STATE OF CALIFORNIA
BUSINESS, TRANSPORTATION AND HOUSING AGENCY
DEPARTMENT OF CORPORATIONS
TO: US Dinar Bank
US DinarEx
David Pratt
165 West Maple Street
San Diego, CA 92103
DESIST AND REFRAIN ORDER
(For violations of sections 25110, 25401, 29520, 29535 and 29236 of the Corporations Code)
The California Corporations Commissioner (“Commissioner”) finds that:
1. US Dinar Bank is an entity that does business and has offices located in California but is
not registered with the California Secretary of State. After the California Department of Financial
Institutions contacted US Dinar Bank about the use of the word “bank” in its name, US Dinar Bank
changed its name to US DinarEx on April 14, 2011. US Dinar Bank and US DinarEx (hereinafter
“US Dinar”) have never been registered with the United States Commodity Futures Trading
Commission (“CFTC”) or a member of the National Futures Association (“NFA”).
2. David Pratt (“Pratt”) during relevant times resided in California and acted as the CEO
or manager of US Dinar and was responsible for the operations of US Dinar. Pratt solicited investors
on the internet via US Dinar’s websites at www.usdinarbank.com and www.usdinarex.com. The
websites offer investors an Iraqi bank account for dinar and dollar exchange. (The dinar is the
currency of Iraq.) Pratt has never been registered with the CFTC or a member of the NFA.
3. US Dinar and Pratt provided potential investors with an information package. Pratt
told investors that US Dinar will open an interest (3%) bearing Iraqi savings account at a large
commercial bank in Iraq, Al Warka Bank. This account would enable an investor to buy and sell
dinars and have online review 24/7.
4. Pratt stated that the bank account is managed by William Burbank and that the return on
an investment would be four times the initial investment within a short period of time and investors
would be charged 20% of the total profit for managing the account. Pratt offered dinars at a
“discount” for between 75 and 85 cents and stated dinars would be listed on FOREX, the foreign
exchange market. Pratt stated “the Dinar will open trading at between $1.50-$2.00 minimum.”
Pratt projected the Dinar to rise “within days to the $3.00-$3.50 range.”
5. US Dinar solicits clients that are unsophisticated individuals with minimal or no
investment experience. A client receives and signs a customer agreement in which US Dinar
agrees to accept a customer and to open and maintain accounts for dinar trading in which US Dinar
is authorized to act as broker or agent, or as principal to execute a customer’s orders.
6. US Dinar and Pratt violated provisions of the California Corporate Securities Law
of 1968 and the California Commodity Law of 1990, respectively set forth in Corporations Code
section 25000 et seq. and section 29500 et seq.
7. US Dinar’s offering of an interest bearing Iraqi “custodial” bank account is an
investment contract that is not exempt from the qualification requirements of the Corporate
Securities Law of 1968. US Dinar and Pratt offered or sold investment contracts in violation of
Corporations Code sections 25110.
8. US Dinar and Pratt offered and sold commodity contracts or options to investors by
means of fraudulent acts, which are in violation of Corporations Code sections 25401 and 29536.
These include, but are not limited to, the following misrepresentations and omissions of material
fact:
MISREPRESENTATIONS
a. US Dinar Bank was not a “Bank” or financial institution;
b. Investors would receive a return of three percent (3%) on the
amount of their respective investment;
OMISSIONS
a. US Dinar Bank, US DinarEx and David Pratt were not registered with
the CFTC; and,
b. US Dinar Bank, US DinarEx and David Pratt did not qualify the
investment offerings in California.
9. US Dinar sold or purchased, offered to sell or purchase commodity contracts or options,
or offered to enter into, or entered into as a seller or purchaser commodity contracts or options in
California.
10. The commodity contracts and options that US Dinar sold or purchased, offered to sell
or purchase, or offered to enter into or entered into as a seller or purchaser on behalf of investors,
were primarily for speculative or investment purposes, in that, the contracts were offered,
purchased, sold, or entered into based on quoted price changes and fluctuations in particular
contracts, rather than as a means of acquiring these physical commodities.
11. The contracts or options US Dinar sold or purchased, offered for sale or purchased, or
offered to enter into or entered into as a seller or purchaser are commodity contracts and
commodity options, as respectively defined in Corporations Code sections 29505 and 29510.
12. US Dinar’s above-described transactions do not meet the exemptions found in sections
29530, 29531 and 29532 of the Corporations Code and are in violation of Corporations Code
section 29520.
13. Corporations Code section 29509 defines a commodity merchant as a futures
commission merchant, commodity pool operator, commodity trading advisor, introducing broker,
leverage transaction merchant, an associated person of the foregoing, a floor broker and any other
person required to register with the CFTC.
