William J. Hionas, of Sunny Isles, Florida, and two Miami-based companies he owns, Pan American Metals of Miami, LLC and Pan American Metals of Miami Beach, Inc., have been charged with fraud by the U.S. Commodity Futures Trading Commission (CFTC). The charges stem from illegal, fraudulent off-exchange financed transactions in precious metals with retail customers.
The CFTC filed an order on July 29, 2013, requiring Hionas and the Pan American Companies to jointly pay approximately $3.2 million in restitution to defrauded customers and a $1.5 million civil monetary penalty. The order also permanently bans Hionas and the companies from trading and registering with the CFTC, and prohibits any further violations of federal commodities law.
According to the CFTC, from July 2011 to at least April 2012, the Pan American Companies fraudulently solicited over $4.7 million from retail customers across the United States and Canada for financed transactions involving gold, silver, platinum, and palladium. These transactions purported to allow customers to purchase physical commodities with only a partial payment.
The CFTC found that the Pan American Companies falsely claimed to sell and transfer ownership of physical metals, provide loans for purchases, and store the metals in independent depositories. In reality, no metals were sold or transferred, no loans were disbursed, and no metals were stored on behalf of customers. The companies also misrepresented their experience, trading results, and the risks associated with these transactions.
The investigation revealed that 180 out of 189 customers lost money, with approximately $1.68 million – roughly 35% of the $4.7 million collected – going towards commissions and fees for the Pan American Companies. Notably, the company provided a risk disclosure warning against using retirement funds for such investments, yet actively solicited at least 46 individuals over the age of 65, including four over 90 and one person in hospice care.
These financed off-exchange transactions with retail customers have been illegal since July 16, 2011, following amendments made by the Dodd-Frank Wall Street and Consumer Protection Act of 2010.
Source: CFTC.gov
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