Royal Metals Group LLC and part owner Chelsea Gless of Iowa were charged with defrauding retail clients for false promises to deliver precious metal in return for funds. The Complaint also alleged that they obtained precious metals by fraud with promises of payment which were not made.
The Commodity Futures Trading Commission (CFTC) filed a civil enforcement action in the U.S. District Court for the Southern District of New York against Defendants Royal Metals Group, LLC (RMG), and its member, manager and part owner, Chelsea Gless of Iowa. The CFTC’s Complaint charges Defendants with defrauding retail clients in connection with precious metals transactions and fraudulently obtaining more than $600,000 from those clients.
Director of Enforcement James McDonald, stated: “As this case shows, the CFTC is actively policing precious metals transactions and will vigorously enforce the anti-fraud provisions of the Commodity Exchange Act. The CFTC will continue to fight to protect customers and to hold wrongdoers accountable.”
According to the Complaint, from at least March 2016 to present (the Relevant Period), Defendants fraudulently obtained funds from some of the clients after Defendants and/or Defendants’ Agents represented to these clients that they would deliver precious metals in return for their funds. But, the Complaint alleges, Defendants failed to deliver all of the precious metals as represented and instead only made a small delivery of coins.
Also according to the Complaint, during the Relevant Period, Defendants fraudulently obtained precious metals, including gold and silver, from some of the clients after Defendants and/or Defendants’ Agents represented to these clients that they would be paid in full for their precious metals. But, the Complaint alleges, Defendants kept the clients’ precious metals without paying the clients for the metals.
The Complaint further alleges that instead of delivering the precious metals and/or paying clients as represented, Defendants misappropriated their clients’ funds and metals for their own purposes including the payment of airline fees, purchases at Walmart, and transfers to accounts controlled by Gless and other third parties. In order to further perpetuate and/or conceal their scheme, the Complaint alleges, Defendants made false representations to clients regarding invalid delivery tracking numbers for their precious metals and/or funds and provided clients with unsigned checks and checks that could not be cashed due to stop payment orders and/or insufficient funds.
In its continuing litigation against Defendants, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act, as charged.