Delaware Broker Faces Court Over $50 Million Missing Gold, Silver
Tens of thousands of gold and silver coins valued at around $50 million went missing from a North Wilmington warehouse vault, leading to federal charges against Robert Leroy Higgins, the owner of First State Depository Co. Higgins pleaded not guilty to tax and fraud charges, and also faces additional charges related to misappropriating investments and precious metals. The scheme involved diverting investor funds for personal expenses, creating fake silver lease programs, and providing fraudulent account statements. The court appointed a receiver to recover assets, but a significant amount of precious metals remain missing, with estimates ranging from 59 million to 112.7 million in missing assets.
The Scheme Unveiled
Founded in 2006, First State Depository Co., under Higgins’s leadership, promised to securely store and insure precious metals for a custody fee. However, federal prosecutors allege that Higgins used the depository and his precious metal brokerage businesses to mislead investors and the federal government, diverting tens of millions of dollars in investments for his own personal use. This led to the financial ruin of his companies by 2012, struggling under the weight of a $10 million loan and owing vast sums to investors.
Legal Battles and Charges
Higgins’s initial court appearance marked the third round of federal tax and fraud charges against him, with the potential for over four decades in prison. In addition to the criminal charges, Higgins faces a civil case brought by federal financial regulators seeking over $145 million in restitution and civil penalties. The discovery of gold coins in Higgins’s home and his attempts to intimidate witnesses further complicate his legal woes, painting a picture of a desperate attempt to maintain a facade of legitimacy.
Impact and Recovery Efforts
The court-appointed receiver’s efforts to recover the missing assets have revealed the magnitude of the scheme, with significant amounts of precious metals unaccounted for. The impact on the 1,000 depository customers, whose investments vanished, ranges from financial loss to a breach of trust in the precious metals storage industry. While Higgins’s assets have been frozen, the likelihood of investors recovering their full investments remains slim, highlighting the need for stringent oversight in the industry.
The ripple effects of Higgins’s alleged actions underscore the importance of due diligence and regulatory oversight in the precious metals market. As the legal proceedings continue, the case serves as a cautionary tale for investors and a call to action for regulators to prevent similar schemes from devastating more lives.
