AUBURN, ALABAMA – Federal regulators have accused Charles H. McAllister of Auburn, Alabama, of defrauding thousands of customers out of more than $16 million through his company, BullionDirect, Inc. (BDI). The Commodity Futures Trading Commission (CFTC) filed a civil enforcement action against McAllister in the U.S. District Court for the Western District of Texas on April 30, 2018.
The CFTC alleges that from August 15, 2011, through July 20, 2015, McAllister and BDI engaged in a fraudulent scheme targeting customers across the United States who purchased precious metals – gold, silver, palladium, and platinum – through BDI’s website. Customers were led to believe they could either take immediate delivery of the metals or store them with BDI.
However, the complaint states that McAllister and BDI failed to actually purchase all the metal promised to customers. Instead, they allegedly misappropriated millions of dollars, using the funds in a Ponzi scheme-like fashion to pay earlier investors, cover business expenses, and invest in other ventures. The company also allegedly issued false account statements and made misleading claims to customers.
The CFTC is seeking restitution for defrauded customers, disgorgement of ill-gotten gains, a trading ban, a civil monetary penalty, and a permanent injunction against further violations of commodities laws. McAllister has never been registered with the CFTC.
Adding to the legal pressure, the U.S. Attorney’s Office for the Western District of Texas filed separate criminal charges against McAllister on January 18, 2018, alleging two counts of wire fraud and one count of money laundering, dating back to 2009. McAllister was taken into custody on January 23, 2018, and conditionally released pending further legal proceedings.
The CFTC investigation was conducted with the cooperation of the U.S. Attorney’s Office, the Federal Bureau of Investigation, and the Internal Revenue Service, all based in Austin, Texas. CFTC staff members Jo Mettenburg, J. Alison Auxter, Stephen Turley, Joyce Brandt, Christopher Reed, and Charles Marvine were responsible for the matter.
The CFTC encourages customers to be vigilant against precious metals fraud and provides resources, including a dedicated fraud advisory, on its website. Suspicious activity can be reported to the CFTC via a toll-free hotline or online complaint form.
Source: CFTC.gov
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