Operators of U.S. Coin Bullion, LLC to Plead Guilty to More Than $7 Million in Fraud

By the United States Attorney’s Office, Middle District of Florida ……
United States Attorney Maria Chapa Lopez announces that brothers Salvatore Esposito (47, Orlando) and Joseph Esposito (43, Orlando) have agreed to plead guilty to an information charging them with conspiracy to commit wire fraud and mail fraud. Each faces a maximum penalty of 20 years in federal prison. Their initial appearances and change of plea hearings have been scheduled for October 2, 2019.

According to court documents, the Espositos operated U.S. Coin Bullion, a local Orlando company formed in 2012. From 2014 to July 2019, the Espositos engaged in a conspiracy to defraud U.S. Coin Bullion’s customers. Instead of using the customers’ funds to purchase precious metals as had been promised, the Espositos caused U.S. Coin Bullion to use customer funds to pay other customers, to pay commissions and other business expenses, and to purchase silver for the company itself.

U.S. Coin Bullion used its customers’ funds to purchase silver on “margin”, or “leverage”, by which it acquired an interest in the silver by paying only a portion of its full price. The company took out loans to purchase the silver on margin and then used more customer funds to pay the interest associated with those loans, as well as storage fees for the silver. And, because it was buying on margin, U.S. Coin Bullion was subject to “margin calls”; if the market price for silver declined, the company might immediately have to deposit more (customer) funds into its accounts to maintain its interest in the silver.

U.S. Coin Bullion never told its customers that their funds were being used in this way. By at least 2016, it was regularly using its customers’ funds to buy millions of dollars worth of silver. When the price for silver fell from more than $35 an ounce (in 2012) to less than $15 an ounce during the conspiracy, the company experienced massive losses and had to spend customer funds due to margin calls.

To cover up U.S. Coin Bullion’s losses, the Espositos provided customers with false account statements making it appear that the company had purchased the silver for the customers (not itself) and that their accounts maintained value despite any drop in the market price of silver. Ultimately, U.S. Coin Bullion’s margin purchases resulted in a loss of nearly all the market value of the silver that its customers believed they had purchased and held.

An information is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.

To date, the United States Secret Service has identified more than 120 victims who have been defrauded as a result of this conspiracy, with total losses of over $7.9 million. A dedicated email address ([email protected]) has been established for victims to provide victim impact statements and any other information related to their losses.

This case was investigated by the U.S. Secret Service, with assistance from the Florida Attorney General’s Office of Citizen Services – Consumer Assistance Program, which has provided invaluable assistance with the victims. This case is being prosecuted by Assistant United States Attorney Roger B. Handberg.