UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

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COMPLAINT FOR PERMANENT INJUNCTION, OTHER
EQUITABLE RELIEF, AND CIVIL MONETARY PENALTIES

I. SUMMARY

1. Starting in approximately September 1998 and continuing through the date of this Complaint (the "relevant period"), defendants National Bullion and Coin, Inc., d/b/a/ National Bullion & Coin Services, Inc. ("NBC"), Capital Credit Management & Finance, Inc. ("CCMF), Lawrence Colman ("Colman"), and Joseph B. Flanigan ("Flanigan") have engaged in fraudulent telemarketing of highly leveraged commodity futures contracts in precious metals to individuals nationwide.

2. NBC and its employees falsely represent to customers that NBC will purchase the metals for customers and then deliver the metals to "your depository of choice." Additionally, NBC explains to customers that the precious metal purchases can be financed through a loan provided by CCMF. NBC further represents that if a customer chooses to finance the purchase through CCMF, the metals purchased will be stored at CCMF's storage facilities. NBC, Flanigan, and Colman reinforce this representation by issuing NBC customers phony "letters of confirmation" that itemize "deposit required," "commission required," and "premium" for the commodities purportedly purchased by NBC, financed by CCMF, and then delivered to CCMF's storage facility. CCMF also charges "interest" that purportedly represents finance charges on loans CCMF claims to extend to NBC customers for the purchase of the physical commodities.

3. In reality, after NBC receives customer funds, CCMF does not lend customers money and in all but a few instances delivery never occurs as neither NBC nor CCMF purchases and stores metal for its customers as they claim.

4. The futures contracts offered and sold by NBC and CCMF are not consummated on or subject to the rules of any contract market designated by the Commodity Futures Trading Commission (the "Commission"). Therefore, NBC and CCMF have violated Section 4(a) of the Commodity Exchange Act, as amended ("Act"), 7 U.S.C. � 6(a) (1994). Moreover, Colman and Flanigan, as the controlling persons of NBC and CCMF, are liable for NBC's and CCMF's violations of Section 4(a), pursuant to Section 13(b) of the Act, 7 U.S.C. �13c(b) (1994).

5. NBC, by and through its employees and agents, makes a multitude of false representations concerning the purchase, financing, and storage of precious metals on behalf of customers, and issues false "letters of confirmation" and "customer agreements," and therefore violates Section 4b(a)(i)-(iii) of the Act, 7 U.S.C. � 6b(a)(i)-(iii) (1994).

6. Additionally, NBC, by and through its employees and agents, the NBC account executives ("AEs"), make false representations as to the risks, profits, and even the actual existence of the precious metal involved in the proposed financed precious metal transactions. These false representations violate Section 4b(a)(i)-(iii) of the Act. NBC is liable for this violation because NBC is responsible for its AEs' false representations.

7. Coleman and Flanigan are directly liable for violating the antifraud provisions of Section 4b(a)(i)-(iii) because they both make and have made false representations regarding the existence of metal, and have created and continue to perpetrate an overarching scheme to defraud customers.

8. Moreover, Colman and Flanigan, as the controlling persons of NBC and CCMF, are liable for violations by NBC and CCMF of Section 4b(a)(i)-(iii), pursuant to Section 13(b).

9. NBC and CCMF aid and abet each other's violations of Sections 4(a) and 4b(i)-(iii), and are liable for each other's violations pursuant to Section 13(a) of the Act, 7 U.S.C. � 13c(a) (1994), because they solicited customers to purchase the precious metals contracts and financed these transactions with sham loans.

10. Colman and Flanigan aid and abet each other's and NBC's and CCMF's violations of Sections 4(a) and 4b(i)-(iii) by extending to NBC customers CCMF sham loans for the purchase price of the commodities, falsely claiming to purchase and store the commodities on behalf of investors, and issuing "letters of confirmation." Colman and Flanigan know that NBC solicits retail customers to purchase precious metals and that CCMF's financing is the purported means for the financing of those highly leveraged investments. Thus, Colman and Flanigan are both liable for each other's violations, and NBC's and CCMF's violations, pursuant to Section 13(a) of the Act.

