The U.S. Commodity Futures Trading Commission appeared in front of the 11th Circuit appellate court to uphold its Florida federal court win. The CFTC had alleged that two companies and their CEO defrauded investors of over $2 million based on false promises of precious metal purchases.
According to the CFTC, Southern Trust Metals Inc., Loreley Overseas Corporation and their CEO, Robert Escobio, were on the hook for an alleged $2.6 million scheme that defrauded investors into thinking they were purchasing precious metals. Instead, the funds were invested in derivatives.
The CFTC filed suit against both companies in 2014, claiming that Southern Trust and Loreley Overseas Corporation sold investments in platinum, gold, and silver to investors between 2011 and 2013. Some of the investments were not in physical commodities but in futures, and customers were not given the metals as promised. As opposed to a physical commodity, a future is an investment vehicle used to predict the value of a security at some point in the future. As a general rule of thumb, investing in futures is highly speculative.
The Florida district court agreed with the CFTC, holding that the companies and their CEO knowingly made false statements to investors about the use of investor funds and that no loans were actually taken out on their behalf to leverage their investments.
Escobio was accused of knowing or being reckless in not knowing that Loreley was not purchasing physical metals at various trading firms where he had opened accounts and had no basis to believe that the margin trading firms he was dealing with were providing loans as he claimed.
CFTC Asks for Lifetime Ban for Escobio
The CFTC is asking for a lifetime ban to prevent Escobio from commodity trading activities, contending that his acts are egregious violations of the Commodity Exchange Act.
Do you think you have a connection to this CFTC Case?
If you invested with Robert Escobio or one of his companies, you may have certain legal rights that require your immediate attention. The attorneys at Dimond Kaplan & Rothstein, P.A. have recovered over $100 million from banks and brokerage firms for their wrongful actions.