August 7, 2014
Federal Court in Florida Imposes over $35 Million in Sanctions against Florida Company AmeriFirst Management LLC and its Principals, John P. D’Onofrio, George E. Sarafianos, and Scott D. Piccininni, for Fraudulent Precious Metals Scheme
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court Supplemental Consent Order requiring Defendants John P. D’Onofrio of Fort Lauderdale, Florida, George E. Sarafianos of Lighthouse Point, Florida, Scott D. Piccininni of Fort Lauderdale, Florida, and their Florida company AmeriFirst Management LLC jointly and severally to pay more than $25 million in restitution and a $10 million civil monetary penalty in connection with operating a fraudulent precious metals scheme (see CFTC Press Release and Complaint 6655-13, July 30, 2013).
The Supplemental Order was entered on July 24, 2014, by Judge William P. Dimitrouleas of the U.S. District Court for the Southern District of Florida. Previously, on September 18, 2013, Judge Dimitrouleas entered a Consent Order of permanent injunction against the Defendants, finding them liable for illegal, off-exchange precious metals transactions and fraud, as charged in the CFTC’s Complaint. The Consent Order also imposes permanent trading and registration bans against the Defendants and requires them to pay restitution and a civil monetary penalty, as provided in a Supplemental Order.
According to the Consent Order, Defendants operated an illegal, off-exchange precious metals scheme and made numerous fraudulent misrepresentations, false reports, and statements in connection with the scheme.
Furthermore, the Consent Order, which incorporates the Complaint, finds that AmeriFirst was a purported precious metals clearing and financing firm for precious metals dealers and that AmeriFirst used a network of dealers to solicit retail customers to invest in financed, precious metals transactions. Defendants created documents related to such transactions, such as trade confirmations and account statements, with misrepresentations designed to mislead customers, including (1) the customer bought, and the dealer sold, precious metals, (2) the dealer held the precious metals on behalf of the customer, and (3) the customer received, and the dealer made, a loan so that the customer could purchase precious metal on finance. These representations were false, the Consent Order finds, as the dealer did not sell metal to the customer, did not store metal for the customer, and did not provide a loan to the customer. Likewise, AmeriFirst did not sell metal to the customer; did not store metal for the customer; and did not provide a loan to the customer.
The Defendants’ scheme lasted from at least November 2011 through February 2013, when Defendants voluntarily closed the business in the wake of another Florida federal court’s entry of a preliminary injunction against Hunter Wise, another metals dealer that had been sued by the CFTC (see CFTC Press Release 6522-13, February 27, 2013). In May 2014, the CFTC subsequently prevailed in a jury trial against Hunter Wise and obtained a judgment for more than $108 million in sanctions (see Press Release 6935-14, May 22, 2014).
The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
CFTC Division of Enforcement staff members responsible for this case are David Chu, Mary Elizabeth Spear, Ava Gould, Scott Williamson, Rosemary Hollinger, and Richard Wagner.
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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: August 7, 2014