On Friday, January 10, the U.S. Commodity Futures Trading Commission (CFTC) announced it had filed a civil enforcement action on January 8 in the U.S. District Court for the Middle District of Florida, charging US Coin Bullion LLC, Salvatore Esposito, and Joseph Esposito with misappropriating over $7.9 million of customer funds, as well as engaging in fraudulent solicitations in connection with the purported purchase of precious metals.
“As this case shows, the CFTC is actively policing precious metals transactions and will vigorously enforce the anti-fraud provisions of the Commodity Exchange Act,” said CFTC Director of Enforcement James McDonald. “As I have said many times, working in parallel with our law enforcement partners is an extremely effective way to prosecute wrongdoers and send a message to potential wrongdoers that their fraudulent conduct will result in significant consequences.”
The complaint seeks an order that permanently bans the defendants from registering with the CFTC and trading in any CFTC-regulated markets, as well as restitution and disgorgement.
The complaint alleges that from at least 2012 through July 2019, the defendants received over $7.9 million from at least 120 customers for the purpose of investing in precious metals. Instead of making these purchases, the defendants misappropriated the entire amount to pay for personal and business expenses, diverted funds invested by new customers to make Ponzi scheme-like payments to earlier customers who requested account withdrawals, and used customer funds to trade leveraged precious metals in US Coin accounts at precious metals dealers. The complaint alleges that, in order to conceal their fraud, the defendants provided customers with account statements falsely representing ownership of specific amounts of precious metals purchased at particular prices.
Related Criminal Action
On September 20, 2019, the U.S. Attorney’s Office for the Middle District of Florida announced a separate criminal action against Salvatore and Joseph Esposito [See United States v. Esposito, No. 6:19-cr-00208-CEM-DCI (M.D. Fla.)] Each individual pleaded guilty to one count of wire fraud and agreed to pay restitution to victims of their fraud.
Victims of US Coin’s and the Espositos’ fraud can find further information by sending an email to [email protected].
The CFTC thanks the U.S. Attorney’s Office of the Middle District of Florida, Orlando Division; the U.S. Secret Service Orlando Field Office, and the U.S. Secret Service Central Florida Task Force for their assistance in pursuing this matter.
The Division of Enforcement staff members responsible for this case are Eugenia Vroustouris, Michael Loconte, Erica Bodin, Aimée Latimer-Zayets, and Rick Glaser.
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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.