CFTC News Release 4415-00 (civ-00-6885)
For Release July 5, 2000
CFTC CHARGES NATIONAL BULLION AND COIN, INC. (NBC) (d/b/a/ NATIONAL BULLION & COIN SERVICES, INC.); CAPITAL CREDIT MANAGEMENT & FINANCE, INC. (CCMF); JOSEPH B. FLANIGAN; AND LAWRENCE COLMAN WITH CONDUCTING A FRAUDULENT NATIONWIDE PRECIOUS METALS SCHEME
Federal Court Enters Ex Parte Order Which, Among Other Things, Freezes the Assets of NBC and CCMF and Appoints a Receiver to Take Control of Businesses
CFTC Issues Consumer Advisory Warning Asking the Public to be Wary of Sales Pitches Offering Great Profits and Low Risk through Investments in Precious Metals
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that on June 28, 2000, it filed an injunctive action in the U.S. District Court for the Southern District of Florida against National Bullion and Coin, Inc. (NBC), doing business as National Bullion & Coin Services, Inc. of Plantation, Florida; Capital Credit Management & Finance, Inc. (CCMF) of Tamarac, Florida; Joseph B. Flanigan of Plantation, Florida, the owner of NBC and CCMF; and Lawrence Colman, the president of NBC and CCMF, whose last known address was in Tamarac, Florida, charging them with the fraudulent sale of illegal precious metals futures contracts via telemarketing to individuals nationwide.
The CFTC complaint alleges that customers were defrauded about the nature of the investment they were making and about the risk and profit potential of the futures contracts.
On June 29, 2000, the court entered an ex parte restraining order which, among other things, freezes the assets of all the defendants and appoints a receiver to take control of both companies. None of the defendants is registered with the CFTC.
CFTC Posts Consumer Advisory Warning on its Website
In a separate announcement today, the CFTC issued a Consumer Advisory warning the public to be wary of similar sales pitches offering great profits and low risk through investments in precious metals (see CFTC News Release 4416-00, July 5, 2000).
CFTC Charges That NBC/CCMF Fraudulently Solicited Customers to Purchase Illegal Futures Contracts
The CFTC complaint alleges that since approximately September 1998, NBC/CCMF has offered a metals financing program in which customers made downpayments that purportedly were applied to purchases of metal or to commissions and other fees. NBC/CCMF then supposedly purchased physical metal for customers and stored it, lending the customers the balance they owed on the value of the metal; when the price of metal dropped, customers using this financing were required to pay additional funds to bring the equity in their accounts back to pre-determined levels.
The CFTC complaint claims that the defendants violated the Commodity Exchange Act (CEA) by deceiving customers about the risks related to these transactions by having account executives make various false statements, such as: "Itís absolutely impossible not to make money on a product [gold] thatís been in the earth since thereís been an earth," or "if you and I had done business a week or ten days ago when we first started talking, and you had 10,000 ounces, you would have made yourself $10,000."
The CFTC complaint also alleges that NBC and CCMF did not buy and store metal as promised customers, and that the metals contracts are illegal futures contracts because they were not sold on a CFTC-designated contract market.
The CFTC, in addition to the restraining order, is also seeking preliminary and permanent injunctive relief, disgorgement and restitution, civil monetary penalties (in amounts not to exceed the higher of $110,000 or triple the monetary gain to the defendants for each violation of the CEA), and other relief.
The Department of Banking and Finance for the Office of the Comptroller for the State of Florida provided valuable assistance to the CFTC during the investigation of this matter.
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