11. Moreover, NBC and CCMF are liable for any violations of the Act by Flanigan, Colman, or any other AEs working at either NBC or CCMF, pursuant to Section 2(a)(1)(A)(iii) of the Act, 7 U.S.C. � 4 (1994), and Section 1.2 of the Commission's Regulations ("Regulations").

12. Accordingly, pursuant to Section 6c of the Act, 7 U.S.C. � 13a-1 (1994), the Commission brings this action to enjoin such acts and practices, and to compel compliance with the provisions of the Act and the Commission's Regulations. In addition, the Commission seeks disgorgement of defendants' ill-gotten gains, restitution to customers, civil monetary penalties, and such other relief as the Court may deem necessary or appropriate.

13. Given defendants' pattern of fraudulent activity, unless restrained and enjoined by this Court, the defendants are likely to continue to engage in the acts and practices alleged in this Complaint, as more fully described below.

II. JURISDICTION AND VENUE

14. The Act prohibits fraud in connection with the commodity futures and options market and establishes a comprehensive system for regulating the purchase and sale of commodity futures contracts and options. This Court has jurisdiction over this action pursuant to Section 6c of the Act, 7 U.S.C. � 13a-1 (1994), which authorizes the Commission to seek injunctive relief against any person whenever it shall appear to the Commission that such person has engaged, is engaging, or is about to engage in any act or practice constituting a violation of any provision of the Act or any rule, regulation or order thereunder.

15. Venue properly lies with the Court pursuant to Section 6c of the Act, 7 U.S.C. � 13a-1(e) (1994), in that the defendants are found in, inhabit, or transact business in this district, and the acts and practices in violation of the Act have occurred, are occurring, or are about to occur within this district.

III. THE PARTIES

A. Plaintiff

16. Plaintiff Commission is an independent federal regulatory agency charged with the responsibility for administering and enforcing the provisions of the Act, 7 U.S.C. �� 1 et seq. (1994), and the Regulations promulgated under it, 17 C.F.R. �� 1 et seq. (1999).

B. Defendants

17. Defendant NBC is a telemarketing firm that solicits customers to enter into financed precious metal transactions. It is a Florida corporation, whose principal place of business is 5950 W. Oakland Pk. Blvd., Ste. 201, Plantation, Florida, 33313. Since approximately September 1998, and at all times material to this Complaint, NBC transacted business in the Southern District of Florida. NBC is not designated by the Commission as a contract market for the trading of precious metals or any other commodities, nor is NBC registered with the Commission in any capacity. NBC conducts business as National Bullion & Coin Services, Inc.

18. Defendant CCMF is a Florida corporation that purports to finance and store precious metals for NBC customers. CCMF lists its principal place of business at 4407 Treehouse Lane, Suite C, Tamarac, Florida, 33319. Since September 1998, and at all times material to this Complaint, CCMF transacted business in the Southern District of Florida. CCMF is not designated by the Commission as a contract market for the trading of precious metals or any other commodities, nor is CCMF registered with the Commission in any capacity.

19. Defendant Lawrence Colman is President and Registered Agent of NBC and CCMF. His last known addresses are 4470 Treehouse Lane #C, Tamarac, Florida, 33319 and 3650 Environ Blvd. #303, Lauderhill, FL 33319-0000. Colman is not registered with the Commission in any capacity. At all times material to this Complaint, Colman transacted business that is the subject of this Complaint in the Southern District of Florida.

20. Defendant Joseph B. Flanigan is the owner of NBC and CCMF. He currently resides at 12105 N.W. 23^rd Ct., Plantation, Florida, 33323. Flanigan is not registered with the Commission in any capacity. Additionally, at all times material to this Complaint, Flanigan transacted business that is the subject of this Complaint in the Southern District of Florida.

IV. FACTS

21. Since approximately September 1998, NBC has marketed and sold precious metals futures contracts to members of the public nationwide. Although NBC customers speculate on the price of precious metals without ever actually taking delivery of the metals, NBC holds itself out to the public as a seller of physical metal. NBC claims that the metal can be financed through transactions that allow the customer to make a down payment to a finance company, CCMF. CCMF then purportedly buys the metal for the customer and stores it in a depository.

