The U.S. Commodity Futures Trading Commission today announced it filed a civil enforcement action on January 8th 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 s797aid 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: USCB-Victims@usss.dhs.gov.