Fort Lauderdale, FL – July 30, 2013 – The U.S. Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against John P. D’Onofrio, George E. Sarafianos, and Scott D. Piccininnio, all of Fort Lauderdale, Florida, alleging a fraudulent precious metals scheme. The complaint, filed on July 29, 2013, in the U.S. District Court for the Southern District of Florida, accuses the men and their company, AmeriFirst Management LLC (AML), of illegally marketing financed commodity transactions and misrepresenting their nature to investors.
According to the CFTC, AML operated as a precious metals wholesaler and clearing firm, utilizing a network of over 30 dealers. These dealers allegedly solicited customers to invest in financed precious metals, requiring a 20% deposit with the remaining 80% supposedly provided as a loan by the dealer. Customers were led to believe the full metal amount was purchased and allocated to them at a depository.
The CFTC alleges that AML created false documentation indicating these loans, sales, and allocations had occurred, when in reality, no loans were issued, and no metal was ever purchased or allocated for customers. Despite this, AML reportedly charged customers finance and storage fees as if the transactions were legitimate.
The scheme allegedly violated the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which requires such transactions to be executed on a regulated exchange – a rule that went into effect on July 16, 2011. The CFTC claims all transactions conducted by the defendants occurred after this date and were therefore illegal.
The CFTC is seeking a permanent injunction against future violations of commodities laws, permanent registration and trading bans for the defendants, restitution for defrauded customers, disgorgement of any ill-gotten gains, and civil monetary penalties. The case is being pursued by David Chu, Mary Beth Spear, Eugene Smith, Patricia Gomersall, Ava Gould, Scott Williamson, Rosemary Hollinger, and Richard Wagner of the CFTC’s Division of Enforcement.
The CFTC issued a consumer fraud advisory in January 2012 warning of similar precious metals schemes, highlighting instances where companies fail to purchase physical metals for customers and instead retain their funds. The advisory also cautioned against unlawful leveraged commodity transactions not executed on regulated exchanges.
Source: CFTC.gov
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