Miami resident Michael Ghaemi has been ordered to pay over $2.1 million in penalties and restitution after being found guilty of running a fraudulent precious metals scheme, the Commodity Futures Trading Commission (CFTC) announced today. The federal court default judgment, entered on August 12, 2013, also permanently bans Ghaemi and his company, Global Precious Metals Trading Company, LLC (GPMT), from trading and registering with the CFTC.
According to the CFTC, from July 2011 through August 2012, Ghaemi and GPMT fraudulently solicited approximately $800,000 from nine U.S. retail customers, promising to purchase physical precious metals – gold, silver, platinum, and palladium – on a financed basis. However, the agency found that Ghaemi and GPMT never actually purchased or stored the metals, despite charging customers interest and storage fees.
The scheme violated the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which requires such transactions to be executed on a regulated exchange. Ghaemi and GPMT conducted the transactions off-exchange, rendering them illegal. The CFTC determined that Ghaemi misappropriated nearly all of the customer funds, losing them through personal use, unauthorized spending, and speculative margin trading at a London brokerage.
As a result of the judgment, Ghaemi and GPMT must pay a $1.26 million civil monetary penalty, $736,979 in restitution to the defrauded customers, and disgorge $186,860 in ill-gotten gains. The order prohibits them from further violations of the Commodity Exchange Act (CEA) and CFTC regulations. The case was filed in federal court in Washington, D.C. on August 22, 2013.
The CFTC acknowledged the assistance of the U.K. Financial Conduct Authority in the investigation. Staff members Camille Arnold, Heather Johnson, Joseph Konizeski, Scott Williamson, Rosemary Hollinger, and Richard Wagner were responsible for the case.
Source: CFTC.gov
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