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Commodities Fraud

Commodities fraud is defined as the illegal sale of raw materials or semi-finished goods that are uniform in nature and sold on an exchange. Conviction for committing this type of white collar crime carries the threat of serious penalties, including jail time and hefty fines, so if you are being investigated for commodities fraud, it is critical to contact an experienced federal crimes lawyer who can explain your legal options and help you formulate a strong defense.

Types of Commodities Fraud

Foreign exchanges are overseen by the Commodities Future Trading Commission (CFTC). The CFTC, however, only has regulatory authority over certain products, including, but not limited to the following items:

  • Metals;
  • Orange juice;
  • Coffee;
  • Oil;
  • Natural gases;
  • Livestock;
  • Energy;
  • Grain; and
  • Foreign currency.

These products are considered commodities because they satisfy the following three requirements:

  • They are standardized, which for industrial and agricultural products means that they are in a raw state;
  • They are usable upon delivery; and
  • Their price varies enough to justify creating a market.

Most buyers and sellers purchase commodities on the future market. This means that a buyer purchases the obligation to receive a specific quantity of the product at a specific date and price. The CFTC investigates reports of fraudulent purchases or sales within this market, such as:

  • Misrepresenting the nature of an investment risk;
  • Failing to register a solicitation of funds; or
  • Enticing investors by making false claims and high pressure sales tactics.

Investigations

During investigations the CFTC conducts specific activities, including:

  • Auditing a company’s records;
  • Reviewing transactions;
  • Reviewing contracts to determine whether false statements were made in connection with them;
  • Assessing a person’s assets; and
  • Reviewing bank accounts to identify unexplained sources of income or unusual activity.

Anyone can be charged with commodities fraud, but those who are investigated most often include:

  • Corporate executives suspected of insider trading;
  • Business executives who falsify accounting data; and
  • Investment brokers who misrepresent a product.

Penalties

To convict someone of violating the Commodity Exchange Act, the prosecutor must demonstrate that both important facts and the degree of risk were intentionally withheld from the investor or buyer. If convicted, a defendant faces up to 25 years in prison and may be required to pay restitution to investors, employees, and clients who suffered a financial loss as a result of the alleged fraudulent activity.

Contact an Experienced Federal Crimes Lawyer Today

Commodity fraud charges can have devastating consequences for the suspected individual or company. Even those who are not convicted risk suffering irreparable damage to their reputations, both business and personal, so if you are a resident of south Florida and are being investigated for fraudulent practices, it is critical to contact an experienced attorney as soon as possible to mitigate this damage. If you have questions or concerns about your own business practices, please contact Jeffrey S. Weiner, P.A by calling 305-670-9919 and a member of our dedicated legal team will help you set up a free consultation with a knowledgeable federal crimes attorney.

Resources:

cftc.gov/consumerprotection/fraudawarenessprevention/index.htm

law.cornell.edu/uscode/text/7/6c

Jeffrey S. Weiner, P.A., Criminal Defense Attorneys, is located in Miami, Florida and serves the following communities: Alachua County, Gainesville, Orlando, Broward County, Fort Lauderdale, Hollywood, Pembroke Pines, Pompano Beach, Collier County, Naples, Hillsborough County, Tampa, Indian River County, Vero Beach, Lee County, Cape Coral, Fort Myers, North Fort Myers, Manatee County, Sarasota, Marion County, Ocala, Ocklawaha, Miami-Dade County, Hialeah, Homestead, Key Biscayne, Miami, Miami Beach, and North Miami Beach.
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