Washington DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against S.J. Woods, Inc. (SJW) and its owners, Peter Blanco and Paul Proscia (together Respondents), involving their participation in illegal, off-exchange financed transactions in precious metals with retail customers. The Order requires Respondents jointly to pay restitution totaling $2,971,992.23 to their customers, imposes permanent trading bans against them, and prohibits them from violating the Commodity Exchange Act, as charged. SJW’s principal place of business is Holbrook, New York. Blanco is a resident of Brightwaters, New York, and Proscia is a resident of Sayville, New York.
The Illegal Transactions
The CFTC Order finds that from July 2011 through February 2013, Respondents solicited retail customers, generally by telephone, to buy and sell physical precious metals, such as gold and silver, in off-exchange, leveraged transactions. According to the Order, customers paid as little as 25 percent of the purchase price for the metals, and Respondents purportedly financed the remainder of the purchase price, while charging customers interest on the amount borrowed.
The CFTC Order states that financed, off-exchange transactions with retail customers have been illegal since July 16, 2011, when certain amendments of the Dodd-Frank Wall Street and Consumer Protection Act of 2010 became effective. As explained in the Order, financed transactions in commodities with retail customers like those engaged in by Respondents must be executed on, or subject to, the rules of a CFTC-approved board of trade. Since Respondents’ transactions were done off-exchange, with customers who were not eligible contract participants, they were illegal, the Order finds.
The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.
CFTC Division of Enforcement staff members responsible for this matter are Boaz Green, Kara Mucha, James H. Holl, III, and Rick Glaser.
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CFTC’s Precious Metals Customer Fraud Advisory
The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Precious Metals Fraud Advisory, which alerts customers to precious metals fraud and lists simple ways to spot precious metals scams.
Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.