New York, NY – Federal regulators have filed a civil enforcement action against Robert Jeffrey Johnson, Kathleen Hook, and Ross Baldwin, along with their companies Precious Commodities, Inc. (PCI), National Coin Broker, Inc. (NCB), and NCB Wholesale Co. (NCBWC), alleging a multi-million dollar precious metals fraud. The Commodity Futures Trading Commission (CFTC) filed the complaint in the U.S. District Court for the Southern District of New York on July 1, 2021.
The CFTC alleges that from approximately June 2014 through October 2019, Johnson, Hook, PCI, NCB, and NCBWC operated a fraudulent scheme known as the “Silver Lease Program.” The scheme targeted at least 60 investors and misappropriated at least $8 million in funds and silver. The program falsely promised guaranteed monthly lease payments – between 3.9% and 5% – in exchange for the use of silver either purchased from NCB or provided by investors themselves.
According to the complaint, investors were led to believe their silver would be securely stored in a vault and that the program was fully insured. However, the CFTC alleges that PCI never maintained a secure storage facility and misappropriated both investor funds and the pledged silver. The monthly “dividend” payments made to investors were, in reality, Ponzi-style payments funded by new investor money, the complaint states.
The CFTC is seeking restitution, disgorgement of ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act and CFTC regulations. Baldwin, Johnson, and Hook are accused of either directly participating in the deceptive conduct or being responsible as control persons of the involved companies.
In a parallel criminal case, the U.S. Attorney for the Southern District of New York has also brought criminal charges against Johnson, Hook, and Baldwin. The case is United States v. Johnson et al., 21 Cr. 428 (S.D.N.Y.).
The CFTC acknowledged the assistance of the U.S. Attorney’s Office for the Southern District of New York, the FBI, the U.S. Mint, and the UK Financial Conduct Authority in the investigation.
Source: CFTC.gov
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