Release Number 7791-18
September 17, 2018
CFTC Charges Precious Metals Dealer and its Owner with Fraud
Washington, DC – The Commodity Futures Trading Commission (CFTC) filed a civil enforcement action in the U.S. District Court for the Southern District of New York against Defendants Royal Metals Group, LLC (RMG), and its member, manager and part owner, Chelsea Gless of Iowa. The CFTC’s Complaint charges Defendants with defrauding retail clients in connection with precious metals transactions and fraudulently obtaining more than $600,000 from those clients.
Director of Enforcement James McDonald, stated: “As this case shows, the CFTC is actively policing precious metals transactions and will vigorously enforce the anti-fraud provisions of the Commodity Exchange Act. The CFTC will continue to fight to protect customers and to hold wrongdoers accountable.”
According to the Complaint, from at least March 2016 to present (the Relevant Period), Defendants fraudulently obtained funds from some of the clients after Defendants and/or Defendants’ Agents represented to these clients that they would deliver precious metals in return for their funds. But, the Complaint alleges, Defendants failed to deliver all of the precious metals as represented and instead only made a small delivery of coins.
Also according to the Complaint, during the Relevant Period, Defendants fraudulently obtained precious metals, including gold and silver, from some of the clients after Defendants and/or Defendants’ Agents represented to these clients that they would be paid in full for their precious metals. But, the Complaint alleges, Defendants kept the clients’ precious metals without paying the clients for the metals.
The Complaint further alleges that instead of delivering the precious metals and/or paying clients as represented, Defendants misappropriated their clients’ funds and metals for their own purposes including the payment of airline fees, purchases at Walmart, and transfers to accounts controlled by Gless and other third parties. In order to further perpetuate and/or conceal their scheme, the Complaint alleges, Defendants made false representations to clients regarding invalid delivery tracking numbers for their precious metals and/or funds and provided clients with unsigned checks and checks that could not be cashed due to stop payment orders and/or insufficient funds.
In its continuing litigation against Defendants, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act, as charged.
CFTC Division of Enforcement staff members responsible for this action are Janine Gargiulo, Alben Weinstein, Judith Slowly, Steven Ringer, Lenel Hickson, and Manal Sultan.
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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.
Also, before investing or trading with a firm, check the firm’s registration status and disciplinary history, if registered, with the National Futures Association. A company’s registration status can be found at: www.nfa.futures.org/basicnet.
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.