BULLETIN: OH, FLORIDA! Receiver In Alleged Commodities Online LLC Ponzi Caper Says Scheme Operated Through Multiple Companies; James Clark Howard III, Louis N. Gallo III, George Saliba And Martin Vegas Sued For Combined Millions Of Dollars

James Clark Howard III

BULLETIN: David S. Mandel, the receiver in the alleged Commodities Online LLC Ponzi and fraud scheme, has sued four Florida residents and is demanding more than $9 million.

Named defendants in U.S. District Court in the Southern District of Florida are James C. Howard III of Parkland; Louis N. Gallo III of Parkland; Martin Vegas of North Bay Village; and George Saliba, also known as George Saliva, of Parkland.

“From January 26, 2010 until April 1, 2011, Howard and Gallo operated and controlled a Ponzi Scheme designed to defraud investors that allowed Howard, Gallo and their confederates to steal and misappropriate investor funds,” Mandel alleged in the lawsuit.

“Howard and Gallo, in running the Ponzi Scheme, regularly made transfers of Commodities Online funds from one related entity to another with no business purpose other than to make the Ponzi Scheme more difficult to detect and assist in conveying the appearance of a profitable business to investors,” Mandel alleged.

Howard controlled Florida firms known as Sutton Capital LLC and J&W Trading LLC, Mandel alleged. Meanwhile, Gallo controlled Florida firms known as Minjo Corp. and American Financial Solutions LLC, according to the lawsuit.

Four “related entities involved in the inter-company transfers utilized in the Ponzi scheme” were identified by Mandel as:

  • SSH2 Acquisitions Inc, controlled by nondefendant Michael Palermo.
  • Rapallo Investment Group LLC, controlled by non-defendant Patricia Saa.
  • Minerales Mexiron LLC, a Florida firm controlled by defendant George Saliba.
  • Minerales Mexico Iron SACV Inc., another Florida company controlled by Saliba.

Former AdSurfDaily member and Surf’s Up moderator Terralynn Hoy is listed in Nevada records as a “director” of SSH2. She has not been accused of wrongdoing. SSH2 sued Howard and others in 2010, in a case that alleged it was a victim of a Ponzi scheme.

On two dates in February 2010, Mandel alleged, Howard “wrongfully converted” more than $1.74 million my moving it from Commodities Online to Sutton Capital and JW Trading.

In March 2010 and April 2010, according to Mandel, Howard caused Commodities Online to “lend” more than $320,000 to yet another entity: Pisces Trading Inc.

“Howard thereafter directed Pisces Trading, Inc. to repay these loaned Commodities Online funds to his wholly owned and controlled entity, J&W Trading, thereby converting the Commodities Online funds to his own benefit and use,” Mandel alleged.

From March 2010 to March 2011, “Gallo converted $413,143 of Commodities Online funds to his own use and benefit by causing net funds to be transferred to his wholly owned and controlled entity, American Financial,” Mandel alleged.

Between May 2010 and March 2011, according to the lawsuit, “Gallo converted $1,767,870 of Commodities Online funds to his own use and benefit by causing net funds in that amount transferred to his wholly owned and controlled entity, Minjo.

In March 2011, according to the lawsuit, Gallo also “converted $360,000 of Commodities Online funds to his own use and benefit by causing those funds to be wired to Minerales Yacimientos y Reservas in Mexico, which the Receiver is advised is a fictitious company.”

Still moving money in March 2011, Gallo “converted $226,200 of Commodities Online funds to his own use and benefit by causing those funds to be wired to Terracerias y Pavimentos in Mexico” — plus the following sums and destinations:

  • $40,044 to Jorge Ortega Balderas in Mexico.
  • $700,000 to Diego Diaz Ceballos Torre in Mexico.
  • $625,000 to Grupo Minero Leecota in Mexico.
  • $150,000 to Franscisco Javier Ortiz Gonzalez in Mexico.

In a separate filing, Mandel said that the process of determining whether Commodities Online had any iron holdings in Mexico had proven difficult, but that investigators now believe that there is “no recoverable iron ore in Mexico.”

What happened to the money in Mexico is unclear. In April 2011, the SEC alleged that about $3.8 million funds linked to Commodities Online flowed to Mexico and the Netherlands as the agency was issuing subpoenas in the emerging fraud case in March 2011.

The transfers were “extremely suspicious,” the agency said in April.

“Howard, Gallo, and Vegas breached their fiduciary duty to Commodities Online and its investors by personally stealing and misappropriating Commodities Online funds, allowing coconspirators to steal and misappropriate those funds, and dissipating almost $3 million through imprudent transfers of Commodities Online funds to Mexico without adequate controls and documentation to insure the company’s assets and funds,” Mandel alleged in the lawsuit.

Money continued to flow to Mexico even after Commodities Online retained attorney James Sallah in March 2011 and Sallah “counseled management of Commodities Online to discontinue all solicitations of new investor money, to freeze all existing company assets and otherwise cooperate with the Securities and Exchange Commission,” according to Mandel’s lawsuit.

“Contrary to Mr. Sallah’s advice, defendants Howard, Gallo and Vegas, in disregard of their fiduciary duties to Commodities Online and its investors, continued to authorize wire transfers of Commodities Online funds to various accounts in Mexico where the funds became untraceable and defendants could re-divert the proceeds of the wire transfers to their personal use and benefit,” according to the lawsuit

Vegas, according to Mandel, “converted $631,264 of Commodities Online funds to his personal use and benefit by causing those net funds to be paid out to him for no consideration.”

Saliba, according to the lawsuit, “controlled” Minerales and Mexiron and “converted $2,089,368 of Commodities Online funds to his own use and benefit” between May 2010 and November 2010.

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One Response to “BULLETIN: OH, FLORIDA! Receiver In Alleged Commodities Online LLC Ponzi Caper Says Scheme Operated Through Multiple Companies; James Clark Howard III, Louis N. Gallo III, George Saliba And Martin Vegas Sued For Combined Millions Of Dollars”

  1. Please open and read carefully the following link.

    http://www.ripoffreport.com/r/Javier-OrtizCasabella/Select-StateProvince/Javier-OrtizCasabella-Francisco-Ortiz-Gonzales-Javier-Ortiz-of-Casabella-has-blatantly-l-1079289

    It appears Gonzalez & his many AKA’s knows where the monies are located.

      (Quote)

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