January 13, 2020
featured in today's Securities Industry Commentator:
In a Complaint filed in the United States District Court for the Middle District of Florida
https://www.cftc.gov/media/3306/enfuscoinsbullioncomplaint010820/download, the CFTC charged US Coin Bullion LLC, Salvatore Esposito, and Joseph Esposito with misappropriating over $7.9 million of customer funds, as well as engaging in fraudulent solicitations in connection with the purported purchase of precious metals. Separately, criminal charges were filed against the Espositos, who each pled guilty to one count of wire fraud and agreed to pay restitution. As alleged in part in the CFTC Release:
[F]rom at least 2012 through July 2019, the defendants received over $7.9 million from at least 120 customers for the purpose of investing in precious metals. Instead of making these purchases, the defendants misappropriated the entire amount to pay for personal and business expenses, diverted funds invested by new customers to make Ponzi scheme-like payments to earlier customers who requested account withdrawals, and used customer funds to trade leveraged precious metals in US Coin accounts at precious metals dealers. The complaint alleges that, in order to conceal their fraud, the defendants provided customers with account statements falsely representing ownership of specific amounts of precious metals purchased at particular prices.
In a 2018 FINRA Arbitration Statement of Claim, a former Merrill Lynch senior manager alleged that his former employer had engaged in RICO-like fraud when it failed to pay him his just compensation upon his 2010 resignation. Claimant alleged that his damages were caused by the 2008 collapse of the securitized residential mortgage-backed securities ("RMBS") and collateralized debt obligations ("CDO") markets. Although a Merrill Lynch manager, Claimant argued that he had no knowledge of his employer's fraudulent role in the collapse of the cited markets. 2008 RMBS/CDO collapse. 2010 resignation. 2018 FINRA Arbitration claim. Did Claimant timely file his claim?
Former stockbroker Jeffrey Auerbach, pled guilty in the United States District Court for the Eastern District of New York to conspiracy to commit securities fraud As alleged in part in the DOJ Release:
[B]etween July 2014 and September 2015, Auerbach conspired with others to defraud investors and potential investors in NXT-ID, a company that purported to provide a comprehensive platform of technology products and services that enable the Internet of Things ("IoT"). As part of this scheme, Auerbach allegedly accepted secret payments from the CEO of NXT-ID in exchange for promoting NXT-ID stock to investors, and making payments to a broker to purchase shares of NXT-ID stock in the accounts of the broker's clients.
Aref Zokita Said pled guilty in the United States District Court for the District of Massachusetts to eight counts of wire fraud and conspiracy to commit wire fraud; and he was sentenced t60 months in prison plus three years of supervised release, and $1,631,478 in restitution. As alleged in part in the DOJ Release:
Beginning no later than August 2013, Said and his co-conspirators defrauded law firms and non-profits, including charities, by sending them fraudulent cashier's checks and convincing them to wire money to members of the scheme, with the false assurance that the fake checks would cover the expense. Once the checks were discovered to be fraudulent-after the victims' bank accounts were debited-the victims were left with thousands of dollars in losses, having unwittingly forwarded their own money to a member of the conspiracy.