Block letters spelling fraud, with magnifying glass
andreypopov/123RF

The U.S. Commodity Futures Trading Commission (CFTC) and several U.S. state regulators filed a civil enforcement action against a couple of precious metals dealers, alleging they perpetrated a US$185-million fraud targeting senior investors.

The CFTC and 30 members of the North American Securities Administrators Association (NASAA) charged companies doing business as Metals.com, Barrick Capital, Inc. and the two men behind them (Lucas Asher and Simon Batashvili), alleging they operated a fraud dealing in overpriced gold and silver bullion.

The complaint alleges they fraudulently solicited over US$185 million, including more than US$140 million in retirement savings, targeting senior investors with little experience in precious metals.

“The defendants deceived customers into purchasing precious metals bullion at grossly inflated prices that bore no relationship to the prevailing market price,” the regulators said. “The overcharges averaged from 100% to more than 300% over the prevailing market price. In the end, nearly every customer lost the vast majority of their funds deposited with the defendants.”

The U.S. District Court for the Northern District of Texas froze the defendants’ assets and appointed a receiver to take control of them.

The regulators are seeking disgorgement of ill-gotten gains, monetary penalties, restitution and permanent bans.

The case represents the largest joint filing for the CFTC and state regulators, and is the first generated under an information-sharing agreement between the CFTC and NASAA signed in 2018.

“This historic joint effort between the CFTC and 30 state regulators is an important step toward rooting out fraud across the country,” said CFTC chairman Heath Tarbert.

“This case highlights just how geographically broad commodities fraud can be in our rapidly evolving financial markets and how important it is for regulators at all levels of government to work together to pursue bad actors and protect market participants,” Tarbert said.

“Investors benefit when regulators build bridges toward our common goals of protecting investors and the integrity of the financial markets,” said Lisa Hopkins, president of NASAA and senior deputy securities commissioner of West Virginia. “We look forward to continue strengthening these bonds as we bring many more collaborative enforcement actions such as those announced today.”