The Commodity Futures Trading Commission ("CFTC") announced it had filed charges against a South Carolina man and his company for operating a $90 million Ponzi scheme involving the sale of silver contracts. Ronnie Gene Wilson ("Wilson"), along with Atlantic Bullion & Coin, Inc., ("ABC"), were charged in a South Carolina federal court with violations of the newly-passed Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("Dodd-Frank Act"), which prohibits the use of a manipulative or deceptive device in connection with the sale of commodities. In the complaint, the CFTC is seeking restitution to defrauded investors, the disgorgement of any and all ill-gotten gains, injunctive relief, and civil monetary penalties.
According to the CFTC, from at least 2001 to February 29, 2012, Wilson and ABC purported to engage in the business of purchasing contracts of the sale of silver. Potential investors were solicited to contribute to ABC's "Silver Investment Account" based on representations that silver was poised to increase in value exponentially, and were assured that any silver purchased would be held in safe-keeping at a Delaware depository. Additionally, Wilson and ABC issued financial statements that supposedly contained (1) the amount of silver owned by ABC, (2) the value of ABC's silver investment, and (3) the profitability of ABC's silver investment. Based on these representations, over $90 million from nearly 1000 investors over the 11-year period, with nearly $12 million raised during the six-month period from August 2011 to February 2012 alone. However, in reality, neither Wilson nor ABC ever purchased any silver, and there was no Delaware depository which was housing this silver investment. Instead, Wilson and ABC misappropriated investor funds and little is known as to the amount of funds remaining.
[EDIT 6/19] - Wilson was arrested in March and charged with mail fraud, which carries a maximum sentence of twenty years in prison and up to a $250,000 fine.
A copy of the CFTC complaint is here.