copied from cftc site
May 13, 2013
CFTC Charges Global Precious Metals Trading Company and Michael Ghaemi of Coral Gables, Florida with Fraudulent Precious Metals Scheme
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil injunctive enforcement action in the U.S. District Court for the Southern District of Florida against Defendants Global Precious Metals Trading Company, LLC (GPMT) of Coral Gables, Florida, and its owner Michael Ghaemi, who resides in Miami, Florida. The CFTC’s Complaint charges that, since July 2011, the Defendants solicited and accepted more than $800,000 from approximately nine U.S. customers in connection with illegal off-exchange retail commodity transactions and then misappropriated virtually all of the customers’ funds.
According to the CFTC Complaint, the Defendants claimed to purchase and store physical metal, including gold, silver, platinum, and palladium, for customers. Defendants told customers that the minimum investment to purchase physical metal was $25,000, and that the customers would finance the remaining amount of the total value of the physical metals purchased through a loan which GPMT would arrange.
These claims were false, according to the Complaint. Instead of purchasing, storing, or financing the purchase of physical metals, the Defendants misappropriated the customers’ funds and used the funds for Ghaemi’s benefit, including to make car payments, pay Ghaemi’s salary, pay for Ghaemi’s travel and entertainment expenses, and to margin their own speculative metals trading account in London. According to the Complaint, the Defendants have returned less than $65,000 of the over $800,000 obtained from customers and misappropriated the remaining funds.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) of 2010, which expanded the CFTC’s jurisdiction over retail commodity transactions like these, prohibits fraud in connection with such transactions, and requires that these transactions be executed on or subject to the rules of a board of trade, exchange, or contract market, according to the Complaint.
CFTC’s Precious Metals Fraud Advisory
In January 2012, the CFTC issued a Precious Metals Consumer Fraud Advisory to alert customers to precious metals fraud. The Advisory stated that the CFTC had seen an increase in the number of companies offering customers the opportunity to buy or invest in precious metals. The CFTC’s Advisory specifically warns that frequently companies do not purchase any physical metals for the customer, but instead simply keep the customer’s funds. The Advisory further cautions consumers that leveraged commodity transactions are unlawful unless executed on a regulated exchange.
In its continuing litigation against the Defendants, the CFTC is seeking preliminary and permanent civil injunctions in addition to other remedial relief, including restitution to customers.
The CFTC thanks the Florida Office of Financial Regulation and the United Kingdom Financial Conduct Authority for their assistance.
CFTC Division of Enforcement staff responsible for this action are Camille Arnold, Heather Johnson, Joseph Konizeski, Scott Williamson, Rosemary Hollinger, and Richard Wagner.
Last Updated: May 13, 2013