14. Corporations Code section 29535 states no person shall engage in the trade or business
or otherwise act as a commodity merchant unless the person is registered or temporarily licensed
with the CFTC for each activity constituting that person as a commodity merchant. US Dinar acted
as a commodity merchant and is not exempt from the registration and licensing requirements.
15. Corporations Code section 29536 states it is unlawful for any person, directly or
indirectly, in connection with the purchase or sale of, the offer to sell, the offer to purchase, the
offer to enter into, or the entry into, a commodity, commodity contract, or commodity option to do
any of the following: (a) to willfully employ any device, scheme, or artifice to defraud, (b) to
willfully make any false report, enter any false record, make any untrue statement of a material
fact, or omit to state a material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading, (c) to willfully engage in any
transaction, act, practice, or course of business which operates or would operate as a fraud or
deceit upon any persons, or (d) to willfully misappropriate or convert the funds, security, or
property of any other person.
16. US Dinar Bank, US DinarEx and David Pratt failed to comply with the qualification
provisions when they offered and sold securities in violation of Corporations Code section 25110.
17. US Dinar Bank, US DinarEx and David Pratt made misrepresentations or omissions of
material facts that violated Corporations Code section 25401.
Based upon the foregoing, the California Corporations Commissioner is of the opinion that
US Dinar Bank, US DinarEx and David Pratt sold or purchased, or offered to sell or purchase
commodities under commodity contracts or options, or offered to enter into, or entered into, as a
seller or purchaser commodity contracts or options.
Pursuant to section 29542 of the Corporations Code, US Dinar Bank, US DinarEx and
David Pratt are hereby ordered to desist and refrain from the further sale or purchase or offer to
sell or purchase any commodity contract or under any commodity option, including, but not
limited to, contracts and from the further offer to enter into, or entering into, as sellers or
purchasers of any commodity contract or any commodity option in the State of California, unless
and until such activity is not in violation of Corporations Code section 29520 of the law.
The Commissioner is of the opinion that US Dinar Bank, US DinarEx and David Pratt are
engaged in a trade or business as a commodity merchant without registration or licensure, then in
effect, in violation of Corporations Code section 29535.
Pursuant to Corporations Code section 29542, US Dinar Bank, US DinarEx and David
Pratt are hereby ordered to desist and refrain from conducting business as a commodity merchant
in the State of California, until registration or licensure has been made with the CFTC or unless
exempt.
The Commissioner is of the opinion that US Dinar Bank, US DinarEx and David Pratt
engaged in the above-described offer and sale of commodities, commodity contracts or commodity
options in this State by willfully making an untrue statement of material fact or omitting to state a
material fact necessary in order to make the statements made, in the light of the circumstances
under which they were made, not misleading.
Pursuant to Corporations Code section 29542, US Dinar Bank, US DinarEx and David
Pratt are hereby ordered to desist and refrain from offering or selling any commodity,
commodity contracts or commodity options in the State of California by means of any fraudulent
act including, but not limited to, willfully making an untrue statement of material fact or omitting
to state a material fact necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading.
The California Corporations Commissioner is of the opinion that the activities of US
Dinar Bank, US DinarEx and David Pratt involve the unqualified offers or sales of securities in
California that are subject to qualification under the CSL, without such offers or sales first being
qualified or exempt, in violation of Corporations Code section 25110.
Pursuant to Corporations Code section 25532, US Dinar Bank, US DinarEx and David
Pratt are hereby ordered to desist and refrain from the further offer or sale of securities including,
but not limited to, investment contracts, unless and until the offers and sales have been duly
qualified under the Corporate Securities Law or unless exempt.
The California Corporations Commissioner is also of the opinion that such offers and sales
of securities in this state were made by means of written or oral communications which included
an untrue statement of a material fact or omitted to state a material fact necessary in order to make
the statements made, in the light of the circumstances under which they were made, not
misleading, in violation of Corporations Code section 25401.
Pursuant to Corporations Code section 25532, US Dinar Bank, US DinarEx and David
Pratt are hereby ordered to desist and refrain from offering or selling or buying or offering to buy
any security in the State of California by means of any written or oral communication which
includes an untrue statement of a material fact or omits to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they were made, not
misleading.
This Order is necessary, in the public interest, for the protection of investors and consistent
with the purposes, policies, and provisions of the California Commodity Law of 1990 and the
Corporate Securities Law of 1968.
Dated: June 10, 2011
Los Angeles, California
PRESTON DuFAUCHARD
California Corporations Commissioner
By________________________________
ALAN S. WEINGER
Deputy Commissioner
Enforcement Division
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