May 30, 2017
Federal Court in Florida Orders K.B. Concepts Group, LLC and Kelvin Burgos to Pay More than $486,300 in Disgorgement and a Civil Monetary Penalty for Engaging in Illegal, Off-Exchange Precious Metals Transactions
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced that Judge Cecilia M. Altonaga of the U.S. District Court for the Southern District of Florida entered a final Order of Default Judgment (Order) against Defendants Kelvin Burgos and his company K.B. Concepts Group, LLC d/b/a Apex Asset Advisors, LLC (K.B. Concepts) for engaging in illegal, off-exchange precious metals transactions. Burgos, a resident of Florida, was the owner and principal of K.B. Concepts, which operated its metals business under the name Apex Asset Advisors, LLC. The Court’s Order stems from a CFTC civil enforcement action filed against the Defendants on September 20, 2016 (see CFTC Complaint and Press Release 7448-16).
The Court’s Order requires Burgos and K.B. Concepts to pay, jointly and severally, $121,591.10 in disgorgement and a $364,773.30 civil monetary penalty. The Order also imposes permanent trading, solicitation, and registration bans against Burgos and K.B. Concepts, and prohibits them from engaging in illegal, off-exchange precious metals transactions, as charged.
The CFTC’s Complaint alleged that (1) Burgos and K.B. Concepts engaged in illegal, off-exchange precious metals transactions on a leveraged, margined or financed basis, (2) K.B. Concepts acted as a Futures Commission Merchant (FCM) without being registered as such, and (3) Burgos controlled K.B. Concepts and failed to act in good faith or knowingly induced the violations by K.B. Concepts, and was therefore liable for K.B. Concepts’ violations of the Commodity Exchange Act.
In the Order, the Court found that from at least September 2012 through at least February 2013, K.B. Concepts, by and through its employees, solicited retail customers to engage in financed precious metals transactions, which constitute off-exchange retail commodity transactions, and acted as an FCM without being so registered. The Court also found that Burgos acted as a controlling person of K.B. Concepts.
The Court further found that precious metals were never delivered to any customers with respect to the leveraged metals transactions made on behalf of K.B. Concepts’ customers. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, leveraged, margined or financed transactions such as those conducted by K.B. Concepts, are illegal off-exchange transactions unless they result in actual delivery within 28 days.
The CFTC cautions that Orders requiring repayment of funds to victims may not result in the recovery of any 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 action are Michael Loconte, Erica Bodin, James A. Garcia, Michael Solinsky, and Rick Glaser.
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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: May 30, 2017