**Release: #4030-97 (Civ. 97-4443)**

**For Release: June 23, 1997**

**CFTC CHARGES CALIFORNIA COMPANY, ITS PRESIDENT AND THREE OF THE**

**FIRM'S TELEMARKETERS WITH FRAUD IN THE SALE OF ILLEGAL,         OFF-EXCHANGE**

**PRECIOUS METALS FUTURES CONTRACTS NATIONWIDE**

**Court Issues Ex Parte Order Freezing Defendants' Assets and         Appointing a Receiver**

         WASHINGTON - The Commodity Futures Trading Commission (CFTC)         announced today that on June 18, 1997, it filed a two-count         civil injunctive action in the U.S. District Court for the Central         District of California charging C.O.M. Consultants, Inc., d/b/a Golden         State Bullion (Golden State) of Marina del Ray, California; Richard         David Otto, Golden State's president and owner, of Corona del Mar,         Ca.; and Fred Ronald Williams of Pacific Palisades, Ca., **Linton         Samaru** of Venice, Ca., and Bruce Michael Paine of Venice, Ca.,         three of Golden State's telemarketers, with fraudulently selling         illegal off--exchange precious metals futures contracts to         members of the public nationwide.      

         On June 19, 1997, the court entered an ex parte asset freeze order         which, among other things, freezes the defendants' assets and         appoints a receiver to take control of Golden State.      

         The CFTC said it is bringing this case against the defendants to halt         the alleged fraudulent telemarketing of highly-leveraged         investments in platinum, gold, silver, and palladium. The CFTC         complaint charges that the defendants violated section 4(a) the         *Commodity Exchange Act (CEA)* by offering and selling illegal,         off-exchange precious metals futures contracts and section 4b of         the CEA by cheating and defrauding customers through false claims         concerning the likelihood of profit and the risk of loss associated         with Golden .State's precious metals program. Specifically, the         complaint alleges that the defendants' high-pressure sales         pitch claims that their precious metals investment program involves         little or no risk and that impending labor turmoil at South         Africa's platinum mines will cause the price of platinum to         increase to between $600 and $700 per ounce, providing investors with         a return of three to four times their investments in two to three         months. The complaint alleges that, in fact, customers consistently         lose the bulk of their investments.      

         Commenting on the filing of this matter, CFTC Director of Enforcement         Geoffrey Aronow said:      

         "We believe the fraudulent investment scheme alleged in this         complaint is not      

         unique. Investors need to be wary of off-shore metal financing         schemes that promise quick riches with little risk. Our investigative         work in this area continues."      

         According to the complaint, the defendants' precious metals         program involves highly�leveraged speculative investments. The         complaint alleges that under Golden State's program a customer         pays for a portion of the precious metal (usually 20 percent) in cash,         and an off�shore financial institution loans the customer the         balance of the purchase price of the metal. Customers do not receive         the metal they have supposedly purchased and instead the metal is         purportedly purchased and held by the off-shore financial         institution. The defendants' telemarketers claim they will inform         customers when the price of the metal has peaked and should be sold at         a profit, according to the complaint.      

         In addition, according to the complaint, the defendants attempt to         sell customers additional platinum, gold, silver, and/or palladium         investments, after their initial platinum purchase, representing that         the customers can expect high profits and be exposed to little or no         risk by investing in these metals, as well.      

         In its continuing litigation against the defendants, the CFTC is         seeking preliminary and permanent civil injunctions in addition to         other remedial relief including, restitution to **investors and civil         monetary** penalties against each defendant. The CEA provides for a         civil monetary penalty of up to $110,000 (or $100,000 for violations         occurring before November 28, 1996), or triple the monetary gain to         the defendant, whichever is greater, for each violation of the CEA.      

         The Federal Bureau of Investigation (San Diego Office), the San Diego         Boiler Room Task Force, the California Department of Corporations, and         the Texas State Securities Board provided valuable assistance to the         CFTC during the investigation of this matter.