The Program

22. NBC offers investments in standardized lot sizes, such as:

• 10 troy ounces platinum bars,
• 10 troy ounces palladium bars,
• 10 troy ounces gold bullion bars, and
• 1,000 troy ounces silver bullion bars.

23. Once a prospective customer indicates an interest in purchasing precious metals, NBC telemarketers solicit that customer to participate in CCMF's finance program. Virtually all of NBC's customers "purchase" their metal through CCMF and the AEs encourage the customers to do so, promising high profit potential from entering into a leveraged transaction.

24. An NBC customer's initial investment consists of a 25% "down payment" on the purchase of the commodity, with the balance of the "purchase price" usually "financed" by CCMF.

25. In addition to the 25% down payment, a customer must pay the following other charges and fees:

• NBC charges a commission of 5% of the total value of the commodities purchased (which includes the leveraged portion). The total value is calculated based upon the price of the nearby futures contract month traded on an exchange, to which a mark-up is added (see below);
• NBC charges a mark-up on the price of the metals. The amount of the mark-up depends upon the metal purchased. For example, $5 or $6 dollars is added to the price of gold for the nearby month of gold futures contracts;
• NBC charges customers an 8% premium for the purported costs of storing and delivering the commodity. This delivery charge represents a charge for delivering the metal to the storage facility; should a customer wish to take delivery of the metal directly, additional delivery charges would be levied. Most customers never take actual delivery of the metal;
• CCMF charges customers a loan origination fee of 2% of the amount of the loan; and
• CCMF charges interest of approximately 2% over the prime rate on the unpaid balance of the loan.

26. In total, customers in the finance program pay approximately 39.5% of the total value of their purchase. Of this 39.5% payment, 14.5%, is made up of fees and commissions.

27. As a result of the substantial fees and charges imposed on the investment, a customer would break even on his investment only after the price of the metal increased approximately 14.5%. That figure does not take into account the additional interest charges levied after the loan is financed.

28. CCMF requires customers to make initial payments that are a fixed percentage of the contract price. These payments are comparable to an initial margin payment paid on futures transactions. CCMF purportedly holds the customers' commodities in storage and issues margin calls whenever the commodity price for any given investment decreases, or the accumulating interest and premium fees cause a customer's account equity to drop below contractually permissible levels. When CCMF issues a margin call, the customer must pay additional sums, which are comparable to maintenance margin paid on futures transactions, to return his or her account equity to an appropriate level; otherwise, CCMF purports to sell a quantity of the commodity sufficient to restore sufficient equity to the customer's account.

29. The terms of delivery, rules for margin calls, and other terms and conditions of NBC's investment scheme are standardized and contained in the form of a "customer agreement" provided to customers by CCMF.

30. NBC and CCMF encourage their customers to enter into offsetting transactions. "Offset" describes a means by which a customer can extinguish the payment obligations attendant on his or her "ownership" of a quantity of precious metals by selling a like quantity of precious metals and receiving a net cash gain or paying the loss posted to the customer's account. Customers who enter into offsetting transactions never actually take delivery of the metal. NBC, CCMF, and their AEs routinely tell customers to use offsetting transactions as a way to speculate on the prices of precious metals without ever having to take delivery of the metal.

31. CCMF claims to lend NBC customers 75% of the purchase price of the precious metals. In exchange for the loan, CCMF charges a "finance" charge at an annualized rate of Prime Rate plus 2%. NBC sends its customers phony "letters of confirmation" that itemize deposit, commission, and premium fees, and reduce the customers' account equity by a commensurate amount.

32. The NBC /CCMF financed precious metals transactions are contracts to buy or sell a specific commodity for future delivery. The price is determined when the contract is entered into, and both parties to the contracts are obligated to fulfill the terms of the contracts at that price.

