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Precious Metals Futures Fraud

The Commodity Futures Trading Commission (“CFTC”) established the Precious Metals Fraud Advisory to alert customers to precious metals fraud and lists of recognized frauds and scams. The advisory also posts blogs and tips on simple ways to spot precious metals scams. The CFTC implemented several customer protections advisories to provide various warnings on popular scams and frauds.

The Precious Metals Fraud Advisory notifies investors about fraudulent promises of profits from rising prices in precious metals including gold, silver, palladium, and platinum. The advisory also includes tips on spotting signs of a fraudulent sales pitch. Signs include:

  • Profit from news already known to the public including issues with mines and new uses of metals;
  • Individuals claiming to work as “metal dealers” or “merchants”;
  • Individuals marketing themselves via radio, television, or online, including Email;
  • Individuals reaching out to you using various forms of communication and asking for personal information; and
  • Individuals identifying as a broker or salesman from a company promoting the purchase of precious metals.

The advisory includes persuasion tactics that are often used by fraudulent dealers in precious metal scams. These tactics include promising wealth, building credibility by claiming a strong reputation, promoting stories of other investors they helped become wealthy, and creating a false sense of urgency.

The frauds also commonly ask for a small percentage (10-15%) of the full of the total purchase price through a low-risk financing agreement. The scams often claim that the company will store the precious metals in a storage facility or bank.

Before investing in any precious metals, contact the National Futures Association to check on the company’s reliability and registration status. If you are aware of any suspicious activity, you are asked to report the CFTC through their tip or complaint system.

Florida Based Special Metals Fraud

The CFTC charged Florida-based Southern Trust Metals, Inc. and Robert Escobio of Coral Gables, Florida with defrauding retail customers with promises of high returns from investing in precious metals. The illegal, off-exchange, financed precious metals transactions caused losses of over $600,000 to investors. The scheme raised more than $2.6 million from over 135 investors. In another unlawful scheme, the Florida-based company solicited an additional $900,000 for the purchase and sale of precious metals futures and options without registering with the CFTC.

The complaint against Southern Trust Metals claims that the organization solicited investors to engage in precious metals transactions without registering with the CFTC. A phone call by a potential investor to the CFTC , before investing in a special metals scheme, would result in neither a confirmation that Southern Trust Metals was registered nor following Dodd-Frank Act regulations. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the transactions are illegal unless they result in delivery of the metal within 28 days. The precious metals sold by Southern Trust Metals and many other fraudulent precious metals schemes never resulted in actual delivery.

Let Us Serve You Today

If you invested in a precious metals scheme that you believe is fraudulent, contact attorney Gregory Tendrich, P.A. in Boca Raton to discuss your options for obtaining restitution. We are prepared to help you in any way that we can.

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