CFTC Imposes $145.7M Penalty on Fraudulent Silver Scheme

The U.S. District Court for the District of Delaware imposed a default judgement of $145.7 million on an investment company and depository for selling silver coins fraudulently, the Commodity Futures Trading Commission announced on Monday.

Argent Asset Group LLC, First State Depository Co. LLC and Robert Leroy Higgins, the owner of both, sold American Silver Eagle coins to investors, according to the CFTC. Higgins and the companies then leased those same coins from the investors and paid investors monthly payments. They told the investors the coins were fully insured and under the custody of First State Depository.

However, the coins were not custodied or insured. Additionally, Higgins misappropriated “tens of millions of dollars” worth of coins from more than 200 customers, according to the CFTC’s release.

The scheme began in January 2014 and was known as the “Maximus Program.” Investors had the option of transferring their own coins to the defendants in exchange for monthly payments or buying them from Higgins.

The CFTC complaint from September 2022 explained that, “To the extent that defendants even obtained ASEs for customers in the first place, defendant’s typical practice was for FSD to systematically transfer all of the customer’s ASEs to Argent and Higgins, and for Higgins to sell those ASEs to third parties. This was typically done by moving metal from FSD’s vault to Argent’s offices at FSD, but on occasion it was simply accomplished by having metal delivered directly to Argent without ever being physically placed in FSD’s vault.”

The complaint says that no assets of equal value were used to replace customers’ ASEs, and “very little, if any, of the leased silver was actually stored in customer accounts at FSD.” It goes on to say that the “Defendants misappropriated the Leased Silver, simply taking it and diverting it for their own use.”

The CFTC brought charges in October 2022. The CFTC claimed it served the defendants and that they never responded. The judge therefore issued a default judgement of $112.7 million in restitution to their victims, as well as $33 million in civil penalties.

The District Court established a receivership for First State Depository. A website made by the court-appointed receiver states that $78 million in precious metals is unaccounted for in FSD’s vaults and that Higgins was arrested on June 10.

No information on how to contact the defendants was readily available.