33. The terms of the NBC/CCMF contracts may be fulfilled by offset or the payment of the balance due, plus delivery. Neither NBC, CCMF, nor their customers rely on the delivery of metal to carry out their business, because NBC customers speculate on the price of the metal. Additionally, the contracts are not tools designed to accomplish the delivery of precious metals. NBC AEs strongly encourage customers to enter into the finance program and offsetting transactions rather than take delivery. NBC AEs made the following pitches designed to steer customers into the CCMF finance program:

• I never had an account pay the unpaid balance and receive the physical gold. (10/21/98)
• [T]he gold is yours. You're reaping the rewards on it. You don't have to pay anything to reap the rewards. The only reason you would ever have to pay the unpaid balance . . . is if you physically wanted to receive the gold. . . No, you don't [have to take the gold]. I told you, my accounts never take the gold. Why do that? (Id.)
• [If you enter into the finance program instead of buying the metal] . . .you're receiving two and a half times what you initially put in. So that's the beautiful part of this program. (Id.)
• Because the profits you would get by using our leverage program is about three, four times of what you would get from just getting physical delivery. So it's better to really use our leverage program, because you can get, you know, like a substantial amount of gains in your profit here. ( 10/11/98)

34. The NBC/CCMF contracts are entered into by members of the general public for purposes of speculating on changes in the price of precious metals, and NBC/CCMF markets them as such. The customers are rarely, if ever, commercial users of, or dealers in, precious metals.

35. The commodity contracts telemarketed by NBC and serviced by CCMF are futures contracts that are not made on or subject to the rules of a board of trade designated as a "contract market" by the Commission, or on any board of trade, exchange, or market located outside the United States, its territories or possessions.

The False Representations

36. The entire finance program is a sham. NBC and CCMF make the following false claims about their program for purchasing, storing, and financing physical commodities on their web site and in their marketing materials:

• NBC claims to obtain the physical commodities on behalf of the customers "ounce for ounce," and CCMF claims to hold the metal as collateral on the customers' loans. NBC assures customers that the customers actually own the precious metals, and that they are being stored on their behalf at CCMF's storage facility;
• NBC sells only physical products;
• NBC delivers the physical product customers have purchased directly to them, or, in the case of a financed purchase, directly to the participating company or their depository;
• NBC does not use futures contracts, forward contracts, options or any other "artificial means" to acquire precious metals; and
• NBC charges customers 5% commission and 8% premium of the total value of the metal. They also charge customers 2% over prime rate in interest on the alleged loans, as well as a 2% loan origination fee.

37. The above claims about the purchase of physical commodities are false because:

• NBC and CCMF do not purchase or store physical commodities for their customers;
• NBC and CCMF do not lend their customers any money to finance the purchase of physical commodities;
• NBC/CCMF charges customers "premiums," which include delivery and storage fees, for commodities neither purchased nor stored on the customers' behalfs and "interest" on loans never made to them.

38. In addition, NBC and CCMF falsely state in the promotional materials and on the web site that if the company becomes insolvent, the customer's financial purchase would be unencumbered by corporate debt. However, if either NBC or CCMF did become insolvent, the customer's investments would not be protected and might possibly be encumbered by corporate debt, because the customers would be unsecured creditors.

39. Also, NBC's web site and brochure contain an example of how to compute the break-even price of a hypothetical investment that fails to include the loan origination fee and interest on the investment, thus materially misleading customers into believing it is easier to make a profit on a precious metals purchase than it really is.

40. In addition to the lies told by NBC and CCMF about the nature of the customer's investment and the purpose of the fees the customer pays, NBC's AEs make specific representations as to past profits, with knowledge of their falsity or with reckless disregard for their truth or falsity. Additionally, NBC's AEs make false claims regarding both the risks and profits involved in purchasing precious metals. These representations include, but are not limited to:

• And if you and I had done business a week or ten days ago when we first started talking, and you had 10,000 ounces, you would have made yourself $10,000. (6/29/99)
• You never have to worry about paying off the unpaid balance . . . .Because the market does that for you. (5/27/99)
• You have a potential to make a tremendous profit in a short amount of time. And I've done it for many of my clients in the past. (10/11/98)
• But usually,-- I do this every year. You know, I get it --usually, we buy in at gold at, say, three, 350; sell out at 450. (10/11/98)
• Gold, it can't -- Gold can't lose its value. It's been the ultimate medium of wealth for thousands and thousands of years. (10/11/99)
• [I]f you are buying at the low, you know, you have no way of losing. It's impossible. . . . It may go down a few dollars, but it will hit its high every year . . . And so you know, you're guaranteed. (10/11/99)
• It's absolutely impossible not to make money on a product that's been in the earth since there's been an earth. (5/27/99)
• I am so glad you said that, especially the part about wanting something safe. The leveraging program that we place our clients in is an extremely safe, liquid investment, with no sell-out charges, no storage fees on your metal, no forced sell-out, no forced liquidation, no margin calls. (5/27/99)
• Customer: So there's really no risk of losing my investment, then? AE: No risk at all. (10/21/99)

