California Firms Charged in Alleged Gold Fraud
Source: Futures Magazine (12/16/10)
"Overall trading losses amounted to approximately $2.2 million."
The CFTC complaint alleges that the defendants solicited approximately $5.5 million from at least 80 customers to invest in precious metals, including gold, palladium, platinum, silver bullion. In soliciting participants, the defendants allegedly fraudulently represented that (1) they would only invest participants' funds in bullion and coins, (2) participants' funds would be maintained in segregated accounts, (3) defendants' investments were insured against loss, (4) defendants would use stop-loss orders to protect participants from any loss of their principal and (5) Ryan Nassbridges was registered with the CFTC.
The defendants allegedly used a significant portion of participants' funds to trade commodity futures and options, including gold and silver futures, and sustained overall trading losses of approximately $2.2 million.
Defendants allegedly misappropriated millions of dollars of participants' funds to pay personal expenses and to pay earlier investors purported profits with more recent participants' funds, as is typical of a Ponzi scheme. Nassbridges also allegedly used misappropriated participant funds to pay approximately $586,100 in mortgage payments, approximately $305,000 in credit card payments, approximately $90,100 in car payments and more than $157,700 in cash withdrawals, according to the complaint.
The CFTC complaint further alleges that Nassbridges tried to conceal his fraud by giving misleading and false testimony.
The CFTC's complaint seeks civil monetary penalties, trading and registration bans against the defendants and disgorgement of ill-gotten gains from the relief defendants.