CFTC News Release 4382-00
For Release: March 20, 2000
CFTC CHARGES IMC COMMON ENTERPRISE AND THREE INDIVIDUALS IN $18 MILLION FRAUDULENT PRECIOUS METALS SCHEME
Court Freezes Defendants' Assets and Appoints Receiver to Take Control of Business
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that on March 13, 2000, it filed an injunctive action in the U.S. District Court for the Western District of North Carolina against IBS, Inc., a North Carolina Corporation; IMC Trading, Inc., a North Carolina Corporation; IMC Trading, Inc., a Nevada Corporation; IMC Trading, Inc., an Arizona Corporation; Joe Miller Company d/b/a IMC Trading, a California Corporation; Mazuma Trading Group, Inc. d/b/a Pinpoint Marketing, Ltd., a Florida Corporation (collectively the IMC Common Enterprise); and three individuals -- Alan Stein, Joseph Finateri and Michael Temple. The CFTC complaint charges these entities and individuals with fraudulently telemarketing illegal futures contracts. The Commission estimates that the scheme took in nearly $18 million during an approximately four-year period, and in one two-year period, received at least $7.7 million from at least 375 customers nationwide.
In addition, the complaint charges that the IMC Common Enterprise transferred substantial funds obtained through fraud to the following parties, named in the complaint as relief defendants: International Bullion Services, Inc., a Bahamas Corporation; Kimberlynn Creek Ranch, Inc., a California Corporation; Kingsfield Racing, Inc., a Nevada Corporation; F. X. & B, L.L.C., a Nevada Corporation; A. J. S. Enterprises, Inc., a Nevada Corporation; Samuel Kingsfield; and Pamela Kingsfield.
On March 13, 2000, the court entered an ex parte restraining order which, among other things, freezes the defendants’ assets and appoints a receiver to take control of the IMC Common Enterprise.
William Rainer, Chairman of the CFTC, commented:
"This case demonstrates how partnerships with other law enforcement agencies present the most effective way of cracking down on investment schemes that operate across state and international jurisdictional lines. Members of the public should protect themselves by taking a close look at firms that tout a quick buck with little risk, especially firms that claim to use unfamiliar overseas firms to finance their investments and store precious metals and other commodities on their behalf."
CFTC Charges Defendants with Fraudulently Telemarketing Customers And Offering Illegal Futures Contracts
Specifically, the CFTC complaint alleges that under the IMC Common Enterprise’s program, a customer pays for a portion of the commodity (usually 20 percent) in cash and that International Bullion Services, Inc., or another financing firm, allegedly loans the customer the balance of the purchase price of the commodity. The financing firm then purportedly purchases and holds the commodities on behalf of the IMC Common Enterprise customers, according to the complaint. When decreases in the price of a commodity or accumulating credit and storage fees cause a customer’s equity to drop below a specified level, the customer must pay additional money to return his or her equity to a specified level, the complaint alleges. IMC Common Enterprise telemarketers claim they will monitor the market and instruct customers when they should liquidate their accounts for a profit, according to the complaint. It is only after customers send their funds to the IMC Common Enterprise, the complaint alleges, that customers receive account opening forms and documents purporting to disclose risks inherent in the investment scheme.
The CFTC complaint charges that the IMC Common Enterprise and defendants Alan Stein, Joseph Finateri, and Michael Temple violated section 4(a) of the Commodity Exchange Act (CEA) by selling illegal, off-exchange futures contracts, and violated section 4b of the CEA by defrauding customers through misrepresentations concerning the profits investors were likely to achieve and through their failure to disclose the risks associated with their investment program. Customers consistently lose the bulk of the funds they invest, according to the complaint.
Finally, according to the CFTC complaint, the defendants also have engaged in an elaborate ruse to keep their current whereabouts secret. Defendants claim that they are currently operating out of the Bahamas, instruct customers to call them at a Bahamas telephone number and to send investment checks to a Bahamas address, and send account statements to customers from the Bahamas, the complaint alleges. The complaint further alleges that, in fact, defendants operate from a location in Charlotte, North Carolina.
In its continuing litigation against the defendants, the CFTC is seeking preliminary and permanent civil injunctions in addition to other remedial relief including restitution to customers. The CFTC is further seeking disgorgement of funds transferred to International Bullion Services, Inc., Kimberlynn Creek Ranch, Inc., Kingsfield Racing, Inc., F. X. & B L. L. C., A. J. S. Enterprises, Inc., Samuel Kingsfield, and Pamela Kingsfield.
The California Department of Justice Telephonic Sellers Unit, the Securities Division of the Office of the Secretary of State for the State of Nevada, the Nevada Department of Business and Industry Division of Consumer Affairs, the Iowa Department of Justice, Securities Bureau, the United States Customs Service, and the Federal Trade Commission also provided valuable assistance to the CFTC during the investigation of this matter.
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