The Commodity Futures Trading Commission is suing the now defunct Alista Group, LLC in Florida Federal Court. Alista operated in 2016 and 2017, collecting nearly $900,000 from investors to invest in leveraged precious metals.[1] However, the CFTC alleges that these funds never hit the customer’s accounts. Instead customer funds were used by the three owners to speculate on precious metals under Alista’s own account. The CFTC also alleges these funds were used to pay business expenses, interest charges, and personal expenses such as food and entertainment. When customers attempted to cash out their accounts, Alista made “Ponzi-style” payments to customers, selling off holdings from the Alista account to cover funds which had been previously used on personal and business expenses.
Per the complaint, Alista, and its owners, used an aggressive cold-call campaign to raise $890,500 from 19 customers. Though registered in Georgia, much of Alista’s business was conducted in Florida. When Alista was banned from trading with a California-based precious metals dealer, it set up a Cayman Islands “straw account” in the name of a French individual who had contributed no funds to the account, per the CFTC complaint.
While the CFTC is now seeking to force the company to return funds to customers, ban the company from future trading, and impose a civil penalty, relief for the defrauded could still be years away. This illustrates the importance of maintaining a healthy level of skepticism when making investment decisions. When deciding to invest, customers should review the prospectus, fee schedules, and research the leadership of the investment group. Had the customers researched Alista prior to investing, they may have learned that one of the owners had pled guilty to a charge of conspiracy to distribute cocaine in 2009 and another had pled guilty to conspiracy to commit mail fraud in 2011 (per the complaint).
Receiving a cold-call solicitation for investment opportunities can also be a red flag. Many states have rules against cold-call campaigns without first registering with the state’s regulatory agencies, and you should never receive a cold call if you are on your state’s do not call list. If you are being targeted by an illegal cold-call scheme or fraudulent investment organization, contact the attorneys at Cosgrove Law Group, LLC.
[1] https://www.law360.com/energy/articles/1292887/cftc-says-fla-precious-metals-co-ran-ponzi-scheme