precious metal scams

American Greed

We were watching one of our favorite shows, CNBC’s American Greed – The Fugitives, last week when we suddenly sat bolt upright in our seat. The story that came on involved a notorious OTC leveraged metal crook, Luis Ferreira, aka Lou Almeda. Long-time fans of this blog (and the number of loyal readers is growing every week, thank you!) know our feelings about OTC leveraged precious metal dealers: many are a blot on humanity, and refuses to sell lead lists to any of them.

Ferreira represents the lowest scum in the business, an outright Ponzi thief who sold imaginary metals to unsuspecting dupes. He is also on the loose – the FBI has a wanted poster out on him for jumping bail. Ferreira was born in Brazil. He is six feet one inch tall, with brown hair and eyes. He weighs about 200 pounds and has a tattoo on his left shoulder

Well, what did Luis do to get him in such hot water? The precise charge is jury tampering regarding his involvement in a fraudulent scheme to steal from investors. He ran three “investment firms” in Deerfield Beach, Florida that solicited investments for leveraged OTC precious metals. He used lead lists to trick people into “buying” precious metals: gold, silver, platinum and palladium. One hapless investor had an RV dealership that was hit hard by the recession. Luis preyed on his desperation to convince him he could make fantastic returns on a precious metals investment.

Bear in mind the Luis was previously convicted of telemarketing fraud, was out on supervised release and was expressly barred from telemarketing and metals brokerage. He supplied phony work stubs to fool his parole officer into thinking that he was working as a janitor. We heard a story in which Luis Stopped payment on a check five minutes after writing it. The Deerfield police was called, and when they arrived they noticed his office was on the other side of a law office. The entrance to the boiler room was a lobby to a law office!

The RV dealer eventually sent in a sizeable check, which Luis pocketed.  Then, every month, Luis would fabricate an account statement that showed profits piling up on the dealer’s gold investment. Luis was so good, he got the dealer to “invest” an additional $20,000 in palladium. Luis also charged his customers fees for “storage and insurance” of their “investments”. None of his dupes insisted on taking physical delivery of their purchases!

Eventually, the RV dealer needed some cash, and asked Luis to sell off some of his “holdings”. Luis told him there might be a delay because they were being sued by a “bankrupt company” – a lie, of course. The next time the dealer called, Luis’ phone was disconnected and he was long gone. Luis was caught and convicted in 2011, sentenced to 33 months in prison. He was released after sentencing with an electronic ankle bracelet and was due to surrender to the prison, but never showed up – he’s a fugitive.

These kinds of stories are why will never sell lead lists to OTC metals dealers. Period!

Eric Bank

Florida: A Hot Bed of Precious Metal Scams

Leveraged OTC metals brokerAs we have discussed before, doesn’t sell lists to telemarketers in the leveraged OTC precious metals business because of all the fraud reported in that market. An article last year in the Sun Sentinel highlighted the problem, which plagues Broward and Palm Beach Counties with dozens of precious metal firms. Since 2007, over 45 firms have launched in these two counties – 23 were being investigated at the time the article was written.

The Scam

A telemarketer (with or without the required state license) calls you and offers to get you into gold and silver with little money down – often 20 cents on the dollar. They will warehouse your holdings for you so that they remain “safe”. You send in your money and receive reports from time to time showing you how much money you are making. At some point, you decide to withdraw your money. Suddenly, the reports stop coming, the firm’s telephone number is disconnected and your money is gone.


Even when legitimately run, a leveraged metals transaction is very risky. It’s true that you only put down 20 percent, but that means you are borrowing (and are on the hook for) the other 80 percent. You must pay interest on your borrowings, plus fees and commissions and whatever else they want to charge you. Then, if the market should temporarily move against you, you will receive a margin call – put up more collateral or lose all of your investment. High leverage ratios make it difficult or impossible to make a profit unless you actively day-trade your portfolio, and even then it’s tough. As a passive investor, you don’t stand a chance.

The Perpetrators

Over the 2010 – 2011 time period, at least seven South Florida precious metal dealers have amassed losses exceeding $54 million. Some notables include:

  • Global Bullion Exchange in Lake Worth lost $29.5 million belonging to 1,400 investors in what the owner admitted was a Ponzi scheme in which actual metals were never purchased.
  • The bank account of JDC United Metals Inc. was frozen by the Broward County court after a 70-year-old investor accused the firm of a $627,500 fraud.
  • Three related Miami companies — Certified Inc., Global Bullion Trading Group Inc. and WJS Funding – went bankrupt with $22 million in outstanding claims.

Laws were toughened up last year to mandate physical delivery of metals within 28 days or else the transaction falls under federal jurisdiction, thereby requiring a federal commodities license. We hope this is helping, but it is impossible for us to know who is legit and who is a crook in this business, so we say to all of you leveraged OTC metals dealers: “Phooey – take your business elsewhere!”

Eric Bank