Release Number 6014-11

March 30, 2011

CFTC Charges Florida Precious Metals Company Kastle & Hawke, Inc. and its Principals, James A. Ward and Nathaniel R. Walker, with Fraud

Defendants allegedly misappropriated at least $319,000 of customer funds for personal expenses and purchases.

Federal court issues order freezing defendants’ assets and preserving books and records.

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today charged precious metals firm Kastle & Hawke, Inc. of Ft. Lauderdale, Fla., and its principals, James A. Ward, also of Ft. Lauderdale, and Nathaniel R. Walker of Lauderhill, Fla., with fraud in connection with purchasing, selling or delivering gold, silver, platinum and palladium to customers on a leveraged basis. The CFTC’s lawsuit also alleges that the defendants violated the Commodity Exchange Act’s prohibition against selling palladium on a leveraged basis. Kastle & Hawk has never been registered with the CFTC in any capacity.

On March 30, 2011, the same day the complaint was filed, Judge James I. Cohn, of the U.S. District Court for the Southern District of Florida, entered a restraining order freezing the defendants’ assets and prohibiting the destruction or alteration of their books and records.

The complaint alleges that the defendants fraudulently represented that they were selling physical metals on a leveraged basis. The defendants allegedly charged customers an initial deposit equal to 23 percent of the full cost of the metals, after which Kastle & Hawke purportedly would arrange loans for financing the remaining 77 percent and store customers’ metals in a secure depository. In reality, the defendants never held or acquired any metals for customers and charged customers interest on non-existent loans, according to the complaint.

Furthermore, between at least August 2007 and November 2010, the defendants allegedly misappropriated at least $319,000 of customer funds, which they used for personal expenses and purchases, including Ward’s car, car-related expenses, rent payments, restaurant meals and food at a grocery store chain. To conceal their fraud, the defendants allegedly manufactured and sent false account statements and transaction confirmations to customers.

In its continuing litigation, the CFTC seeks preliminary and permanent injunction orders against the defendants, disgorgement of ill-gotten gains, civil monetary penalties and trading and registration bans.

The CFTC thanks the U.S. Attorney’s Office for the Southern District of Florida, the U.S. Postal Inspection Service, the Florida Office of Financial Regulation and the Alabama Securities Commission for their assistance.

CFTC Division of Enforcement staff responsible for this action are Stephanie Reinhart, Joseph Konizeski, Carlin Metzger, Jennifer Smiley, Judith McCorkle, Mary Kaminski, Scott Williamson, Rosemary Hollinger and Richard Wagner.

Media Contact
Dennis Holden
202-418-5088

Last Updated: March 30, 2011