CFTC fines Southern Trust Metals, Robert Escobio and Loreley $2.5M for fraud

The U.S. Commodity Futures Trading Commission (CFTC) fines Southern Trust Metals, Robert Escobio and Loreley for carrying out the fraudulent scheme. The wrongdoers are ordered to pay back over $2.5 million. How was the scheme executed?  

2 September, AtoZForex – The CFTC has won a case of the precious metals fraudulent scheme. The fraud was executed by Robert Escobio who attracted more than $1.5 million from 78 investors of his leveraged precious metals scheme. Robert Escobio managed to carry out the fraud by using two firms: Southern Trust Metals, Inc. and Loreley Overseas Corporation.

CFTC fines Southern Trust Metals

The decision of the court is final and orders the wrongdoers to pay back the compensation of $1.5 million and a civil monetary penalty of $250,000. Whereas, the Robert Escobio has been restricted from participating in the industry. Furthermore, Southern Trust, the offender’s firm, is required to pay extra compensation of $0.5 million and a penalty of $120,000 for carrying out an unregistered futures scheme.

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Although, the defendants refused the accusations the court still approved the findings. Aitan Goelman, the Director of the CFTC’s Enforcement Division, commented :

“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 a trial where necessary.”

How was the scheme executed  

The offenders asked investors to buy physical precious metals which they stated would be placed in Hong Kong or London cellars. However, the wrongdoers neither bought nor sold precious metals. Instead, Robert Escobio used the Loreley firm registered in the British Virgin Islands to transfer the funds from the US to the account based in the UK. The account was used to trade derivatives on margin.

Question if investors will get their money back 

Referring to the investors’ restitution, the court has mandated the defendants to pay back over $2.1 million. However, there is no guarantee that the investors who were victims of the precious metal fraudulent scheme would receive their money back.

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