The US Commodity Futures Trading Commission (CFTC) has charged precious metals firm American Precious Metals, LLC (APM) of Deerfield Beach, Florida, and its founders and principals, Sammy J Goldman of Delray Beach, Florida, and Harry Robert Tanner, Jr.of Lake Worth, Florida, with fraud in connection with offering, purchasing, selling or delivering gold, silver, platinum and palladium to US retail customers on a leveraged basis.
The CFTC’s lawsuit also alleges that the defendants violated the Commodity Exchange Act’s prohibition against selling palladium to customers on a leveraged basis. APM has never been registered with the CFTC.
The CFTC complaint was filed under seal on May 10, 2011, in the US District Court for the Southern District of Florida. Specifically, the complaint alleges that the defendants “engaged in a massive fraudulent scheme” and, from at least July 1, 2007, APM, through its agents and employees, acting at the direction of Tanner and Goldman, purportedly purchased more than USD23 million of precious metals for customers in their “leverage program.” The program allegedly requires customers to make a down payment of as little as USD5,000 to APM for certain quantities of physical precious metals. APM also allegedly claims to finance up to 80 percent of customers’ purchases and store customers’ physical metals in a secure depository.
According to the complaint, these statements are false. In reality, APM allegedly does not purchase or sell any precious metals for customers, does not arrange loans for customers to purchase physical metals and does not arrange for storage in any depository. Instead, after charging customers commissions of approximately 40 percent of their initial investment, APM allegedly pools the remaining funds and sends a portion of that money to a third party. The third party does not purchase any physical precious metals, provide loans or arrange for metals storage on behalf of any APM customer, according to the complaint.
The complaint also charges APM with making misrepresentations and omissions of material fact related to the profitability of and risks associated with the leverage program.
In its continuing litigation, the CFTC seeks preliminary and permanent injunction orders against the defendants, disgorgement of ill-gotten gains, civil monetary penalties and trading and registration bans.
This represents the third case in the past seven weeks filed by the CFTC against companies and company owners who purport to offer retail investors the opportunity to purchase physical precious metals on a leveraged basis. (See CFTC Press Release 6014-11, March 30, 2011, Kastle & Hawke, Inc., et al. and CFTC Press Release 6029-11, April 28, 2011, 20/20 Trading Company, Inc., et al. Also, see the CFTC’s Precious Metals Fraud Advisory.)
