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CFTC seeks injunction against another Florida precious-metals trading scheme

The U.S. Commodities Futures Trading Commission has taken action against yet another precious metals trading scheme based in Florida, this time the Global Precious Metals Trading Company.

Author: Dorothy Kosich
Posted: Tuesday , 14 May 2013


The U.S. Commodities Futures Trading Commission Monday filed a civil injunctive enforcement action against Global Precious Metals Trading Company (GPMT) and its owner Michael Ghaemi for allegedly misappropriating as much as $735,000 from nine U.S. customers.

The case is just the latest of several cases over the past two years involving Florida-based corporations allegedly involved in illegal physical precious metals trading schemes.

In February of this year, the CFTC ordered two Boca Raton companies (Joseph Glenn Commodities and JGCF, LLC) to pay over $1 million in restitution and penalties for engaging in illegal metals transactions with their customers.

See also: CFTC bans 2 Florida firms from precious metals trading

In May 2011, the CFTC filed charges against Florida-based precious metals telemarketer American Precious Metals.

See also: FTC, CFTC file for closure of, restitution by American Precious Metals

In August 2012, four men were charged in the U.S. District Court for the Southern District of Florida in a precious metals investment scheme involving Global Bullion Tracking Group, WJS Funding, d/b/a Capital Asset Management, and Certified Inc., d/b/a Certified Clearing.

See also: 4 arraigned in big bucks, precious metals bullion Ponzi-scheme

According to the latest CFTC Complaint filed Monday in the U.S. District Court for the Southern District of Florida, from July 16, 2011, to at least August 2012, the defendants claimed to purchase and store physical metal, including gold, silver platinum and palladium for customers.

“GPMT has an affiliated United Kingdom limited liability company which purports to operate from its offices in London, England,” said the CFTC complaint. “GPMT also purportedly maintained offices in New York, New York and Hong Kong.”

“GPMT purported to engage in the business of retail commodity transaction by being a broker between its customers and ‘tier one banks’ to facilitate the purchase, sale and accumulation of physical metals such as gold, silver, platinum and palladium for customers after customers paid a portion of the metals’ purchase price and financed the remainder,” said the complaint.

Customers were allegedly told the minimum investment was $25,000 and GPMT could finance the remaining amount of the total value through a loan which GPMT would reportedly arrange.

“During the relevant period, GPMT accepted at least $800,000 from U.S. customers for the financed purchase of physical precious metals and also accepted funds from foreign customers,” said the CFTC. GPMT charged customers at a rate set by Ghaemi of 7.5% and deducted the interest from customers’ accounts.

However, the complaint observed, “Instead of purchasing metals, defendants misappropriated the customers’ funds by wiring a portion of the customers’ funds held in GPMT’s bank account to a GPMT trading account at FIXI LLC, a trading firm headquarter in London, England. …GPMT’s customers did not have a direct interest in the FIXI account.”

“Between August 2011 and November 2011, GPMT suffered massive losses in the FIXI account nearly every month,” said the agency. “Ghaemi, who was in part responsible for monitoring GPMT’s profits and losses at FIXI, did not disclose these mounting losses to GPMT customers until virtually all of the funds were dissipated.”

“Defendants also misappropriated a portion of the customers’ funds by using them to make Ghaemi’s car payments; pay Ghaemi a $10,000 per month salary; pay personal travel and entertainment expenses; make cash disbursements; and make a $125,000 loan to a GPMT broker to purchase a home,” the complaint claimed.

On or about Nov. 28, 2011, the defendants reportedly sent customers an e-mail “stating that the GPMT trading accounts ‘closed in negative value’ on or about November 23, 2011. GPMT had been suffering losses continually from August to November 2011, but this email was the first time that the losses were disclosed to customers.”

“Of the approximately $800,000 defendants obtained from U.S. customers during the relevant period, to date they have returned less than $65,000 to customers. GPMT customers have suffered approximately $735,000 in losses,” said the complaint.

The complaint alleges three counts of violations of the Commodity Exchange Act including illegal off-exchange trading; fraud; and fraud in interstate commerce.

The CFTC is asking a federal judge to issue a permanent injunction against the defendants and any other person or entity associated with them from trading or trading in futures. Damages of $140,000 for each violation committed on or after Oct. 23, 2008, are being sought, as well as an order requiring defendants to pay costs and fees.

The commission also noted that defendant Michael Ghaemi was disciplined in 2009 by the National Futures Association “for making a misleading and deceptive sales solicitation, including misrepresenting and deceptive sales solicitation, including misrepresenting the profit potential of heating oil and orange juice futures contracts, downplaying the risk of loss, and recommending trades to customers that were for the purpose of generating commissions for himself. The NFA fined Ghaemi $10,000 and barred him from NFA membership for two years.”

Tags: physical precious metals trade, CFTC, precious metals trade fraud, U.S. District Court in Southern Florida, Florida-based precious metal trading companies, Commodity Futures Trading Commission, Global Precious Metals Trading Company, LLC, Michael Ghaemi, precious metals futures, gold, silver, platinum, palladium

About Dorothy Kosich

A veteran mining journalist, Dorothy Kosich, MA, MPA, brings a wealth of experience not only in mining itself but also in public policy, government affairs and socially sustainable development to bear on Mineweb's largest market. She is Mineweb's Deputy Editor and Americas' Editor

Email: dorothy@mineweb.com

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10 May 2013


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