Kitco, Debbie Carlson - The U.S. Commodity Futures Trading Commission on Tuesday filed an anti-fraud enforcement case against a California-based precious metals trading company, saying the firm cheated and defrauded customers and prospective customers of at least $4 million since 2006 by misrepresenting the likelihood of profit and concealing the near certainty of loss from investing, the agency said Thursday in a press release.
The CFTC charged 20/20 Trading and its employees Bharat "Brad" Adatia and Sharief "Sharice" D. McDowell with commodity options fraud and 20/20 Trading and Adatia with failing to supervise McDowell. It also charged 20/20 Precious Metals, Adatia, McDowell and Todd Krejci with fraud in connection with purported leveraged metals transactions.
Allegedly their clients lost nearly all of the $3.8 million they invested, with approximately 63% of those losses a result of 20/20 Trading's commissions. Nearly half of their customers used IRA funds to open their accounts, and those accounts sustained losses of more than $1.9 million in the same period.
There Adatia, along with McDowell and Krecji, the CFTC alleges, fraudulently solicited customers to buy physical metals on a leveraged basis through 20/20 Precious Metals. The trio is alleged to have told customers that this firm would purchase physical metals for them. The CFTC's complaint charged that 20/20 Precious Metals did not actually do any of these activities.
Since 20/20 Precious Metal's inception in late 2009, its customers deposited more than $1 million, and 20/20 Precious Metals took in commissions of more than $400,000—or more than one-third of the funds actually deposited by customers, according to the complaint.
The CFTC wants all contracts and agreements rescinded and for ill-gotten gains to be surrendered. The agency also seeks civil monetary penalties, trading and registration bans and permanent injunctions.
The CFTC charged 20/20 Trading and its employees Bharat "Brad" Adatia and Sharief "Sharice" D. McDowell with commodity options fraud and 20/20 Trading and Adatia with failing to supervise McDowell. It also charged 20/20 Precious Metals, Adatia, McDowell and Todd Krejci with fraud in connection with purported leveraged metals transactions.
Allegedly their clients lost nearly all of the $3.8 million they invested, with approximately 63% of those losses a result of 20/20 Trading's commissions. Nearly half of their customers used IRA funds to open their accounts, and those accounts sustained losses of more than $1.9 million in the same period.
There Adatia, along with McDowell and Krecji, the CFTC alleges, fraudulently solicited customers to buy physical metals on a leveraged basis through 20/20 Precious Metals. The trio is alleged to have told customers that this firm would purchase physical metals for them. The CFTC's complaint charged that 20/20 Precious Metals did not actually do any of these activities.
Since 20/20 Precious Metal's inception in late 2009, its customers deposited more than $1 million, and 20/20 Precious Metals took in commissions of more than $400,000—or more than one-third of the funds actually deposited by customers, according to the complaint.
The CFTC wants all contracts and agreements rescinded and for ill-gotten gains to be surrendered. The agency also seeks civil monetary penalties, trading and registration bans and permanent injunctions.
