Florida Precious Metals Scam Golden Opportunity to Learn

A Florida court recently found Robert Escobio and his companies, Southern Trust Metals and Loreley Overseas Corp guilty by the U.S. Commodity Futures Trading Commission (CFTC) of bilking customers in a precious metals scam. Escobio was accused of stealing $600,000 from 35 customers from July 2011 through May 2013. Over the time period, the defendant and his companies received more than $2.6 million from the plaintiffs, according to South Florida Business Journal.

Escobio, Southern Trust, and Loreley were banned from commodity trading and ordered to pay more than $2.1 million in penalties.

Here’s how the scam worked: Southern Trust was a trading firm offering financing for customers to purchase physical metals. The firm solicited customers by phone and told them the metals would be held in London and Hong Kong depositories, according to the CFTC. Therefore, customers believed the company had physical possession of the metals, but that wasn’t the case at all.

As it turns out, Southern Trust never possessed, held titles, or delivered any of the precious metals they claimed to have. Instead, Southern Trust “transferred customer accounts through Loreley and then through accounts in the U.K.,” according to the CFTC.

The scam offers a great teaching opportunity for customers looking to buy gold and silver:

• When buying precious metals for vault storage, make sure you work with a company that explicitly guarantees physical possession, either through delivery or storage.
• Local coin dealers can help ensure physical possession, but if you’re planning to buy gold in a larger amount, you’ll want to work directly with a gold dealer such as SchiffGold.

Dealers like SchiffGold can acquire any bullion product at the best possible price in larger quantities. Shipping is easy, safe, and often free. Often we can beat the prices of your local coin shop because we don’t share the overhead costs of a brick-and-mortar retail space. More importantly, we deal only with reputable suppliers and storage houses. If you’ve bought precious metals from us, you can be sure it exists and you can take possession of it whenever you need it.

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