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The U.S. Commodity Futures Trading Commission (CFTC) today announced that on May 31, 2016, it filed a civil enforcement action in the U.S. District Court for the Southern District of Florida charging defendants Jeffrey Slemmer of Acton, Massachusetts, Christian Dorrian of Boynton Beach, Florida, and Adam Roth of Boca Raton, Florida, and their respective Florida companies Slemmer Enterprises LLC, Dorrian Enterprises, LLC, and Roth Investment Group LLC with fraud, engaging in illegal, off-exchange transactions in precious metals, and acting as futures commission merchants without registering as such with the CFTC, as required.
As alleged in the Complaint, the defendants executed their unlawful scheme using the business names Berkley Hard Asset Group, Berkley Hard Assets, and Berkley Rare Diamonds.
The CFTC’s Complaint charges that, since at least June 2012, the defendants fraudulently solicited and received more than $2.7 million from at least 60 customers for the purchase of precious metals on a leveraged, margined, or financed basis, as well as on a fully-paid basis.
According to the Complaint, the defendants represented to customers that precious metals would be purchased and stored at a depository on the customers’ behalf. The defendants, however, generally failed to purchase and store sufficient amounts of precious metals for their customers, instead misappropriating customer funds for other purposes.
The CFTC’s Complaint alleges that the defendants employ a deceptive “bait-and-switch” scheme to further defraud their customers. According to the Complaint, after soliciting customers to purchase precious metals, the defendants urge customers to sell their purported precious metal holdings and purchase diamonds instead. The defendants provide customers with diamonds along with purchase orders and appraisal documents that fraudulently misrepresent the diamonds’ fair market or resale value. As alleged in the Complaint, customers are left with diamonds worth far less than what the defendants represent and only a small fraction of the customer’s original investment.
In its request for relief against the defendants, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution for the benefit of customers, permanent registration and trading bans, and a permanent injunction from future violations of the Commodity Exchange Act, as charged.
The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers to ensure the wrongdoers are held accountable.