The U.S. Commodity Futures Trading Commission (CFTC) has successfully obtained a judgement in a case of precious metals fraud. An individual named Robert Escobio who has been residing in Miami, Florida, has managed to channel over $1.5 million from 78 clients of his leveraged precious metals scheme.
The perpetrator used two companies – Southern Trust Metals, Inc. and Loreley Overseas Corporation. The judgement on the case is final and mandates the defendants to pay restitution in the amount of just over $1.5 million and a civil monetary penalty of $250,000. Robert Escobio has also been permanently barred from the industry.
According to the judgement on the case the perpetrator’s company Southern Trust has to pay additional restitution of over $0.5 million and a penalty of $120,000 for executing an unregistered futures scheme. The final judgement on the case has been awarded despite multiple denials by the perpetrators of the scheme.
How to Prepare for CySEC’s New Tiered LeverageGo to article >>
Commenting on the matter, the Director of the CFTC’s Division of Enforcement, Aitan Goelman, said: “Protecting consumers from fraud and ensuring market integrity are core components of the CFTC’s mission. This case is another demonstration that the CFTC will be relentless in fulfilling its mission, including successfully prosecuting cases through trial where necessary.”
Investors Awarded $2.1m Restitution But No Warranties of Recovering Funds
The investors in the scheme have been solicited to purchase physical precious metals which the defendants claimed to have been stored in London or Hong Kong based vaults. In reality the perpetrators of the scheme have never purchased nor sold precious metals.
By using the British Virgin Islands registered company Loreley, Escobio channeled the funds out of the US and into a United Kingdom based account which was used to trade derivatives on margin.
While the court has awarded over $2.1 million in restitution, there is no warranty that the clients of the fraudulent scheme organized and executed by Escobio will get any of their money back.