Aviv Hen, Precious Metals Fraud, Florida 2019

A U.S. District Court in Florida has entered a default judgment against Aviv Michael Hen of New York and Omega Knight 2, LLC, along with a consent order against Erez Hen of Florida, for perpetrating a fraudulent precious metals scheme and failing to register with the Commodity Futures Trading Commission (CFTC).

The court ordered Omega Knight and Aviv Hen to jointly pay $11,442,771 in civil penalties and $3,814,257 in disgorgement. Both entities are also subject to permanent bans from registering with the CFTC and engaging in trading. Erez Hen was penalized $75,000 and ordered to disgorge $275,000, and faces a five-year ban on registration and trading, along with additional compliance undertakings related to his other businesses.

The case, originally filed by the CFTC on June 13, 2018, alleged that the defendants engaged in illegal, off-exchange precious metals transactions. According to the CFTC’s motion for default judgment, from March 2013 through June 2017, Omega Knight, led by Aviv Hen, defrauded customers across the United States in connection with precious metals transactions, receiving at least $5.5 million from 90 or more victims.

Investigators found that Omega Knight did not use all customer funds to purchase precious metals as promised. Instead, funds were misappropriated for personal expenses, distributed as purported profits to other customers (functioning as a Ponzi scheme element), and used to fund the company’s operations. False trade confirmations, account statements, and other communications were used to conceal the fraudulent activity.

The court determined that Omega Knight’s leveraged precious metals transactions were illegal, as they were conducted off-exchange and did not result in the full delivery of purchased metal to customers. Omega Knight also operated as an unregistered futures commission merchant by accepting customer orders and funds.

The CFTC advises that victims may not fully recover their losses, as the defendants may lack sufficient assets. The agency pledged to continue pursuing legal action against fraudulent actors and protecting customers.

Source: CFTC.gov

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