CFTC brings fraud charges against Argent Asset Group, First State Depository Company
The Commodity Futures Trading Commission (CFTC) today announced that it filed a civil enforcement action in the Delaware District Court against precious metals dealer Argent Asset Group LLC and precious metals depository, First State Depository Company, LLC (FSD), and their owner, Robert Leroy Higgins.
The CFTC has charged the two companies and their owner with fraud in connection with a multimillion-dollar precious metals scheme.
On September 29, U.S. District Court Judge Richard Andrews signed an ex parte statutory restraining order freezing assets controlled by the defendants, preserving records, and appointing a temporary receiver. A status hearing is scheduled for October 11.
The complaint alleges that from approximately January 2014 through the present, Argent and FSD, acting as a common enterprise controlled by Higgins, engaged in a fraudulent and deceptive scheme to solicit and misappropriate at least $7 million in funds and silver from at least 200 customers in connection with a fraudulent silver leasing program referred to as the “Maximus Program.” The complaint further alleges Higgins either directly engaged in deceptive conduct in furtherance of the scheme or did so indirectly by virtue of his being the control person of Argent and FSD.
As alleged in the complaint, the Maximus Program purported to offer customers guaranteed monthly lease payments in exchange for the use of silver purportedly purchased from Argent or silver owned by customers. 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 were falsely told, among other things, that Argent would acquire silver on their behalf, their silver was securely stored by FSD in a storage facility, and their investments were guaranteed and fully insured.
In reality, as alleged in the complaint, customers’ precious metals were not securely stored at FSD, but instead were misappropriated by the defendants. Moreover, on several occasions, the defendants also misappropriated funds intended to be used to purchase metals.
According to the complaint, the defendants’ fraudulent scheme was not limited to the Maximus Program. The defendants misappropriated other client assets and misled and deceived those clients when they attempted to withdraw their assets or transfer them to another depository. In addition, the defendants lied about the insurance coverage FSD maintained and failed to adequately insure its clients’ assets despite representations and guarantees it made to the contrary.
In continuing litigation against the defendants, the CFTC seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.