Financial Mines

News and notes from the business reporters for the Connecticut Media Group.

Archive for December 5th, 2012

Fool’s gold? CFTC says 12 firms sell phantom metals

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2008 file photo of actual gold. AP

The CFTC is cracking down on firms playing up demand for metals during these uncertain economic times.

The U.S. Commodity Futures Trading Commission announced Wednesday, it filed a civil injunctive enforcement action in the U.S. District Court for the Southern District of Florida against 12 firms and their executives for fraudulently marketing illegal, off exchange retail commodity contracts.
The firms and individuals are: 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; Newbridge Alliance, Inc.; United States Capital Trust, LLC; Harold Edward Martin, Jr.; Fred Jager; James Burbage; Frank Gaudino; Baris Keser; Chadewick Hopkins; John King; and David A. Moore.

According to the CFTC complaint, the defendants claim to sell physical metals, including gold, silver, platinum, palladium, and copper, to retail customers in retail commodity transactions. Under the defendants’ retail commodity transactions investment contract, customers allegedly make a down payment on certain quantities of physical metals, usually 25 percent of the total purchase price. Defendants allegedly claim to arrange loans for the balance of the purchase price, and advise customers that their physical metals will be stored in a secure depository.

But the CFTC alleged that the defendants do not purchase any physical metals, arrange loans for their customers to purchase physical metals, or arrange for storage of physical metals for any customers participating in their retail commodity transactions. Instead, all the transactions are just paper transactions, according to the complaint. Defendants allegedly do not own or sell metals to customers; customers are charged storage and insurance fees on metals that do not exist; and are charged interest on loans, which are never made by the defendants.

Hunter Wise Commodities, the orchestrator of the alleged fraud according to the CFTC , has taken in at least $46 million in customer funds since July 2011.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) of 2010 expanded the CFTC’s jurisdiction over transactions like these, and requires that such transactions be executed on or subject to the rules of a board of trade, exchange or commodity market, according to the complaint. This new requirement took effect on July 16, 2011. The complaint alleges that all of the defendants’ financed commodity transactions after July 16, 2011, were illegal. The complaint also alleges that the defendants defrauded customers in all of these financed commodity transactions.

David Meister, the CFTC’s Director of Enforcement stated: “Here is a prime example of how the Dodd-Frank Act provided the Commission with additional strong authority to go after wrong-doers, such as, as alleged in the complaint, individuals who prey on people looking to make retail investments in commodities like gold and silver. We will use this new authority to the fullest extent possible.”

Source: CFTC announcement.

State has $1.8 million for Sandy-related work program

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The Connecticut Labor Department has received $1.8 million in funding for a temporary work placement program for clean up, demolition, repair and reconstruction of damaged public structures.

Only people who became unemployed as a result of Sandy or were unemployed prior ot the storm and no longer receive unemployment benefits or other income support are eligible for the program, which could fill up to 120 positions.

Those interested should email the nearest CTWorks Career center:

Here are the email contacts for the local ones:

Bridgeport:

Stephanie James

Mary Malenda

Hamden:

Tony Harris

Waterbury:

Steve Romano

Sikorsky’s $3.5 billion CH-53K program enters test phase

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Sikorsky CH-53K prototype awaits transport to testing facility. Contributed photo

The new Super Stallion is ready for lift-off, sort of. Sikorsky announced Tuesday the first prototype CH-53K being developed for the Marines has rolled off the assembly line in Florida and been delivered for tests.

This is a ground test vehicle, which will be harnessed to earth for much of its existence where 1,300 sensors will track its performance as it’s put through its paces.

“The primary purpose of the GTV is to shake out the CH-53K helicopter’s dynamic systems by thoroughly testing and measuring the performance of the rotor blades, transmission, and engines while the aircraft is tied to the ground,” said Michael Torok, Sikorsky’s CH-53K Program Vice President. “Extensive ground-based flight checks with Sikorsky and NAVAIR test pilots at the cockpit controls will confirm whether these dynamic systems, as well as hydraulic, electrical, and avionics systems, can meet the requirements established by the Marines for their next-generation heavy lift helicopter.”

Though designed to the same footprint size as the CH-53E Super Stallion helicopters they will begin to replace in 2019, CH-53K helicopters will triple the external load carrying capacity to more than 27,000 pounds over 110 nautical miles under “high hot” ambient conditions. Technology enablers for increased lift include 7,500-shaft-horsepower GE38-1B engines; a split torque transmission design that more efficiently distributes engine power to the main rotors; fourth-generation composite rotor blades for enhanced lift; and a composite airframe structure.

Flight test engineers will spend the coming months performing preliminary acceptance tests that include calibrating the GTV’s fuel system and attaching measuring devices at more than 1,300 test locations on the aircraft to record temperature, aerodynamic loads, pressure and vibrations. By mid 2013, the GTV will be attached to a specially built outdoor platform to hold the aircraft in place when its three engines are powered on — a process known as a “light-off.” Initial light-off test events will be performed without rotor blades, followed by more rigorous tests with the blades attached.

“This is an important point of transition for the CH-53K program,” said Col. Robert Pridgen, program manager for the heavy lift helicopters. “I am encouraged by the initial results of our testing at the component and subsystem level. Now we bring it all together. The GTV is our first dynamic system-level integration of those same components. We are looking forward to the sights and sounds these next heavy lifters will bring to the Marine Corps.”

Sikorsky is designing, building and testing the GTV and the four flight aircraft — designated Engineering Development Models — as part of a $3.5 billion System Development and Demonstration contract. Two additional ground test articles are undergoing airframe structural testing at Sikorsky’s main manufacturing plant in Stratford, Conn., as part of the same contract. The aircraft’s major fuselage sections are supplied by Aurora Flight Sciences, ITT Excelis, GKN Aerospace and Spirit Aerosystems.

Expectations are to get the next wave of prototype CH-53Ks in the air in 2014 and 2015.

Source: Sikorsky Press release.