Up to His Old Tricks, Regulator Claims

MIAMI (CN) - Recidivist commodities trader Michael Ghaemi bilked people for $800,000 through his Global Precious Metals Trading Co., the CFTC claims in court.

Ghaemi, of Miami, is the founder and sole principal of Global Precious Metals Trading Co. In 2009, the National Futures Association fined him $10,000 and barred him from membership in it for two years, the CFTC says in its federal complaint. He was accused then of "making a misleading and deceptive sales solicitation, including misrepresenting the profit potential of heating oil and orange juice futures contracts, downplaying the risk of loss, and recommending trades to customers that were for the purpose of generating commissions for himself," the Commodity Futures Trading Commission says in its complaint.

This time, the CFTC says, beginning in 2011, Ghaemi "solicited and accepted at least $800,000 from approximately nine U.S. retail customers for the purpose of purchasing physical precious metals."

"During the relevant period, defendants defrauded these retail customers by among other things, misappropriating customer funds, misrepresenting and omitting material information regarding the nature of the investments customers were purchasing, and omitting material information regarding Ghaemi's regulatory history of defrauding or attempting to defraud customers in connection with commodity futures contracts.

"Instead of purchasing physical precious metals for retail customers, Defendants misappropriated virtually all of the customers' funds, using a portion of the funds to pay Ghaemi's car payments, a $10,000 per month salary, travel expenses, cash disbursements, and a $125,000 loan to a GPMT broker to purchase a home. Defendants also misappropriated customer funds to margin a speculative metals trading account in London which suffered massive trading losses.

"Defendants falsely represented to customers that their precious metals were being held in secured depositories, and fraudulently charged customers interest on purported loans to finance the purchase of the physical metals. In reality, no physical metal was stored for Defendants' customers and no loans were made to customers to purchase physical metal.

"Defendants' misappropriation ultimately caused the loss of virtually all of the customers' funds, and in August 2012 Defendants sent at least one customer an e-mail stating that GPMT was closing down. Customers were left without metals or a return of their funds."

The CFTC seeks restitution, penalties of up to $140,000 per violation, and wants a judge to tell Ghaemi not to do it again.

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