A California man and his company have been ordered to pay over $15.7 million for defrauding hundreds of customers in a precious metals scheme, the Commodity Futures Trading Commission (CFTC) announced Wednesday. Hannes Tulving Jr., of Newport Beach, and his firm, The Tulving Company, Inc., were found to have misappropriated customer funds and made false statements about account profitability.
The U.S. District Court for the Western District of North Carolina issued a Supplemental Consent Order on November 29, 2018, requiring Tulving and his company to jointly pay a civil monetary penalty of $15,761,432. This follows a January 5, 2016 Consent Order that imposed permanent trading and registration bans on both, preventing further violations of the Commodity Exchange Act and CFTC Regulations.
Tulving also received a 30-month prison sentence after pleading guilty to one count of wire fraud and aiding and abetting, in violation of 18 U.S.C. §1343 and 2. He and his company are jointly liable for $15,761,432.63 in restitution to the victims. The criminal judgments were entered by the court on May 18, 2016.
The CFTC initially filed an enforcement action on September 11, 2015, alleging that Tulving and his company fraudulently offered contracts for the sale of gold, silver, platinum, and palladium to customers nationwide. The investigation revealed that between August 2013 and January 2014, the defendants falsely portrayed The Tulving Company as a stable and reputable precious metals firm. At least 381 customers across the United States placed orders totaling over $150 million, but at least $15 million of those funds were misappropriated.
According to the court, the defendants failed to purchase precious metals for some customers, instead using the funds to fulfill other orders, pay company debts, and return money to earlier customers—a tactic used to keep the business afloat. The scheme involved misrepresentations about the purchase of precious metals and the fraudulent concealment of financial misdeeds.
Source: CFTC.gov
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