CFTC Charges Lions Wealth Holdings in Alleged Multi-Million Dollar Precious Metals Scheme

CFTC v. Lions Wealth Holdings, Inc. et al, Case No. 2:13-cv-01787 (D. Nev.).  On September 30, 2013, the CFTC announced fraud charges against Lions Wealth Holdings, Inc. and Lions Wealth Services, Inc., both doing business as Lions Wealth Capital (collectively, “Lions Wealth”), 20/20 Precious Metals, Inc. (“20/20 Metals”), and their principal Bharat Adatia.  The CFTC alleges that defendants falsely claimed to sell gold, silver, platinum, and palladium to retail customers in retail commodity transactions.  They also claimed to arrange for loans to customers to purchase physical metals and to store and transfer the metals to an independent depository.  The CFTC alleges that in reality, defendants did not sell or transfer ownership of any physical metals, did not disburse funds as loans, and did not cause any metals to be stored in any depositories.  Rather, the defendants forwarded customer funds to a third-party, Hunter Wise Commodities, LLC and its various subsidiaries and related entities, which also did not purchase or hold metals in the customers’ names.  According to the CFTC, defendants nevertheless charged customers storage fees and other charges on metals that did not exist and interest on loans that were never made.  According to the CFTC, defendants’ financed precious metals sales were made illegal by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) of 2010.  The CFTC sued Hunter Wise in December 2012.  The CFTC charged defendants with illegal off-exchange transactions and fraud.  The CFTC seeks injunctive relief, civil monetary penalties, trading bans, disgorgement, and restitution.

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