allocated the total metal amount to the customer. However, the documents were false because the dealer never made a loan to the customer, nor did the dealer sell or allocate any metal to the customer.
The lawsuit claims that instead, the dealers received commissions to get customers, relay orders and forward down payments to AmeriFirst Management.
Further, the CFTC says, that although there was no loan and no precious metals allocated to the customer, AML charged the customer finance and storage fees for the non-existent metals.
The CFTC also claims that D’Onofrio and Sarafianos had a relationship with American Precious Metals, which bilked investors of more than $37 million in a physical bullion precious metals scheme. In a May 2011 story, Mineweb reported that American Precious Metals was shut down by a federal judge at the request of the Federal Trade Commission.
Many of the telemarketing operation’s customers including senior citizens came from around the United States.
On Monday the CFTC fined two Miami, Florida companies, Pan American Metals of Miami and Pan American Metals of Miami Beach, a total of $4.7 million for restitution and a civil penalty involving illegal, fraudulent off-exchange finance transaction in precious metals with retail customers.