US CFTC Charges Three Individuals Involved in a Commodities Fraud Scheme
- The United States Attorney for the Southern District of New York filed separate criminal charges against them.
The US Commodity Futures Trading Commission (CFTC) announced on Thursday that it had filed a civil enforcement action against three individuals allegedly involved in a multimillionaire commodities fraud scheme. According to the press release, the commission filed charges before the US District Court for the Southern District of New York against Robert Jeffrey Johnson, Kathleen Hook, Ross Baldwin, Precious Commodities, Inc. (PCI), National Coin Broker, Inc. (NCB) and NCB Wholesale Co. (NCBWC), and they are all from Florida.
As mentioned in the complaint, the scheme ran from June 2014 through October 2019, where PCI, NCB and NCBW acted as a joint enterprise controlled by Johnson and Hook. However, the individuals engaged in fraudulent activities by collecting around $8 million in funds and silver from 60 investors through a program dubbed 'Silver Lease Program'. The CFTC argued that Baldwin, Johnson and Hook “either directly engaged in deceptive conduct in furtherance of the scheme, or did so indirectly by virtue of their being control persons of NCB, PCI and NCBWC, respectively.”
How Did the Scheme Work
The scheme was described by the CFTC as follows: “As alleged in the complaint, the Silver Lease Program purported to offer investors guaranteed monthly lease 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 in Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term for the use of silver purportedly purchased from NCB or silver already owned by investors. Investors were told that they would earn a monthly dividend between 3.9% and 5% for the use of their silver, i.e., that the silver would be used on a short-term basis to fulfill purchase orders and it would be replaced within a few days. Moreover, investors were told, falsely, among other things, that their investments were guaranteed and fully insured, and their silver would be stored by PCI securely in a storage facility, often referred to as a vault.”
That said, the commission is seeking restitution, disgorgement, permanent trading and registration bans, civil monetary penalties and a permanent injunction. Moreover, the US Attorney for the Southern District of New York announced criminal charges against the three individuals in a separate and parallel matter.
The US Commodity Futures Trading Commission (CFTC) announced on Thursday that it had filed a civil enforcement action against three individuals allegedly involved in a multimillionaire commodities fraud scheme. According to the press release, the commission filed charges before the US District Court for the Southern District of New York against Robert Jeffrey Johnson, Kathleen Hook, Ross Baldwin, Precious Commodities, Inc. (PCI), National Coin Broker, Inc. (NCB) and NCB Wholesale Co. (NCBWC), and they are all from Florida.
As mentioned in the complaint, the scheme ran from June 2014 through October 2019, where PCI, NCB and NCBW acted as a joint enterprise controlled by Johnson and Hook. However, the individuals engaged in fraudulent activities by collecting around $8 million in funds and silver from 60 investors through a program dubbed 'Silver Lease Program'. The CFTC argued that Baldwin, Johnson and Hook “either directly engaged in deceptive conduct in furtherance of the scheme, or did so indirectly by virtue of their being control persons of NCB, PCI and NCBWC, respectively.”
How Did the Scheme Work
The scheme was described by the CFTC as follows: “As alleged in the complaint, the Silver Lease Program purported to offer investors guaranteed monthly lease 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 in Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term for the use of silver purportedly purchased from NCB or silver already owned by investors. Investors were told that they would earn a monthly dividend between 3.9% and 5% for the use of their silver, i.e., that the silver would be used on a short-term basis to fulfill purchase orders and it would be replaced within a few days. Moreover, investors were told, falsely, among other things, that their investments were guaranteed and fully insured, and their silver would be stored by PCI securely in a storage facility, often referred to as a vault.”
That said, the commission is seeking restitution, disgorgement, permanent trading and registration bans, civil monetary penalties and a permanent injunction. Moreover, the US Attorney for the Southern District of New York announced criminal charges against the three individuals in a separate and parallel matter.