Tens of thousands of gold and silver coins valued at some $50 million missing from a North Wilmington warehouse vault landed a local precious metals broker in front of a federal judge in Delaware on Thursday.
Robert Leroy Higgins, a West Chester, Pennsylvania, man who for more than a decade operated the First State Depository Co. and various precious metals brokerage businesses out of Wilmington, pleaded not guilty to a raft of tax and fraud charges in Delaware District Court.
Federal prosecutors claim Higgins, who is in his 60s, misled investors and the federal government in misappropriating tens of millions of dollars in investments as well as gold and silver coins that were supposed to be stored in his vault inside a warehouse off North Market Street.
Thursday was his initial appearance in court on a third round of federal tax and fraud criminal charges in a case that could lead to more than four decades in prison.
In court, he tersely acknowledged to the magistrate that he understood the charges against him and entered his plea. After the hearing, he declined to comment through his attorney, Jeremy H. Gonzalez Ibrahim.
Separately, he faces another federal where prosecutors said gold coins found stashed in the ceiling of his home are evidence that he lied to a judge under oath. He also allegedly posted “silence is GOLDen” on a witness’s Facebook page in what prosecutors describe as a criminal attempt at intimidation.
Similar facts were also before another federal judge in a civil case brought by federal financial regulators to order Higgins and his companies to pay more than $112.7 million in restitution to defrauded investors along with $33 million in civil penalties.
The scheme laid out by prosecutors
Higgins founded First State Depository Co. in 2006. It operated out of 100 Todds Lane in an unassuming, red-brick building across the street from Riverview Cemetery. Higgins was the head of the company that also employed some of his family members.
The purpose of the company was to store and insure precious metals for investors in return for a custody fee. Many who invest retirement funds in precious metals store their investments in a vaulted depository service like Higgins’ company.
Higgins also owned and operated different precious metal brokerage businesses out of the same building. Those companies would buy and sell precious metals on behalf of investors that could also use Higgins depository services.
The criminal charges, as well as the civil claims against Higgins, center on both his brokerage services as well as the depository.
Criminal court filings state that Higgins’ businesses were on the verge of financial collapse in 2012. The business struggled to make payments on a $10 million loan from the Israel Discount Bank of New York and owed hundreds of thousands of dollars to various investors.
The first victim outlined in charging documents in the criminal case agreed in February 2012 to purchase $1.2 million in silver through Higgins, silver that was to be stored in his vault. Over the next three days, Higgins spent down some $800,000 of that money on business expenses, partially on a $250,000 loan payment. The victim received a fake invoice for the purchase of 31 silver bars that never occurred, prosecutors wrote.
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Prosecutors claim Higgins’ financial problems grew in 2013 when the Israel Discount Bank secured a $9 million judgment against his businesses. The depository remained open; he shuttered one brokerage company and began operating another called Argent Asset Group, according to prosecutors.
Through Argent, he initiated a silver lease program. He pitched that investors that stored their silver with First State Depository could loan the metals to Argent in exchange for a monthly dividend. Higgins told customers he would trade the silver at a profit and the leased silver would be replenished with back-ordered silver.
Prosecutors said he created this program to keep his businesses afloat in light of the monetary judgments against his businesses. Instead of using their funds to purchase silver, he used those funds to pay business expenses and for his own personal use, federal officials state in court documents.
They accuse him of operating the depository as a shell game, sending customers fraudulent account statements, using investor money meant to purchase precious metals for other expenses and sending investors other people’s precious metals when they demanded the return of theirs.
In addition to diverting the money to keep his businesses afloat, prosecutors allege some of it went to his personal accounts for expenses like his home mortgage, vacation expenses and private school tuition.
Tons of missing silver
The scheme outlined in the case went on until 2022 when the Commodity Futures Trading Commission, a government regulatory agency, filed suit against Higgins and his companies accusing fraud. A judge appointed a receiver to account for Higgins businesses’ assets and ultimately return what was left to the rightful owners.
