OANDA to Exit Malta in March, to Run European Business from Poland

CFTC Charges Owner of BullionDirect with $16m Precious Metals Fraud

by Aziz Abdel-Qader
  • Customers were lulled into the false belief that precious metals ‎had been ‎purchased and were stored in the firm's vault.
CFTC Charges Owner of BullionDirect with $16m Precious Metals Fraud
Bloomberg
Join our Telegram channel

The US Commodity Futures Trading Commission (CFTC) today charged a ‎Texas-based commodity pool operator and his firm in a case involving the ‎operation of a fraudulent precious metals vault, according to a CFTC ‎statement.‎

Charles H. McAllister and his company BullionDirect, Inc. (BDI) were ‎accused of taking money from customers who thought they were getting gold, ‎silver, palladium, and platinum in return. ‎Customers were lulled into the false belief that precious metals ‎had been purchased and were stored in Bullion Direct’s vault, but $16 million worth of their bullions vanished over two years.

The complaint also charges McAllister with making several misleading ‎representations to actual and prospective investors. As also alleged, ‎the defendant assured the victims that they were pooling ‎their funds ‎for buying standard-sized bars of gold and ‎silver, while he was actually running a Ponzi Scheme . ‎

An estimated 1,400 ounces of platinum and palladium ‎were also lost, according to the complaint that accuses the ‎defendants of fraud, misappropriation, registration ‎violations, and issuing false statements.‎

The CFTC added that McAllister was indicted in January 2018 on federal wire fraud ‎and Money Laundering charges in connection with BDI‎’s scheme to defraud ‎customers. ‎

The U.S. derivatives regulator alleged in its complaint, filed ‎on January 23, ‎that from 2009 to 2015, the money sent to BullionDirect was not used to ‎purchase precious metals on its clients' behalf. Prosecutors said that instead ‎of buying the precious metals ordered by his customers, McAllister ‎spent the money on company expenses, investment activities ‎and for his own personal use and benefit. ‎

As a result of the actions and misappropriation, the ‎commission seeks full restitution to ‎defrauded ‎participants, disgorgement of any ill-gotten gains, a civil ‎monetary ‎penalty, permanent registration and trading ‎bans, and a permanent injunction ‎against violations of ‎federal commodities laws, as charged.‎

The US Commodity Futures Trading Commission (CFTC) today charged a ‎Texas-based commodity pool operator and his firm in a case involving the ‎operation of a fraudulent precious metals vault, according to a CFTC ‎statement.‎

Charles H. McAllister and his company BullionDirect, Inc. (BDI) were ‎accused of taking money from customers who thought they were getting gold, ‎silver, palladium, and platinum in return. ‎Customers were lulled into the false belief that precious metals ‎had been purchased and were stored in Bullion Direct’s vault, but $16 million worth of their bullions vanished over two years.

The complaint also charges McAllister with making several misleading ‎representations to actual and prospective investors. As also alleged, ‎the defendant assured the victims that they were pooling ‎their funds ‎for buying standard-sized bars of gold and ‎silver, while he was actually running a Ponzi Scheme . ‎

An estimated 1,400 ounces of platinum and palladium ‎were also lost, according to the complaint that accuses the ‎defendants of fraud, misappropriation, registration ‎violations, and issuing false statements.‎

The CFTC added that McAllister was indicted in January 2018 on federal wire fraud ‎and Money Laundering charges in connection with BDI‎’s scheme to defraud ‎customers. ‎

The U.S. derivatives regulator alleged in its complaint, filed ‎on January 23, ‎that from 2009 to 2015, the money sent to BullionDirect was not used to ‎purchase precious metals on its clients' behalf. Prosecutors said that instead ‎of buying the precious metals ordered by his customers, McAllister ‎spent the money on company expenses, investment activities ‎and for his own personal use and benefit. ‎

As a result of the actions and misappropriation, the ‎commission seeks full restitution to ‎defrauded ‎participants, disgorgement of any ill-gotten gains, a civil ‎monetary ‎penalty, permanent registration and trading ‎bans, and a permanent injunction ‎against violations of ‎federal commodities laws, as charged.‎

!"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|} !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}