FT. LAUDERDALE, FL – James A. Ward, along with his firm Kastle & Hawke, Inc. and Nathaniel R. Walker, were charged with fraud by the U.S. Commodity Futures Trading Commission (CFTC) on March 30, 2011. The charges stem from a scheme involving the fraudulent sale of precious metals – gold, silver, platinum, and palladium – on a leveraged basis to customers.
According to the CFTC’s complaint, filed in the U.S. District Court for the Southern District of Florida, Ward and his co-defendants falsely claimed to be selling physical metals with customer financing covering 77% of the purchase price, storing the metals in a secure depository. However, the CFTC alleges that Kastle & Hawke never actually acquired any metals for their customers.
The defendants are accused of charging customers interest on loans that never existed. Between August 2007 and November 2010, Ward and Walker allegedly misappropriated at least $319,000 in customer funds for personal expenses, including a vehicle, related car costs, rent, dining, and groceries. False account statements and transaction confirmations were allegedly fabricated and sent to customers to cover up the scheme.
On the same day the complaint was filed, Judge James I. Cohn issued a restraining order, freezing the defendants’ assets and preventing the destruction of relevant records. The CFTC is seeking preliminary and permanent injunctions, disgorgement of ill-gotten gains, civil monetary penalties, and bans on future trading and registration for all defendants. Kastle & Hawke was not registered with the CFTC at any time.
The CFTC acknowledged the assistance of the U.S. Attorney’s Office for the Southern District of Florida, the U.S. Postal Inspection Service, the Florida Office of Financial Regulation, and the Alabama Securities Commission in this matter.
Source: CFTC.gov
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