‘Boiler Room’ Task Force Raids El Toro Metals Firm

Agents of the Southern California “boiler room” task force Tuesday raided an El Toro precious metals firm, seeking evidence to substantiate allegations that the company has defrauded thousands of investors of $6 million to $9 million in an extensive mail and wire fraud operation.

Two dozen investigators from nearly 10 law enforcement agencies stormed B.R.O.C.K. International at 10 a.m., backed by a federal search warrant, and spent hours combing the firm’s files for evidence to back up federal fraud charges.

No criminal charges were filed Tuesday, but the president of the firm and one other executive were arrested for violation of bail in an unrelated federal mail fraud case.

Sources said Tuesday that B.R.O.C.K.--an acronym that stands for “Better Returns, Overseas Commerce Knowledge”--allegedly sold European strategic metal options, attracting clients through newspaper and television ads and seminars. Selling European commodities is illegal in the United States under federal law.

And federal agents “suspect there is more evidence of wrongdoing,” said one task force member, who requested that his name not be used. “We don’t believe that the various representations (in B.R.O.C.K. sales pitches) are true or that they actually purchased and delivered strategic metals options.”

While the raid was under way, lawyers from the federal Commodities Futures Trading Commission and the state attorney general’s office obtained an order in U.S. District Court in Los Angeles seizing B.R.O.C.K’s assets and the company was placed in receivership, said a task force member who asked not to be identified.

In all, the names of 25 company employees were run through law enforcement agency computers Tuesday to check for arrest warrants.

One employee was held on two outstanding traffic warrants. Four others were detained, task force officials said, to help supervise the collection of evidence.

In addition, Fred Terr, the company’s president, and Raymond Girard, the trading director, were arrested for violating terms of their bail in a mail fraud case involving Crandall Financial, a defunct Orange County investment firm dealing in precious gems, said Sharon McCaslin, a special assistant to the U.S. attorney.

Terr and Girard--who violated terms of their bail when they allegedly attended a sales seminar in Reno last weekend, “are on their way to Terminal Island,” said McCaslin, who is assigned to the Crandall case.

B.R.O.C.K. officials could not be reached for comment.