A U.S. district court has ordered six defendants to pay $6.9 million in restitution to investors who fell victim to a fraudulent silver investment scheme that bilked customers out of millions between 2014 and 2019.

The Commodity Futures Trading Commission (CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term) announced that Ross Baldwin and his Florida firm National Coin Broker agreed to a consent order requiring joint restitution payments. The court previously issued a default judgment against Robert Jeffrey Johnson, Kathleen Hook, Precious Commodities Inc., and NCB Wholesale Co., which must also pay an additional $11.5 million civil penalty.

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Criminal Convictions Follow Civil Case

All three individuals face criminal penalties in a parallel prosecution. Johnson pleaded guilty to wire fraud, Hook admitted to conspiracy to commit wire fraud, and Baldwin pleaded guilty to multiple counts including wire fraud and making false statements to CFTC investigators.

The criminal case underscores the severity of what regulators called a "complete fiction" that never actually stored customer silver as promised.

Check also other CFTC related story: Ponzi-Like Forex Scheme Ends in $3.4M Fine for New York City Man

Schemes in the precious metals and commodities markets are among the most common cases investigated or detected by the CFTC. Several years ago, FinanceMagnates.com described the operation of the “Silver Lease Program,” which also promised participants high monthly dividends and the safe storage of bullion. However, this never materialized. Such cases are often linked to heavy fines, as in 2020, when metal dealers were ordered to pay $185 million after defrauding at least 1,600 people.

Fake Insurance Fueled Investor Confidence

Court documents reveal Baldwin obtained fraudulent insurance policies by lying to two New York brokers about his company's operations. He falsely claimed to be managing a legitimate storage facility while knowing no such vault existed.

Baldwin provided investors with personalized "insurance certificates" showing vault numbers and coverage amounts, even though their silver was never actually stored. Instead, customer funds went toward Ponzi-style payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term to earlier investors or were simply stolen.

The scheme attracted at least 60 customers who sent cash and silver worth thousands to hundreds of thousands of dollars each. Investors were promised monthly dividends of 3.9% to 5% for allowing their silver to be "leased" to fulfill large orders.

Website Promoted Nonexistent Business

The defendants operated through silverlease.com and company promotional materials claiming they ran a "bullion bank" that borrowed customer silver to fulfill orders from the U.S. Mint. Baldwin testified under oath that he never actually saw any stored silver and wasn't involved in borrowing or replacing investor metals.

Hook controlled day-to-day operations as president of NCB Wholesale Co., while Johnson, a convicted bank fraud felon, managed the website and insurance schemes. The court found both companies operated as a "common enterprise" to defraud investors.

Dividend payments stopped in spring 2019, leaving customers unable to recover their silver or money. The National Futures Association will oversee restitution payments to victims, though the CFTC warned that full recovery may not be possible if defendants lack sufficient assets.