Release Number 7017-14
September 29, 2014
CFTC Charges Florida-Based Inter-Global Currency & Precious Metals LLC and Stavros Papastavrou with Engaging in Illegal, Off-Exchange Precious Metals Transactions
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil injunctive enforcement action in the U.S. District Court for the Southern District of Florida against Defendants Inter-Global Currency & Precious Metals LLC (IGCPM) of Pompano Beach, Florida, and its owner and manager, Stavros Papastavrou, a resident of Delray Beach, Florida. The CFTC Complaint charges the Defendants with engaging in illegal, off-exchange transactions in precious metals with retail customers on a leveraged, margined, or financed basis. The Complaint further alleges that Papastavrou, as controlling person for IGCPM, is liable for IGCPM’s violations of the Commodity Exchange Act (CEA).
According to the Complaint, since at least August 2011 and continuing through at least May 2013, IGCPM, by and through its employees including Papastavrou, solicited retail customers by telephone to engage in leveraged, margined, or financed precious metals (including gold, silver, platinum, and palladium) transactions. During that period, approximately 22 of IGCPM’s customers paid at least approximately $1.059 million to IGCPM in connection with precious metals transactions, and IGCPM received commissions and fees totaling at least $447,342 in connection with these precious metals transactions, according to the Complaint.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, leveraged, margined, or financed transactions such as those conducted by IGCPM, are illegal off-exchange transactions unless they result in actual delivery of metal within 28 days. The Complaint alleges that metals were never actually delivered in connection with the leveraged, margined, or financed precious metals transactions made on behalf of IGCPM’s customers.
The Complaint further alleges that IGCPM executed the illegal precious metals transactions through Lloyds Commodities, LLC (Lloyds), Hunter Wise, LLC (Hunter Wise), and AmeriFirst Management LLC (AmeriFirst). The CFTC filed enforcement actions against, among others, Lloyds and Hunter Wise in December 2012, and AmeriFirst in July 2013, charging each with engaging in illegal, off-exchange precious metals transactions, and charging AmeriFirst and Hunter Wise with fraud and other violations (see CFTC Press Releases 6447-12 and 6655-13).
On September 18, 2013, the court entered a Consent Order resolving the CFTC’s claims against AmeriFirst, finding it liable for illegal, off-exchange precious metals transactions and fraud (see CFTC Press Release 6973-14).
On February 5, 2014, in a Consent Order resolving the CFTC’s claims against Lloyds, the court ordered Lloyds Commodities to pay over $5 million in restitution and penalties (see CFTC Press Release 6850-14).
On February 19, 2014, the court found that Hunter Wise had no actual metal to deliver to customers and held that Hunter Wise engaged in illegal precious metals transactions and was required to register as a Futures Commission Merchant but did not do so and therefore violated Sections 4(a) and 4d of the CEA (see CFTC v. Hunter Wise Commodities, LLC, et al., 12-81311-CIV (Order on the Parties’ Motions for Summary Judgment)). On April 15, 2014, the U.S. Court of Appeals for the Eleventh Circuit affirmed the court’s issuance of a preliminary injunction and held that the CFTC’s jurisdiction under Section 2(c)(2)(D) of the CEA extends to the precious metals transactions at issue in the case and that no exception to the CFTC’s jurisdiction applied. And, on May 16, 2014, after a bench trial on the remaining claims, including fraud, the court entered an Order finding that Hunter Wise fraudulently misrepresented the nature of precious metals transactions that resulted in millions of dollars in customer losses (see CFTC Press Release 6935-14).
In its continuing litigation against IGCPM and Papastavrou, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction from future violations of the CEA, as charged.
CFTC Division of Enforcement staff members responsible for this action are Kevin S. Webb, Michelle Bougas, James H. Holl, III, Rick Glaser and Gretchen L. Lowe.
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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 29, 2014