Michael Ghaemi, of Miami, Florida, is facing charges of fraud following a civil enforcement action filed by the U.S. Commodity Futures Trading Commission (CFTC) on May 13, 2013, in the U.S. District Court for the Southern District of Florida. The CFTC alleges that Ghaemi, along with his company Global Precious Metals Trading Company, LLC (GPMT) of Coral Gables, Florida, misappropriated over $800,000 from approximately nine U.S. customers.
According to the CFTC’s complaint, Ghaemi and GPMT solicited funds from customers with the promise of purchasing and storing physical precious metals – including gold, silver, platinum, and palladium – on their behalf. Customers were told a minimum investment of $25,000 was required, with GPMT arranging financing for the remainder of the metal’s value. However, the CFTC alleges these claims were false.
Instead of investing in physical metals, Ghaemi allegedly used the customer funds for personal expenses. These included car payments, his own salary, travel, entertainment, and to cover margin calls on his own speculative metals trading account in London. The CFTC reports that less than $65,000 of the $800,000+ obtained from customers has been returned, with the remainder allegedly misappropriated.
The case falls under the jurisdiction of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which prohibits fraud in off-exchange retail commodity transactions and requires such transactions to occur on regulated exchanges. The CFTC issued a consumer fraud advisory in January 2012 warning of similar schemes where companies fail to actually purchase the metals for customers.
The CFTC is seeking preliminary and permanent civil injunctions against Ghaemi and GPMT, as well as restitution for the affected customers. The CFTC acknowledged assistance from the Florida Office of Financial Regulation and the United Kingdom Financial Conduct Authority in the investigation.
Source: CFTC.gov
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