(Updates with CFTC chairman seeking more antifraud power; paragrah 5)

By Jasmin Melvin

WASHINGTON, June 4 (Reuters) - The U.S. government should close a loophole that allows unregulated firms to sell commodity contracts that may have swindled consumers out of millions of dollars, a U.S. lawmaker said on Thursday.

The loophole, that lawmakers say arose from a 2004 ruling by a U.S. appeals court involving businessman Michael Zelener, limited the definition of a futures contract.

"I think there's a solution, and I think I'm looking at the people that can put it together," said Rep. Leonard Boswell, a Democrat of Iowa.

Boswell, chairman of a House Agriculture subcommittee, asked a three-member panel representing the U.S. Commodity Futures Trading Commission, the National Futures Association and a leading precious metals dealer to arrange a draft bill.

Separately, CFTC chairman Gary Gensler asked senators, when they write a financial reform package, to give CFTC authority to police fraudulent "rolling spot" contracts for all commodities, not just foreign exchange contracts.

Zelener promised customers they would see 120 percent returns with little risk. Instead, his 200 plus customers lost a total of $2 million over two years.

Zelener eventually pled guilty to criminal fraud charges, for which he will be sentenced in August. But an appellate court ruling in this case put it and others like it outside of the jurisdiction of the CFTC.