A Georgia resident and his Florida-based company have been charged of registration violations and misappropriating $890,500 of customer funds though illegal, off-exchange precious metals transactions.
The CFTC filed its civil enforcement action in a Florida court against The Alista Group, LLC, its owner Marvin Courson, and company employees Christopher Kertatos and Luis Pineda Palacios.
The agency alleges that beginning in July 2016 through at least January 2018, Alista and its operatives solicited the public to invest in commodity trading pools (including gold and silver), scamming tens of retail customers. The Complaint alleges that defendants made numerous false statements to induce customers to finance their trades into leveraged metals transactions.
The defendants, however, generally failed to trade precious metals for their customers, instead misappropriating customer funds for other purposes.
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The order also finds that the company accepted clients’ trades and funds and therefore acted as Eligible Contract Participants (ECPs), without registering as such with the CFTC. Further, the fraudulent scheme made Ponzi-style payments, paying returns to early depositors from their own money or money paid by other investors rather than from any actual profit earned from investments.
“In addition, Kertatos and Pineda individually defrauded at least some of Alista’s customers by using individual and/or corporate bank accounts under their personal control to accept Alista customer funds. They then misappropriated those funds to pay for personal and other expenses unrelated to leveraged precious metals transactions on behalf of Alista’s customers, the CFTC said.
Although the derivatives regulator has jurisdiction over only swaps and commodity futures contracts, the CFTC has historically also had enforcement authority on the spot or physical markets.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, off-exchange leveraged transactions such as those conducted by the defendants are illegal unless they result in actual delivery of metal within 28 days. However, the regulator found that precious metals were never delivered to the customers, the watchdog states.