Commodity Related Investment Fraud Lawsuit Filed in Florida Court

A lawsuit has been filed alleging that a Palm Beach County company has engaged in nearly $3 million of precious metal fraud. The lawsuit, which was brought in U.S. District Court, was filed by the United States Commodity Futures Trading Commission (CFTC) against Berkeley Enterprises. If you believe that you have been the victim of commodities fraud, please contact an experienced Miami investment fraud lawyer for immediate legal assistance.

Investors Were Misled

Berkeley Enterprises handled several types of precious metals, including diamonds, gold, silver and platinum. Berkeley sold investors the rights to these metals on a ‘financed’ basis. Essentially, a client would pay a portion of the value of the asset and Berkeley would extend them credit for the remainder of the cost. After making a purchase, investors were given:

• A purchase order;
• An account statement; and
• Additional ownership records.

However, in reality Berkeley Enterprises company owners were actually holding the metals in their personal accounts. Further, they were not holding nearly enough precious metal assets to cover their financial obligations to their investors. In all, the company took in nearly $3 million, but the CFTC alleges that most of those investor funds were never used to purchase the stated assets. If the allegations are true, Berkeley has violated the Commodity Exchange Act.

Common Types of Commodity Fraud

The commodities market is especially complex, and commodities fraud can take many different specific forms. According to guidance from the Federal Bureau of Investigation (FBI) the majority of commodities fraud cases come from two different markets:

• Precious Metals: A significant amount of fraud occurs on the precious metals market. The FBI reported that the majority of precious metals fraud involves misappropriation of funds in a very similar manner to what occurred in the Berkeley Enterprises case. Not purchasing the asset, and then producing fake account statements, is a common form of precious metal fraud. Investors should also watch out for high pressure investment sales tactics, which often include false promises of high, guaranteed, investment returns. Commodity dealers have a legal obligation to market their products in good faith.
• Forex: The Forex market also sees its share of commodities fraud. Forex is a global exchange market for currency. It is a notoriously ‘fast’ market. In this market, one of the biggest issues to watch for is ‘churning’. The unlawful practice of churning occurs when an investment adviser quickly moves in and out of market positions. This is done simply to drive up their own commissions checks, not for the benefit of the investor. Churning will quickly destroy the value of an investor’s account. If you believe that you have been the victim of an investment adviser’s churning, whether in the Forex market, or any other market, you need to speak to an experienced attorney immediately.

Contact Our Office Today

Commodities can be volatile investments, the last thing you want to worry about is the additional risk of becoming a fraud victim. At Carlson & Associates, P.A., our investment fraud lawyers have the experience to help protect you. If you have been a victim of investment fraud in South Florida, please contact our Miami office today at 1-(305)-372-9700 to schedule a initial legal consultation.