The Commodity Futures Trading Commission (CFTC) has settled a precious metals fraud case against two companies and their owner, Robert Higgins, who were accused of running a scam of nearly of $113 million. The charges involving Delaware-based First State Depository Company (FSD), which claimed to be “private depository” that would store customer metals, and Argent Asset Group, which was engaged in the business of buying, selling, and leasing precious metals, were first filed in September 2022.
FSD was supposed to hold thousands of gold and silver coins, but the CFTC found instead that the boxes belonging to various customers’ accounts were empty but for “IOU” slips. On top of that, the agency also discovered “active efforts to conceal misappropriation by sending fake account statements...and offering false and misleading excuses for why assets could not be withdrawn,” the CFTC wrote in a statement announcing the settlement on July 3.
The settlement includes an agreement to fully pay back defrauded customers and pay an additional $33 million in civil monetary penalty. Plus, Higgins and his companies face permanent trading and registration bans.
“This case is deeply troubling. Settling Defendants simply stole customer money or metals, without even a veneer of legality.” —CFTC’s July 3 statement
January 2014 through October 2022: The time period over which Higgins, Argent, and FSD, acting as a common enterprise, ran the deceptive scheme to solicit and misappropriate tens of millions of dollars in funds customers through a so-called “Maximus Program.” Customers were told they would earn a monthly “lease” payment based on a sliding scale that, in part, depended on the amount of silver the Maximus customers leased to Argent. Customers’ silver coins were not store securely and nor were the funds meant for purchases always used correctly.
Oct. 5, 2022: The CFTC files a lawsuit against the silver scam players.
June 9, 2023: Court appointed Receiver Kelly Crawford engages a team of private investigators and metal detectors to search the Higgins’s home. (Neither his companies nor Higgins have ever been registered with the CFTC in any capacity, the Commission said last year.) They discover gold hidden in his ceiling as well as foreign currency and rare coins hidden under the cushion of a love seat in his bedroom. In addition, the team finds evidence that Higgins has been selling precious metals.
June 10, 2023: Higgins is arrested and taken into custody by federal agents.
June 20, 2023: Judge Richard G. Andrews of the US District Court for the District of Delaware enters a consent order against FSD and Argent.
June 30, 2023: The court enters an order of default judgment and permanent injunction against Higgins.
At least $7 million: Funds the two companies misappropriated under fraudulent silver leasing programs referred to as the “Maximus Program” and the “Silver Lease Program”
200: Customers the firms deceived through these programs
36: Ounces of gold found hidden in the ceiling of Higgins’ basement
$112.7 million: Value of assets missing from FSD, including over 500,000 American Silver Eagle Coins. More than 9,000 gold coins were also missing from customer accounts. This amount must be paid back in restitution.
The CFTC has issued several fraud advisories, including for precious metals, which list simple ways to spot precious metals scams, from caller identity to the promise of huge returns.
“These scams commonly start with spam emails or videos forecasting economic collapse, government seizures, or claim to know hidden tax secrets. The messages say the only way to survive pending doom is by owning physical gold, silver, or other precious metals,” the CFTC warns. “Sellers push customers to use their retirement savings to buy overpriced coins. Many times, the sellers charge such high mark-ups buyers are never able to see a profit.”
A rule of thumb to follow is to never buy precious metals based on a cold call, unsolicited email, social media post, or infomercial, and always consult a registered and licensed legitimate finance professional before investing in precious metals.