Release Number 6990-14
September 9, 2014
CFTC Charges Florida Attorney Jay Bruce Grossman with Aiding and Abetting Illegal Metals Transactions and Fraud
Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil enforcement Complaint in the U.S. District Court for the Southern District of Florida against attorney Jay Bruce Grossman, who practices law in Fort Lauderdale, Florida. The CFTC Complaint alleges that beginning on July 16, 2011, Grossman willfully aided and abetted multiple clients in their operation of illegal and fraudulent precious metals schemes, in violation of the Commodity Exchange Act (CEA).
According to the CFTC Complaint, Grossman’s clients, such as Hunter Wise Commodities, LLC, claimed to sell physical metals, such as gold, silver, platinum, palladium, and copper, to retail customers on a financed basis. Under the CEA, since July 16, 2011 such transactions are required to be executed on or subject to the rules of a board of trade registered with the CFTC. Grossman’s clients did not, however, execute the transactions on a board of trade; they never actually owned, possessed, or sold any physical metals; nor did they disburse loans to customers, according to the Complaint.
The Complaint further alleges that Grossman was well-versed in the inner workings of Hunter Wise’s business and has long been aware that Hunter Wise did not sell or store physical metals for or disburse loan funds to its dealers or retail customers. Nevertheless, Grossman aided his clients in crafting the illusion that their schemes were legitimate and complied with the law, and Grossman drafted fraudulent customer forms and made material misrepresentations regarding the true nature of his clients’ businesses, including to the courts and the CFTC, according to the Complaint. As alleged, Grossman’s unlawful actions ultimately enabled his clients to defraud thousands of unsophisticated retail customers out of millions of dollars.
Aitan Goelman, Director of the Division of Enforcement, stated: “This action shows that the Commission will not hesitate to bring cases against gatekeepers, including attorneys, who are complicit in violating the CEA. Lawyers and accountants have the professional responsibility to avoid participating in unlawful conduct that is perpetrated by their clients.”
The CFTC previously obtained judgments in its civil enforcement actions against the following clients, which the CFTC Complaint alleges that Grossman aided and abetted in their violations of the CEA:
• On May 16, 2014, a federal court in Florida found that Grossman client Hunter Wise and its owners committed “repeated, callous, and blatant” fraud in their operation of a precious metals scheme and ordered Hunter Wise and its owners to pay $52.6 million in restitution to defrauded customers and a $55.4 million civil monetary penalty in U.S. Commodity Futures Trading Commission v. Hunter Wise Commodities, LLC, Case No. 9:12-cv-81311-DMM (S.D. Fla.) (see CFTC Press Release 6935-14, May 22, 2014).
• On July 24, 2014, a federal court in Florida ordered Grossman client AmeriFirst Management LLC and its owners to pay $25 million in restitution and a $10 million civil monetary penalty for their operation of a fraudulent precious metals scheme in U.S. Commodity Futures Trading Commission v. AmeriFirst Management LLC, Case No. 0:13-cv-61637-WPD (S.D. Fla.) (see CFTC Press Release 6973-14, Aug. 7, 2014).
• In the same action, the court also ordered Grossman clients James Burbage and Frank Gaudino, and their companies Lloyds Commodities, LLC, Lloyds Commodities Credit Company, LLC, and Lloyds Services, LLC, to pay restitution totaling over $2 million and civil monetary penalties totaling over $2.9 million for engaging in unlawful retail off-exchange precious metals transactions (see CFTC Press Release 6850-14, February 5, 2014).
• Additionally, the CFTC filed and settled charges with two additional Grossman clients, Secured Precious Metals and Joseph Glenn Commodities, for engaging in unlawful retail off-exchange precious metals transactions while acting as metals dealers for Hunter Wise (see CFTC Press Releases 6503-13, January 28, 2013, and 6542-13, March 27, 2013).
In its continuing litigation against Grossman, the CFTC seeks a permanent injunction from future violations of the CEA, as charged, permanent registration and trading bans, and a civil monetary penalty.
CFTC Division of Enforcement staff members responsible for this case are Stephanie Reinhart, Jennifer E. Smiley, Scott Williamson, and Rosemary Hollinger.
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CFTC’s Precious Metals Customer Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Precious Metals Fraud Advisory, which alerts customers to precious metals fraud and lists simple ways to spot precious metals scams.
Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.
Last Updated: September 9, 2014