A precious metals dealer, Robert Higgins, has been ordered to pay $146 million in damages after over half a million silver coins went missing. The Commodities Futures Trading Commission (CFTC) revealed that Higgins operated a fraudulent scheme related to the purchase and sale of precious metals.
Investigations discovered that the vault where Higgins claimed to store his clients’ silver coins was empty, except for boxes of paper IOUs. The Delaware court has now penalized Higgins for leading an elaborate scam that misappropriated nearly $115 million over an eight-year period. The CFTC released a statement announcing the penalties.
Between 2014 and 2022, Higgins convinced almost 200 unsuspecting investors to purchase and store American Eagle Silver coins through his companies, Argent Asset Group LLC and First State Depository Company LLC. The coins, minted by the US Treasury, are made of 99.9% silver and are a popular alternative investment among Americans. However, it remains uncertain whether these coins ever existed in the first place, leaving clients unsure of their ownership.
Court filings revealed that First State Depository misled customers by distributing false monthly account statements. The CFTC highlighted Higgins’s “fraudulent and deceptive scheme” and mandated him to compensate clients with $113 million and pay $33 million in penalties. In addition, his two companies are required to cease all trading activities, and Higgins himself is banned from the industry for life.
The precious metals industry has been plagued by a series of scams recently. In March, the London Metal Exchange faced scrutiny when investigators discovered bags of stones instead of the nickel that was supposed to underpin some of the exchange’s contracts, causing substantial disruption. Similarly, in a separate incident, Trafigura, a trading house based in Singapore, accused metals tycoon Prateek Gupta of fabricating $500 million worth of nickel shipping cargoes.
These cases highlight the potential risks and vulnerabilities in the precious metals market. Investors must exercise caution and conduct thorough due diligence when dealing with precious metals dealers to ensure the security and legitimacy of their investments. Authorities and industry regulators also play a significant role in detecting and preventing fraudulent activities within the sector.
The outcome of the investigation and subsequent penalties imposed on Higgins serve as a warning to others who may attempt to deceive and defraud investors in the future. Such cases demonstrate the necessity for increased oversight and regulation to protect consumers and maintain trust in the precious metals market.