Esposito brothers running U.S. Coin Bullion agree to plead guilty to wire fraud
From 2014 to July 2019, the Espositos engaged in a conspiracy to defraud U.S. Coin Bullion’s customers.
Brothers Salvatore Esposito and Joseph Esposito, operators of U.S. Coin Bullion, have agreed to plead guilty to an Information charging them with conspiracy to commit wire fraud and mail fraud.
According to court documents, from 2014 to July 2019, the Espositos engaged in a conspiracy to defraud U.S. Coin Bullion’s customers. Instead of using the customers’ funds to purchase precious metals as had been promised, the Espositos used customer funds to pay other customers, to pay commissions and other business expenses, and to purchase silver for the company itself.
U.S. Coin Bullion used its customers’ funds to purchase silver on “margin,” or “leverage,” by which it acquired an interest in the silver by paying only a portion of its full price. The company took out loans to purchase the silver on margin and then used more customer funds to pay the interest associated with those loans, as well as storage fees for the silver. And, because it was buying on margin, U.S. Coin Bullion was subject to “margin calls”; if the market price for silver declined, the company might immediately have to deposit more (customer) funds into its accounts to maintain its interest in the silver.
When the price for silver fell from more than $35 an ounce (in 2012) to less than $15 an ounce during the conspiracy, U.S. Coin Bullion incurred hefty losses and had to spend customer funds due to margin calls.
To cover up the losses, the Espositos provided customers with false account statements making it appear that the company had purchased the silver for the customers rather than for the company itself and that their accounts maintained value despite any drop in the market price of silver. Ultimately, U.S. Coin Bullion’s margin purchases resulted in a loss of nearly all the market value of the silver that its customers believed they had purchased and held.
To date, the United States Secret Service has identified more than 120 victims who have been defrauded as a result of this conspiracy, with total losses of over $7.9 million.
Each of the defendants faces a maximum penalty of 20 years in federal prison. Their initial appearances and change of plea hearings are scheduled for October 2, 2019.
A dedicated email address ([email protected]) has been set up for victims to provide victim impact statements and any other information related to their losses.
