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IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF FLORIDA
Case No.: _______ - Civ-
UNITED STATES COMMODITY FUTURES
TRADING COMMISSION,
Plaintiff,
v.
HUNTER WISE COMMODITIES, LLC,
HUNTER WISE SERVICES, LLC, HUNTER
WISE CREDIT, LLC, HUNTER WISE
TRADING, LLC, LLOYDS COMMODITIES,
LLC, LLOYDS COMMODITIES CREDIT
COMPANY, LLC, LLOYDS SERVICES,
LLC, C.D. HOPKINS FINANCIAL, LLC,
HARD ASSET LENDING GROUP, LLC,
BLACKSTONE METALS GROUP, LLC,
N
EWBRIDGE ALLIANCE, INC., UNITED
STATES CAPITAL TR
UST, LLC, HAROLD
EDWARD MARTIN, JR., FRED JAGER,
JAMES BURBAGE, FRANK GAUDINO,
BARIS KESER, CHADEWICK HOPKINS,
JOHN KING, and DAVID A. MOORE,
Defendants.
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COMPLAINT FOR INJUNC
TIVE AND EQUITABLE R
ELIEF AND PENALTIES
UNDER THE COMMOD
ITY EXCHANGE ACT
The Plaintiff U.S. Commodity Futures Trad
ing Commission (“Commission” or “CFTC”),
by its attorneys, alleges as follows:
I.
SUMMARY
1.
Effective July 16, 2011, Section 742 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (“Dodd-Fr
ank Act”), Public Law 111-203, 124 Stat. 1376
(2010), broadened the scope of the CFTC’s ju
risdiction to include financed commodity
transactions with retail custom
ers. Specifically, this broadene
d jurisdiction required that these
Case 9:12-cv-81311-XXXX Document 1 Entered on FLSD Docket 12/05/2012 Page 1 of 48
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transactions be executed on an exchange and subj
ected these transactions
to anti-fraud provisions
as set forth in Sections 4(a) and 4b of the Co
mmodity Exchange Act (“Act”), as amended by the
Food, Conservation, and Energy Act of 2008, Pu
b. L. No. 110-246, Title XIII (the CFTC
Reauthorization Act of 2008 (“CRA”)),
§§ 13101-13204, 122 Stat. 1651 (enacted June 18,
2008), and by the Dodd-Frank Act, to be codifi
ed at 7 U.S.C. §§ 6(a), 6b, 9, and 15, and the
Commission Regulations promulga
ted thereunder, 17 C.F.R. §§ 1.1
et seq. (2012). In addition,
effective August 15, 2011, Section 7
53 of the Dodd Frank Act amended Section 6(c) of the Act,
7 U.S.C. §§ 9 and 15, broadening the CFTC’s anti-
fraud jurisdiction as set out in Commission
Regulation 180.1, 17 C.F.R. § 180.1.
2.
Since the day Section 2(c)(2)(D) of the Ac
t became effective, July 16, 2011 to the
present (the “relevant period”),
Defendants have engaged in i
llegal, off-exchange, financed
commodity transactions with retail customer
s. In addition, Defendants have engaged in
extensive fraud while doing so. The scope of
Defendants’ illegal oper
ation is significant:
between July 16, 2011 and August 31, 2012 alone, Defendant Hunter Wise Commodities, LLC,
the orchestrator of the scheme described in
this complaint, received more than $46,000,000 in
retail customer funds.
3.
Defendants claim to sell physical commod
ities, including gold, silver, platinum,
palladium and copper, in off-exchange transact
ions to retail customers throughout the United
States. The investment product
touted is physical metal, not stocks in metal companies or
exchange–traded commodity futures. Defendants
make three highly material misrepresentations
to customers. Defendants claim to: (1) sell
and transfer ownership of physical metals to
customers; (2) make loans to customers to pu
rchase the physical meta
ls; and (3) arrange for
storage and store customers’ physic
al metals in independent depos
itories. In fact, Defendants do
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not deal in physical metal. In their financed
transactions, Defendants
do not sell or transfer
ownership of any physical metals; they do not disbur
se any funds as loans; and they do not store
physical metals in any depositories for or on behalf
of customers. In effect, Defendants charge
customers commissions for purchasing metal, char
ge interest on loans to buy metal, and charge
storage and insurance fees for metal in connection w
ith paper transactions th
at only provide retail
customers a way to speculate on th
e price direction of metals.
4.
By virtue of this conduct and the cond
uct further described herein, Defendants
have engaged, are engaging, or are about to enga
ge in conduct in violation Sections 4(a), 4b, 4d,
and 6(c) of the Act, as amended, 7 U.S.C.
§§ 6(a), 6b, 6d, 9, 15, and Commission Regulation
180.1(a), 17 C.F.R. § 180.1(a).
5.
Unless restrained and enjoined by this C
ourt, Defendants are likely to continue
engaging in the acts and practices
alleged in this complaint or in similar acts and practices.
6.
Accordingly, the CFTC brings this acti
on pursuant to Section 6c of the Act,
7 U.S.C. § 13a-1, to enjoin Defendants’ unlawful
practices and to compel their compliance with
the Act and the regulations promulgated thereund
er. In addition, the CFTC seeks restitution,
rescission, civil monetary penalties, and such ot
her equitable relief as
this Court may deem
appropriate.
II.
JURISDICTION AND VENUE
7.
Section 6c(a) of the Act au
thorizes the Commission to
seek injunctive relief
against any person whenever it shall appear to
the Commission that such
person has engaged, is
engaging, or is about to engage
in any act or practice constituti
ng a violation of the Act or any
rule, regulation, or order thereunder.
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