Precious Metals and Commodity Options Fraud and Mismanagement Litigation and Arbitration Attorney, Russell L. Forkey, Esq.

March, 2012:

CFTC Charges Florida Resident Abraham Gutterman and His Companies, Alliance Capital Metals LLC and AR Goldman Wealth Management, LLC with Commodity Gold and Oil Options Fraud and Misappropriation

Defendants allegedly stole more than $480,000 from customers

Federal court enters emergency order freezing defendants’ assets and protecting books and records

The U.S. Commodity Futures Trading Commission (CFTC) recently announced the filing of a federal court action against Abraham Gutterman, Alliance Capital Metals LLC (ACM), and AR Goldman Wealth Management, LLC (ARGWM) (doing business as U.S. Principal Financial Services), all of South Florida, charging them with commodity options fraud and misappropriation.

On March 15, 2012, the same day the complaint was filed, Judge Cecilia M. Altonaga of the U.S. District Court for the Southern District of Florida, entered an emergency order freezing the defendants’ assets. The order also prohibits the defendants from destroying or altering books and records. The judge set a hearing date for April 11, 2012.

The CFTC complaint alleges that from at least November 2009 to the present, the defendants fraudulently solicited and accepted at least $483,725 from at least 15 customers to trade gold and oil commodity options contracts. Defendants allegedly never disclosed to customers that their funds would be used for any purposes other than trading gold and oil options. Instead, the defendants misappropriated all of the customers’ funds, and spent the money on various personal expenses, including restaurants, gambling, entertainment, and retail purchases, according to the complaint.

The defendants allegedly lured customers using cold-calls, a website, and at least one face-to-face meeting in a bar in Hialeah, Fla. ACM and ARGWM allegedly used high pressure sales tactics, calling customers repeatedly and promising large profits to convince them to invest. Defendants did not provide customers with any documentation of their investments or account activity statements, and when one customer asked how his investment was doing, ACM and ARGWM advised him to watch the price of gold on business news television stations, according to the complaint.

Specifically, ACM and ARGWM, by and through their employees and agents, allegedly made the following misrepresentations and omissions of material fact to persuade customers to invest:

  • customers would “make a killing” if they invested in commodity options through ACM and ARGWM;
  • customers would make approximately $200,000 to $300,000 in less than three months with a $20,000 investment in gold options;
  • the majority of ACM’s and ARGWM’s prior customers bought gold options in 20 contract lots and those customers’ investments had increased significantly;
  • customers needed to “get in now” because the price of gold was about to rise from prices of approximately $1,700 to $1,800 per ounce to $2,500 per ounce;
  • for every dollar the price per ounce of gold goes up, the customer’s options contracts would increase in value by $500 to $2,000; and
  • gold options are a good investment for retirement savings and, after investing with ACM and ARGWM, the customer would have more than enough money to retire within just a few months.

Within a few months of investing, ACM and ARGWM allegedly advised customers that all their funds had been lost trading commodity options and the only way to recoup their investments was to invest additional funds. When customers requested that ACM and ARGWM sell their purported commodity options and return the balance of their funds, ACM and ARGWM allegedly refused and instead pressured customers not to sell their investments. No money was ever returned to the customers, according to the complaint.

In its continuing litigation, the CFTC seeks civil monetary penalties, restitution, rescission, disgorgement of ill-gotten gains, trading and registration bans, and preliminary and permanent injunctions against further violations of the federal commodities laws, as charged.