Regulator adds another $33 million in fines
On Monday, the Commodity Futures Trading Commission filed a Consent Order for a permanent injunction, civil monetary penalty, and other relief against defendants in a precious metals fraud case involving First State Depository Company, LLC, Wilmington, and Argent Asset Group LLC.
It resolves an action initially filed on September 27, 2022, against defendants and First State owner, Robert Leroy Higgins, West Chester, PA.
The CFTC’s complaint alleged that the defendants operated fraudulent silver leasing programs referred to as the “Maximus Program” and the “Silver Lease Program” and solicited and misappropriated at least $7 million in funds and silver from at least 200 customers. First State represented itself as a “private depository” that would store customer metals. Argent was engaged in buying, selling, and leasing precious metals.
Following the complaint filing, the court-appointed receiver’s investigation revealed the full scope of the defendants’ fraud—as much as $112.7 million in assets were missing from FSD, including over 500,000 American Silver Eagle Coins, a CFTC release stated.
According to the receiver’s website, in June, a team of private investigators and metal detectors searched Higgins’ home and found approximately 36 ounces of gold hidden in the ceiling of his basement. They also discovered foreign currency and rare coins hidden under the cushion of a loveseat in his bedroom. Findings were reported to law enforcement and on the morning of June 10, 2023, Higgins was arrested and taken into custody by federal agents.
According to the CFTC, defendants deceived customers by suggesting that they were holding the coins on behalf of customers. Over 9,000 gold coins were also missing from customer accounts.
According to the receiver, most of the assets that were supposed to be held at First State were missing. The receiver found that defendants left “IOU” slips in empty boxes marked to indicate a customer’s account.
The active efforts to conceal misappropriation by sending fake account statements indicating that defendants had carefully stored and accounted for customer assets and excuses for why assets could not be withdrawn.
The Consent Order requires the settling defendants to pay restitution of $112.7 million, as well as a civil monetary penalty of $33 million and permanent trading and registration bans.
