April 8, 2014
CFTC Orders California, Florida, and Nevada Companies and Their Owners to Pay More than $940,000 in Restitution to Defrauded Customers for Offering Illegal, Off-Exchange Precious Metals Transactions
California Resident Charles Victoria and his Companies PGS Capital Wealth Management and PGS Capital Credit, Inc., and Florida Resident Frank O. Davies and his Company Rockwell Asset Management, Inc. Charged in Separate CFTC Orders
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) filed and settled charges against three companies and their owners (collectively, Respondents) for engaging in illegal, off-exchange precious metals transactions, and requires that the Respondents jointly pay more than $940,000 in restitution to their defrauded precious metals customers.
In the first CFTC Order, the CFTC finds that, from January 2012 to February 2013, PGS Capital Wealth Management of Sherman Oaks, California, PGS Capital Credit, Inc. of Las Vegas, Nevada (together, PGS), and their owner, Charles Victoria, of Sun Valley, California, unlawfully solicited retail customers to buy and sell off-exchange precious metals, such as gold and silver, on a financed basis. The Order requires them jointly to pay $462,727.50 in restitution to their defrauded customers.
The second CFTC Order finds that, from July 2011 to February 2013, Rockwell Asset Management, Inc. (Rockwell) of Boca Raton, Florida, and its owner, Frank O. Davies of Delray Beach, Florida, unlawfully solicited retail customers to buy and sell off-exchange precious metals, such as gold and silver, on a financed basis. The Order requires them jointly to pay $477,210 in restitution to their defrauded customers. Davies was the President and CEO of Rockwell Gold Investments, Inc., a Florida corporation, and on April 12, 2012, Rockwell Gold Investments, Inc. changed its name to Rockwell Asset Management, Inc., according to the Order.
The respective Orders also impose permanent registration and trading bans against the Respondents and permanently prohibit them from further violating Section 4(a) of the Commodity Exchange Act, as charged (offering illegal, off-exchange transactions).
According to the Orders, the Respondents solicited customers through various means, including through their websites and over the telephone. Respondents also obtained a number of customer accounts from a defunct precious metals dealer.
As explained in the Orders, financed transactions in commodities with retail customers, like those offered by PGS and Rockwell, must be executed on, or subject to, the rules of an exchange approved by the CFTC. However, according to the Orders, PGS and Rockwell represented that customers could purchase a desired quantity of precious metals, such as gold, silver or platinum, by paying a deposit of as little as 20 percent to 25 percent of the purchase price, and that the customer would receive a loan for the rest of the purchase price. Customers would then pay PGS and Rockwell a finance charge on the loan, a service charge, and a commission of the precious metal’s value, the respective Orders find.
The Orders also state that, if customers agreed to the transaction, customers sent the deposit, finance charge, and commission to PGS and Rockwell, respectively, who then confirmed the transaction and ultimately transferred the funds to Hunter Wise Commodities, LLC (Hunter Wise), whose existence was not disclosed to the customers. In return, Hunter Wise subsequently remitted $462,727.50 back to the PGS companies and Victoria, and $477,210 back to Rockwell and Davies, as their respective portions of the customers’ commissions and fees for the retail financed precious metals transactions executed through Hunter Wise, the Orders state. The Orders also find that none of the companies bought, sold, loaned, stored, or transferred any physical metals for these transactions, and no precious metals were actually delivered to any customer.
The CFTC sued Hunter Wise in December 2012, charging it with engaging in illegal, off-exchange precious metals transactions, as well as fraud and other violations (see CFTC Press Release 6447-12). On February 19, 2014, a federal district court found that Hunter Wise had no actual metal to deliver to customers. The district court has frozen Hunter Wise’s assets and placed them under the control of a court appointed corporate monitor (see CFTC Press Release 6522-13). A bench trial against Hunter Wise was concluded on March 3, 2014, and the parties are awaiting the court’s final judgment.
The CFTC Division of Enforcement staff members responsible for the Rockwell and PGS cases are Susan B. Padove, Camille M. Arnold, Heather Johnson, Elizabeth M. Streit, Joseph Konizeski, Scott Williamson, and Rosemary Hollinger.
These cases are two more in a series of CFTC cases against precious metals telemarketing firms that unlawfully solicited precious metals orders from customers to be executed through Hunter Wise, including:
• London Metals LLC (CFTC Press Release 6680-13);
• Matthew Hall d/b/a Pacific Exchange Group (CFTC Press Release 6681-13);
• Lloyds Commodities LLC (CFTC Press Release 6850-14);
• Newbridge Metals, LLC (CFTC Press Release 6705-13);
• Joseph Glenn Commodities, LLC (CFTC Press Release 6542-13);
• Newbridge Alliance, Inc. & U.S. Capital Trust, LLC (CFTC Press Release 6903-14);
• Pan American Metals of Miami (CFTC Press Release 6653-13);
• Secured Precious Metals (CFTC Press Release 6503-13);
• Barclay Metals (CFTC Press Release 6503-13);
• Vertical Integration Group (CFTC Press Release 6824-14);
• Lions Wealth (CFTC Press Release 6729-13); and
• Yorkshire Group (CFTC Press Release 6713-13).
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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 25, 2014