41. NBC AEs similarly make false representations concerning the purchase and storage of precious metals on behalf of customers with knowledge of their falsity or with reckless disregard for their truth or falsity. These representations include, but are not limited to:

• Well, we're the sales arm [of NBC]. Capital Credit is the wholesaler that sells the metals all around the country. They have storage areas in about four or five locations in this country, so they can deliver within 48 hours. (10/11/99)
• Capital Credit Management, who's the largest, or one of the largest financiers and depositories in the United States, they actually physically hold your 10,000 ounces of silver as collateral, and finance the 75 percent of your metal. (5/27/99)
• Again, the metal is stored at Capital Credit in your name as collateral. (6/30/99)

42. Additionally, Colman and Flanigan both conducted telephonic compliance interviews with customers following the initial telemarketing pitches, during which they each made false representations, including but not limited to:

• Do you understand that the total delivery of your [commodity] will be held at Capital Credit Management?
• You understand the Capital Credit Management will be financing the unpaid balance of this metal?

The Roles of the Defendants

43. In sum, NBC materially misleads customers about the product it sells, and CCMF extends sham loans to NBC customers for the purchase price of the commodities, falsely claiming to purchase and store the commodities on behalf of investors. NBC's brochure and web site materially misrepresent the way in which the customer's break-even point should be calculated, and also falsely state that owning precious metals protects customers in the case of insolvency by NBC or CCMF. Furthermore, NBC AEs have misrepresented with scienter to customers the profitability of purchasing precious metals, as well as falsely representing the risks in doing so.

44. As such, NBC and CCMF are each directly liable for their fraudulent and deceptive acts and practices, and for the sales of illegal futures contracts, because each, through its respective principals and employees, made material misrepresentations with scienter in connection with solicitations to sell precious metals contracts, and each has participated in the sale of futures contracts for precious metals on an undesignated contract market.

45. NBC and CCMF are each also liable as aiders and abettors under Section 13(a) for aiding and abetting each other's fraudulent and deceptive acts and practices, and the sales of illegal futures contracts.

46. Both Colman and Flanigan are directly liable for the fraud. They both knowingly created and continue to perpetrate this overarching scheme to defraud the public. Flanigan and Colman share control of NBC and CCMF.

47. Colman and Flanigan also aid and abet the fraudulent and deceptive acts and practices of NBC and CCMF, and their sales of illegal futures contracts, by making false representations in solicitations of NBC's customers, by charging interest on sham loans extended to NBC customers for the purchase price of the commodities, and by falsely claiming to purchase and store the commodities on behalf of investors. Flanigan and Colman know that NBC is soliciting retail customers to purchase precious metals and that CCMF's sham financing is the purported means for financing these highly leveraged investments. Flanigan and Colman also know the material fact that NBC's brochure and web site materially misrepresent the way in which the customer's break-even point should be calculated, and also falsely state that owning precious metals protects customers in the case of insolvency by NBC or CCMF.

48. Colman is a controlling person and President of both NBC and CCMF. Colman manages CCMF. He processes loans and he is a signatory on the companies' brokerage and bank accounts. He disburses funds, including paying the NBC brokers. Colman also instructs AEs to tell customers that metal is purchased and stored at CCMF. Thus, Colman knowingly and willingly participates in NBC's and CCMF's violations of the Act, as described above.

49. Flanigan is also a controlling person of both NBC and CCMF. On information and belief, Flanigan owns NBC and CCMF. Flanigan reviews customer information taken from the initial solicitations and decides which customers are worth pursuing, and approves customer account opening and metals sales transactions. Flanigan has the power to hire and fire employees, and supervises the AEs' sales solicitations, including instructing the AEs to tell customers that CCMF stores metal, and telling the AEs what metals to recommend. Flanigan controls customer and company funds, deals with customer complaints, and disburses money to AEs. Flanigan knowingly and willingly participates in NBC's and CCMF's violations of the Act, as described above.

