Federal Court Orders Two Florida Men and Their Companies to Pay More than $3.3 Million in Restitution and Penalties to Settle Charges Stemming from Role in Illegal, Off-Exchange Precious Metals Transactions
The CFTC Sued John King and Newbridge Alliance, Inc., and David A. Moore and United States Capital Trust, LLC, in Scheme Orchestrated by Hunter Wise Commodities, LLC
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that on February 26, 2014, Judge Donald M. Middlebrooks of the U.S. District Court for the Southern District of Florida in Miami entered permanent injunction Orders against Florida residents John King and his company Newbridge Alliance, Inc. (Newbridge), and David A. Moore and his company United States Capital Trust, LLC (USCT), who the CFTC sued for their role in a multi-million dollar precious metals scheme orchestrated by Hunter Wise Commodities, LLC and related companies (Hunter Wise) (see related press release 6447-12 and Complaint.)
The Orders require King and Newbridge jointly to pay $750,515 in restitution to their customers and a $1.5 million civil monetary penalty, and Moore and USCT jointly to pay $380,664 in restitution and a $750,000 civil monetary penalty, respectively. The Orders also impose permanent solicitation, trading and registration bans against King, Newbridge, Moore, and USCT, and prohibit them from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.
The Orders specify that the restitution payments are to be made to Melanie Damian, a court-appointed Special Monitor and Corporate Manager, in the name “Hunter Wise Settlement/Restitution Fund.” The Orders also impose permanent solicitation, trading and registration bans against King, Newbridge, Moore, and USCT, and prohibit them from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.
The Orders find that from at least July 16, 2011 until February 25, 2013, Newbridge and USCT operated under the ownership and control of King and Moore respectively. Both Newbridge and USCT solicited retail customers to buy physical metals, such as gold, silver, platinum, palladium and copper, and then executed those transactions through Lloyds Commodities and Hunter Wise (see related press releases 6850-14 and 6522-13 and Orders).
According to the Orders, both Newbridge and USCT represented that customers could purchase physical metals for a small down payment (usually 25 percent) and finance the remainder of the purchase with a loan. Newbridge and USCT represented that physical metals were stored in “independent banks” or “federally regulated depositories.” In fact, these representations were false because neither Newbridge nor USCT possessed or had title to any physical metals. Additionally, according to the Orders, both Newbridge and USCT failed to disclose that the overwhelming majority of their customers lost money in connection with these transactions. As a result, Newbridge received over $750,000 in commissions and fees from retail customers, and USCT received over $380,000 in commissions and fees from retail customers, and the Orders require payment of those funds as restitution to customers.
Further, the Orders find that the transactions offered and entered into by Newbridge and USCT were not executed on a board of trade and were therefore illegal.
The CFTC’s litigation continues against Hunter Wise and its principals. The court issued an Order on February 19, 2014, finding that Hunter Wise had no actual metal to deliver to customers, and the Court held a trial on all remaining issues between February 26 and March 4, 2014. No ruling has been entered as of the date of this press release.
The CFTC appreciates the assistance of the Florida Office of Financial Regulation.
The CFTC Division of Enforcement staff members responsible for this case are Carlin Metzger, Heather Johnson, Brigitte Weyls, Jeff Le Riche, Peter Riggs, Thaddeus Glotfelty, Joseph Konizeski, Scott Williamson, Rosemary Hollinger, and Richard B. Wagner.
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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.