FBI Seizes Records of La Jolla Firm Suspected of Fraud

A La Jolla firm suspected by authorities of fraud and improperly selling commodities futures contracts has ceased operations after federal agents searched the firm’s offices and subsequently froze its bank account funds.

The offices of First International Metals Exchange in La Jolla were searched Friday night by FBI agents, who hauled away more than two dozen boxes of company records, according to one source familiar with the case.

The company has not been charged with any wrongdoing; however, federal authorities suspect the firm of mail and wire fraud, and of improperly selling off-exchange futures contracts, according to documents filed in federal court.

First International Metals Exchange attracted hundreds of investors, but it is uncertain how much money the 10-month-old firm raised from its clients. One source close to the case estimated that the firm drew more than $1 million in investor funds.

Investors were required to make a 22% down payment to purchase precious metals, with the balance payable in five years. Such futures contracts typically must be registered with the Commodity Futures Trading Commission (CFTC).

Andrew Borthwick, president and owner of First International Metals Exchange, could not be reached for comment Monday.

Company salesman Brian Devlin and company attorney William Drexler--both of whom were mentioned in FBI documents that were filed to obtain the search warrant--also could not be reached for comment Monday.

Borthwick and Devlin both worked for First International Trading Corp., the San Francisco-based gold and silver futures contracts firm that was liquidated last year after it was sued by the CFTC. The company also had offices in Irvine, Calif., Dallas and Houston.

Drexler is also a controversial figure, having been convicted in 1981 of conspiracy, tax evasion and mail fraud for selling phony ministerial degrees and church charters as tax dodges. At the time, Drexler was the self-proclaimed “archbishop” in both the Life Science Church and the Church of Christ.