Historically, South Florida has been a hotbed of precious metal investment frauds including unregistered retail investment firms pushing off-exchange, leveraged precious metal investments. These schemes often make money by charging undisclosed spreads, commissions, fees and interest on loans to purchase precious metals on margin without disclosing the risks. Under these schemes, the unlawful dealer always wins, and the customer usually loses because the costs to maintain the account rise faster than the price of precious metals—requiring liquidation of the accounts.

The Dodd-Frank Act, passed in 2010, prohibits these types of off-exchange leveraged retail commodity transactions where delivery of the metals is not made to the retail customer within 28 days. Since then, the Commodity Futures Trading Commission (CFTC) has brought dozens of lawsuits and enforcement actions in South Florida to shut down unlawful and fraudulent leveraged precious metals trading schemes. However, in a never-ending game of whack-a-mole, each time the CFTC or other government agencies shut down a bogus operation, a new one seems to pop up. With each new iteration, the scheme is tweaked and perfected to avoid future detection.