HomeCrime and FraudFormer Precious Metals CEO in Contempt of Court for Failure to Pay...

Former Precious Metals CEO in Contempt of Court for Failure to Pay Restitution to Fraud Victims

Commodity Futures Trading Commission

By Commodity Futures Trading Commission ……
 

The U.S. Commodity Futures Trading Commission (CFTC) announced today that on March 18, 2019, District Judge James Lawrence King of the U.S. District Court for the Southern District of Florida entered an order finding Coral Gables, Florida resident Robert Escobio in contempt (“Contempt Order”) for failing to pay more than $1.5 million in previously-ordered restitution to defrauded customers of Mr. Escobio’s now-defunct precious metals firm, Southern Trust Metals, Inc. (“Southern Trust”).

The Contempt Order, entered after a two-day evidentiary hearing, required Mr. Escobio to pay $350,000 in restitution within 10 days, plus an additional $10,000 per month until Escobio’s restitution obligation has been satisfied. Mr. Escobio failed to make the $350,000 payment and has been ordered to surrender to the U.S. Marshall Service for incarceration until he has fully complied.

James McDonald, Director of the CFTC’s Division of Enforcement said: “Investor protection and market integrity are two core components of the CFTC’s mission. We will not allow defendants with apparent means to pay, like Mr. Escobio, to shirk their restitution obligations at the expense of defrauded customers.”

The Contempt Order stems from an enforcement action filed by the Commission against Mr. Escobio and Southern Trust in 2014. After trial on the merits, Judge King found that Mr. Escobio had masterminded a scheme to defraud customers relating to the purported sale of precious metals through Southern Trust. On September 1, 2017, Judge King ordered, among other things, for Escobio to pay restitution in the amount of $1,543,892 to compensate victims of the Southern Trust’s leveraged precious metals scheme (“Restitution Order”). The United States Court of Appeals for the Eleventh Circuit subsequently denied Mr. Escobio’s appeal of the Restitution Order on July 12, 2018.

After a two-day evidentiary hearing on whether Mr. Escobio should be found in contempt, Judge King found as follows:

The evidence shows that Escobio has more than $900,000 in assets and that since the judgment he has benefitted from a household income of around $250,000 a year, plus the $200,000 to $300,000 in purported “loans”. In light of these facts, Escobio’s payments totaling $3,525 do not constitute good faith compliance with the final judgment. Not only that, the evidence shows that Escobio does not intend to comply with the Court’s restitution order and has deliberately and contemptuously refused to do so.

Mr. Escobio has appealed the Contempt Order to the United States Court of Appeals for the Eleventh Circuit.

CFTC Division of Enforcement staff members responsible for this action are Ashley J. Burden, Carlin Metzger, Heather Dasso, Venice Bickham, Joseph Konizeski, Scott Williamson and former staff member Rosemary Hollinger.

The CFTC thanks the National Futures Association and the Financial Industry Regulatory Authority for their assistance in this matter.

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CFTC’s Precious Metals Customer Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Precious Metals Fraud Advisory, which alerts customers to precious metals fraud and lists simple ways to spot precious metals scams.

Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.
 

CoinWeek
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