V. VIOLATIONS OF THE COMMODITY EXCHANGE ACT

Count One

VIOLATIONS OF SECTION 4(a) OF THE ACT,

7 U.S.C. � 6(a) (1994)

Offer and Sale of Illegal Commodity Futures Contracts

50. Paragraphs 1 through 49 of this Complaint are realleged and incorporated herein by reference.

51. The commodity contracts offered and sold by NBC and CCMF are contracts for the purchase and sale of commodities for future delivery, commonly known as futures contracts.

52. The commodities that are the subjects of the futures contracts offered by NBC and financed by CCMF are commodities as defined by Section 1a(3) of the Act, 7 U.S.C. � 1a(3) (1994).

53. During the relevant period, NBC and CCMF offered to enter into, entered into, executed, confirmed the execution of and conducted an office or business in the United States for the purpose of soliciting or accepting orders for, or otherwise dealing in, transactions in, or in connection with, contracts for the purchase or sale of a commodity for future delivery (other than contracts made on or subject to the rules of a board of trade, exchange or market located outside the United States, its territories or possessions).

54. As a result, such transactions have not been conducted on or subject to the rules of a board of trade, which has been designated by the Commission as a "contract market" for such commodity. Such contracts have not been executed or consummated by or through a member of such contract market. Therefore, NBC and CCMF have violated and are violating Section 4(a) of the Act, 7 U.S.C. � 6(a) (1994) ("Section 4(a)").

55. Throughout the relevant period, Colman, as President, principal, and registered agent of both NBC and CCMF, directly or indirectly controlled NBC and CCMF and failed to act in good faith or knowingly induced, directly or indirectly, the acts constituting the violations described in this Count One. Therefore, pursuant to Section 13(b) of the Act, 7 U.S.C. � 13c(b) (1994) ("Section 13b"), Colman is liable for the violations of Section 4(a) as described in this Count One.

56. Throughout the relevant period, Flanigan, on information and belief, has owned NBC and CCMF, directly or indirectly controlled NBC and CCMF, and failed to act in good faith or knowingly induced, directly or indirectly, the acts constituting the violations described in this Count One. Pursuant to Section 13(b) of the Act, therefore, Flanigan is liable for the violations of Section 4(a) of the Act, as described in this Count One.

57. During the relevant period, NBC and CCMF committed or willfully aided, abetted, counseled, commanded, induced, or procured the commission of, the acts constituting the violations described in this Count One; or acted in combination or concert with each other in such violations; or willfully caused acts to be done or omitted which if directly performed or omitted by them or another would constitute such violations. Pursuant to Section 13(a) of the Act, 7 U.S.C. � 13c(a) (1994), therefore, NBC and CCMF are liable for the violations of Section 4(a) of the Act, as described in this Count One.

58. During the relevant period, Colman and Flanigan each committed or willfully aided, abetted, counseled, commanded, induced, or procured the commission of, the acts constituting the violations described in this Count One; or acted in combination or concert with NBC and/or CCMF in such violations; or willfully caused acts to be done or omitted which if directly performed or omitted by them or another would constitute such violations. Pursuant to Section 13(a) of the Act, therefore, Colman and Flanigan are liable for the violations of Section 4(a) of the Act, as described in this Count One.

59. The foregoing acts, omissions and failures of Flanigan, Colman, and other AEs working for either NBC or CCMF occurred within the scope of their employment, agency, or office with NBC or CCMF. NBC and CCMF are thereby liable for all of Flanigan's, Colman's, and the other AEs' violations of Section 4(a) of the Act by operation of Section 2(a)(1)(A)(iii) of the Act, 7 U.S.C. � 4 (1994) and Section 1.2 of the Regulations, 17 C.F.R. � 1.2 (1999).

60. Each offer to enter into, entrance into, and execution, confirmation, solicitation or acceptance of an order for, a contract for the purchase or sale of a commodity for future delivery made during the relevant time period is alleged as a separate and distinct violation of Section 4(a) of the Act.

