A business selling metals futures and derivatives will have to pay most but not all of the $2.1 million in restitution awarded by a Florida federal judge, the U.S. Court of Appeals for the Eleventh Circuit ruled Thursday.
The U.S. Commodity Futures Trading Commission sued Southern Trust Metals Inc. and CEO Robert Escobio, alleging fraud under two different marketing schemes. In one, the company led customers to believe they were buying precious metals when they were actually buying metals derivatives, meaning they were buying a product whose value was derived from the price of gold or silver, but no precious metals were delivered. In the other, the company accepted money for metals futures but failed to register for that activity. The commission alleged that the companies charged interest on loans that were never made to buy precious metals that were never purchased and even charged storage fees for the nonexistent gold and silver.
