STATEN ISLAND, NY – Scott Platto, owner of The Yorkshire Group Inc., faces charges of precious metals fraud following a civil enforcement action filed by the U.S. Commodity Futures Trading Commission (CFTC) on September 25, 2013, in the U.S. District Court for the Eastern District of New York. The CFTC alleges Platto and his company engaged in illegal, off-exchange financed transactions involving precious metals with retail customers.
According to the CFTC complaint, between September 2011 and August 2012, Platto, operating through The Yorkshire Group, solicited customers via telephone to purchase leveraged precious metals – specifically silver and palladium – in transactions conducted outside of regulated exchanges. Customers were led to believe they were borrowing funds to finance these purchases, paying a portion upfront and financing the remainder through Yorkshire, with associated interest charges.
However, the CFTC alleges that customers never received the physical precious metals they purportedly bought. Furthermore, the complaint states that neither Platto nor Yorkshire ever purchased, sold, loaned, stored, or transferred any physical metals related to these transactions. This scheme violates the Commodity Exchange Act (CEA) and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which prohibits fraud in retail commodity transactions and requires such transactions to occur on or be subject to the rules of a registered exchange.
The CFTC’s investigation revealed that Yorkshire and Platto acted as a dealer for Hunter Wise Commodities, LLC, a firm previously charged by the CFTC with fraud in December 2012. A preliminary injunction was granted against Hunter Wise in February 2013, freezing its assets and appointing a corporate monitor.
The CFTC is seeking restitution for defrauded customers, the return of any ill-gotten gains, civil monetary penalties, a ban on future trading and registration, and permanent injunctions to prevent further violations of the CEA. The case is being pursued by CFTC staff including Karin N. Roth, Philip Rix, David W. MacGregor, Lenel Hickson, Jr., Stephen J. Obie, and Vincent A. McGonagle.
The CFTC issued a consumer advisory in January 2012 warning of increasing precious metals fraud schemes, specifically noting instances where companies fail to purchase physical metals for customers, instead retaining their funds.
Source: CFTC.gov
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