BREAKING NEWS: FLORIDA — AGAIN: CFTC Says Sammy J. Goldman, Harry Robert Tanner Jr. And Their Firm Ran $23 Million ‘Precious Metals’ Scam; Case Is Third Such Action In 7 Weeks

BULLETIN: In the third such action in the United States since March 30, the CFTC has gone to federal court in Florida to block what it described as a “precious metals” scam that incorporated fictitious trading.

Charged with fraud in the case were Sammy J. Goldman of Delray Beach, Fla., and Harry Robert Tanner Jr. of Lake Worth, Fla. Their Florida-based firm — American Precious Metals LLC (APM) — also was charged.

Tanner was the subject of two previous actions by the National Futures Association for misconduct and was permanently barred by NFA in 2006, the CFTC said.

Goldman, also has been the subject of regulatory actions, according to records.

The CFTC case was filed under seal May 10. Investigators today described APM’s operations it as a “massive fraudulent scheme” that purportedly gathered more than $23 million since July 2007 as part of a “boiler room”telemarketing scam.

APM’s website has been seized by the court-appointed receiver, David R. Chase. U.S. District Judge William Zloch is presiding over the case and issued a Temporary restraining Order after the CFTC filed an emergency petition.

The CFTC’s allegations read like an impossible work of fiction.

APM purported to offer a “Leveraged Precious Metals Investment Program” through which the firm sold metal to customers and arranged financing through a firm known as Global Asset Management (GAM), which purportedly received “interest,” the CFTC said.

The metal purportedly was stored in “independent depository,” the CFTC said.

Along the troubles with the claims was APM did “not purchase or sell physical precious metals on behalf of its leverage program customers,” the agency charged.

“Further, APM does not arrange for or provide loans for the purchase of physical precious metals by its customers,” the agency continued. “APM customers have no physical precious metals stored in any independent depository, and since no loan has been disbursed, no interest accrues on any loan.”

Here is what actually happens through the boiler room, the CFTC charged.

“[A]fter charging commissions of approximately 40% of customers’ funds, APM sends customer funds to GAM, which also does not purchase or sell physical precious metals on behalf of APM leverage program customers.

“Instead,” the agency alleged, “GAM pools the funds received from APM with funds received from similar boiler room telemarketing firms, takes a portion of the funds as its own profit, and deposits the rest in margin accounts held in GAM’s name with various United Kingdom-based firms where GAM trades over-the-counter (‘OTC’) precious metals derivatives. APM discloses none of GAM’s actual activity to its customers.”

Customers further get ripped off through “enormous commissions” APM takes off the top, along with a “3-5% mark-up on the price of the physical precious metals purportedly sold to the customer, account opening fees and the monthly ‘interest’ GAM charges on the financing purportedly provided to the customers,” the CFTC charged.

How corrupt was the scheme?

“[A]s of January 7, 2010, APM’s approximately 396 then-existing leverage program customers purportedly owned gold, silver, platinum, and palladium with a total value of $23,834, 108,” the agency said.

However, “neither APM, GAM nor any secure depository held any physical precious metals for those customers,” the CFTC charged.

“When a customer makes an order to purchase precious metal, APM simply records the transaction on paper and deducts an ‘administrative fee’ equal to 15% of the total value of the metal being purchased, which is equivalent to approximately 40% of the customer’s total cash outlay,” the CFTC charged. “APM divides the administrative fee among the firm’s management personnel and the employees responsible for soliciting the customer. APM pools the remaining customer funds in APM’s own bank accounts with funds received from other customers and sends a portion of its pooled customer funds to GAM on a weekly basis.”

Separately, the Federal Trade Commission has charged Tanner and his wife, Andrea Tanner, with telemarketing fraud.

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One Response to “BREAKING NEWS: FLORIDA — AGAIN: CFTC Says Sammy J. Goldman, Harry Robert Tanner Jr. And Their Firm Ran $23 Million ‘Precious Metals’ Scam; Case Is Third Such Action In 7 Weeks”

  1. […] It turns out that the cases announced this week against American Precious Metals LLC (APM)  by the CFTC and FTC were part of a geographically […]