(CN) - A Miami gold dealer was slapped with more than $1.3 million in penalties as a result of its off-exchange precious metals transactions, the Commodity Futures Trading Commission announced.
U.S. District Judge William Zloch entered an order of default judgment against Gold Distributors Inc., and its sole owner, Jordan Cain, requiring them to pay a civil penalty of $1,011,800, and restitution of $337,266.
The order also imposes permanent trading, solicitation, and registration bans against the defendants.
According to the CFTC, Cain and his business engaged in gold and silver transactions between January 2012 and February 2013 with individuals who were not eligible to participate in such sales.
The agency also accused the defendants of introducing 27 customers to AmeriFirst Management, LLC, a precious metals wholesaler and clearing firm that financed and purported to confirm the execution of customer precious metals transactions.
The Defendants were also accused of transferring at least $797,577 to AmeriFirst for the purchase of precious metals, and of receiving commissions and fees totaling at least $337,266 for the transactions AmeriFirst executed.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, financed transactions such as those conducted by GDI, are illegal off-exchange transactions unless they result in actual delivery of metal within 28 days. According to the order, the Defendants and AmeriFirst never actually delivered any precious metals to any of the Defendants' customers.