Inside the Todd’s Lane vault, some boxes that should have contained customers’ precious metals instead contained paper IOU slips, according to court records. The receiver was able to recover some assets, but the majority were missing, according to regulators’ statements.
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Estimates for how much was missing vary within court documents. Last year, the court-appointed receiver reported to the court that the estimated value of assets missing from depository customer accounts ranged from $59 million up to $112.7 million.
Criminal court records state some 1,000 depository customers were missing some or all of their precious metals valued at the time around $50 million. Investigators found that more than 9,000 gold coins and more than 500,000 1-ounce silver coins were missing. That’s more than 15 tons of unaccounted silver that either was never procured by Higgins or went missing.
The civil case against Higgins’ companies was closed in July with the judge ordering more than $100 million in restitution be paid along with the $33 million in civil penalties.
Editor’s note: The judgment against him, laying out the facts of the case, is posted at the bottom of this story.
It’s likely that only a small fraction of what’s owed to investors will ever be recovered.
Higgins was originally charged in the criminal case in 2022. Since then prosecutors have added charges to his case on two different occasions as the case has largely remained on hold. The latest criminal indictment centers on seven different victims that prosecutors claimed were ripped off by Higgins brokerage companies or the depository.
‘Silence is GOLDen’
The judgment in the civil case essentially froze Higgins’s assets and ordered him to surrender valuables like precious metals to the receiver. It also barred him from working in the industry. Last year, he petitioned the court to appoint him an attorney in his criminal case, representing that he was indigent.
District Court Judge Maryellen Noreika called Higgins to court with some questions. She noted that he said he had no income since 2012, but had gone on overseas vacations since and owned a $900,000 home.
“Most criminal defendants … whose counsel is being paid for by the public are not in Hawaii for fourteen days,” Noreika noted.
Under oath, he told the presiding judge he did not possess any precious metals and that there were no airline or lodging expenses associated with his recent overseas trip to Belarus or his two-week-long vacation in Hawaii the prior December. He was also quizzed about whether he owned part of a timeshare in Hawaii and told the court he hadn’t made payments on that in some five years.
“Basically, we have not made any payments, I’m going to say for the last five years, and I have been waiting for the day they basically say, ‘Hey, you’re not paying us,'” Higgins told the judge.
In documents charging Higgins with perjury and false statements months after the hearing, prosecutors outlined evidence showing that his wife had paid with a credit card nearly $10,000 in maintenance fees associated with the Hawaii timeshare the month of the trip in question.
They also presented receipts and text messages they said indicated that Higgins sold nearly $30,000 in gold to a West Coast dealer a month before the hearing. They also noted that the receiver in the civil case had led a search of Higgins’ West Chester home months after the testimony and found tens of thousands of dollars worth of gold coins stashed in the ceiling.
He had also told the court he had no vehicle, but investigators driving by his house saw him cleaning a Hummer outside his home days before the hearing. They traced the vehicle’s purchase, which was in his wife’s name, to a New York couple who said Higgins had tried to buy the Hummer partially using gold coins and cash.
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Higgins also told the judge he had not given any substantial monetary gifts to anyone in the past year. At the hearing, prosecutors informed the court that a witness, one of Higgins’ former employees, told them he had given her $25,000 in the previous year.
In charging documents, investigators said they became aware that after the hearing Higgins had posted on the person’s Facebook page: “SILENCE is GOLDen.” They also claim that Higgins sent the witness a text message referring to another witness as his “Judas,” which investigators charge was aimed at intimidating the woman not to betray him.
He was eventually appointed counsel with orders he’d pay $300 per month toward the cost. A judge has rejected prosecutors’ efforts to jail him while the case is pending. He’s been out on orders not to leave Pennsylvania or Delaware without permission.
In December, after being charged with lying to the court about the Hawaii timeshare, the court rejected a new request to suspend his pretrial travel restrictions so he could go to Hawaii for another two-week vacation.
Contact Xerxes Wilson at (302) 324-2787 or xwilson@delawareonline.com.