Count Two

VIOLATIONS OF SECTION 4b(a)(i)-(iii) OF THE ACT,

7 U.S.C. � 6b(a)(i)-(iii) (1994)

Fraud in Connection with Commodity Futures Contracts

61. Paragraphs 1 through 60 of this Complaint are realleged and incorporated herein by reference.

62. NBC and CCMF, in or in connection with orders to make, or the making of, contracts of sale of commodities for future delivery, made, or to be made, for or on behalf of other persons, where such contracts for future delivery were or could be used for the purposes set forth in Section 4b(a)(2) of the Act, 7 U.S.C. � 6b(a)(2) (1994), have: (i) cheated or defrauded or attempted to cheat or defraud other persons; (ii) willfully made or caused to be made to other persons false reports or statements thereof, or willfully entered or caused to be entered for other persons false records thereof; or (iii) willfully deceived or attempted to deceive other persons, all in violation of Sections 4b(a)(i)-(iii) of the Act, 7 U.S.C. � 6b(a)(i)-(iii) (1994) ("Section 4b").

63. Specifically, NBC, CCMF, and their AEs engaged in a wide range of misrepresentations and omissions concerning facts that are material to the investment decisions of customers and potential customers in violation of Section 4b of the Act. They made these representations knowingly or with a reckless disregard to their truth or falsity. Examples of these false statements are listed in Paragraphs 36, 38, 39, 40, and 41.

64. Colman and Flanigan are both directly liable for violating Section 4(b)(i)-(iii). Flanigan and Colman knowingly created and perpetuated an overarching scheme to defraud customers and mislead customers to believe that NBC and CCMF purchased precious metals and then stored the metal for the benefit of their customers and made the false statements as described in Paragraph 42.

65. Throughout the relevant period, Colman directly or indirectly controlled NBC and CCMF; and he failed to act in good faith or knowingly induced, directly or indirectly, the acts constituting the violations described in this Count Two. Pursuant to Section 13(b) of the Act, therefore, Coleman is liable for the violations of Section 4b(a)(i)-(iii) of the Act, as described in this Count Two.

66. Throughout the relevant period, Flanigan directly or indirectly controlled NBC and CCMF and failed to act in good faith or knowingly induced, directly or indirectly, the acts constituting the violations described in this Count Two. Pursuant to Section 13(b) of the Act, therefore, Flanigan is liable for the violations of Section 4b(a)(i)-(iii) of the Act, as described in this Count Two.

67. During the relevant period, NBC and CCMF both committed or willfully aided, abetted, counseled, commanded, induced, or procured the commission of, the acts constituting the violations described in this Count Two; acted in combination or concert with each other in such violations; or willfully caused acts to be done or omitted which if directly performed or omitted by them or another would constitute such violations. Pursuant to Section 13(a) of the Act, therefore, NBC and CCMF are both liable for the violations of Section 4b(a)(i)-(iii) of the Act, as described in this Count Two.

68. During the relevant period, Colman and Flanigan committed or willfully aided, abetted, counseled, commanded, induced, or procured the commission of, the acts constituting the violations described in this Count Two; acted in combination or concert with each other and NBC and CCMF in such violations; or willfully caused acts to be done or omitted which if directly performed or omitted by them or another would constitute such violations. Pursuant to Section 13(a) of the Act, therefore, Colman and Flanigan are liable for the violations of Section 4(a) of the Act, as described in this Count Two.

69. The foregoing acts, omissions and failures of Flanigan, Colman, and other AEs working for either NBC or CCMF occurred within the scope of their employment, agency, or office with NBC or CCMF, and NBC and CCMF are thereby liable for all of Flanigan's, Colman's, and the other AEs' violations of Section 4b(a)(i)-(iii) of the Act by operation of Section 2(a)(1)(A)(iii) of the Act, 7 U.S.C. � 4 (1994) and Section 1.2 of the Regulations, 17 C.F.R. � 1.2 (1999).

70. Each material misrepresentation or omission made during the relevant time period, including but not limited to those specifically alleged herein, is alleged as a separate and distinct violation of Sections 4b(a)(i)-(iii) of the Act.

VI. RELIEF SOUGHT

71. WHEREFORE, the Commission respectfully requests that this Court, as authorized by Section 6c of the Act, 7 U.S.C. � 13a-1 (1994), and pursuant to its own equitable powers, enter:

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