AUDREY STRAUSS, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging ROBERT JEFFREY JOHNSON, a/k/a “Jeff Johnson,” ROSS BALDWIN, and KATHLEEN HOOK with conspiring to commit wire fraud and wire fraud for defrauding at least approximately 60 investors of at least approximately $8 million in connection with a precious metals leasing program known as the “Silver Lease Program.” JOHNSON and BALDWIN were further charged with conspiring to commit wire fraud and wire fraud for defrauding insurance companies by making misrepresentations to these insurance companies in connection with obtaining insurance for the purported silver. BALDWIN was also charged with making false statements to federal officials in connection with lying to officials of the Commodity Futures Trading Commission (“CFTC”) during a sworn deposition. JOHNSON and HOOK were arrested this morning in Palm Beach, Florida, and were presented today in the United States District Court for the Southern District of Florida. BALDWIN was arrested this morning in Albany, New York, and was presented today in the United States District Court for the Northern District of New York.
Manhattan U.S. Attorney Audrey Strauss said: “Robert Jeffrey Johnson, Ross Baldwin, and Kathleen Hook allegedly lied to investors in order to get them to invest millions of dollars in the ‘Silver Lease Program.’ As alleged, these investors were told that they were purchasing silver, that their silver was being securely stored for them at a high-tech storage facility in Florida, and that they would earn a guaranteed monthly dividend payment. In reality, the defendants’ promises were not worth their weight in silver – or anything else for that matter. Instead of using investors’ money to purchase silver on their behalf, the defendants allegedly misappropriated that money to pay for their own lavish personal expenses and to fund unrelated business ventures.”
As alleged in the Indictment[1] unsealed today in Manhattan federal court:
The “Silver Lease Program”
From in or about 2014 through in or about January 2021, JOHNSON, BALDWIN, and HOOK conspired to defraud investors in the “Silver Lease Program.” Investors could participate in the Silver Lease Program by either (1) paying funds to purchase silver that the investor then leased back to the operators of the program in return for a fixed monthly dividend payment or (2) providing silver the investor already owned in order to lease that silver to the operators of the program in return for a fixed monthly dividend payment.
While investors were told that they owned a particular quantity of silver that was being stored for them at a specific secure, locked storage facility in Florida (the “Florida Storage Facility”), in reality the purported silver was not being stored at the Florida Storage Facility. The entity that was supposed to be storing the investors’ silver, Precious Commodities Inc. (“PCI”), which was functionally controlled by JOHNSON, did not even have any storage units at the Florida Storage Facility. In order to induce investors to invest in the Silver Lease Program, BALDWIN, through his company National Coin Broker (“NCB”) told the investors various other lies, both orally and through websites and brochures that he prepared in order to solicit investors to participate in the program.
Investors in the Silver Lease Program provided millions of dollars in order to purchase silver through the Silver Lease Program. Unbeknownst to these investors, a substantial portion of their funds were misappropriated to pay for, among other things, personal expenses of JOHNSON, JOHNSON’s wife, and HOOK, as well as to fund other, unrelated business ventures that JOHNSON, JOHNSON’s wife, and other associates of JOHNSON were engaged in.
Misrepresentations to Insurers
In order to induce investors to invest in the Silver Lease Program and so that they would feel secure in their investment, the operators of the Silver Lease Program touted the fact that the investors’ silver would be fully insured. Investors were ultimately provided with a certificate of insurance showing that PCI held an insurance policy with respect to the investor’s silver. JOHNSON and BALDWIN caused material misrepresentations to be made to insurance brokers in connection with procuring these insurance policies. These misrepresentations included lying about BALDWIN’s role with respect to PCI and lying by claiming that the silver the insurers were insuring would be stored at the Florida Storage Facility.
Dividend Payments Cease and Investors Do Not Receive the Return of their Silver or Funds
Beginning in approximately the Spring of 2019, investors largely ceased receiving their monthly dividend payments. Many investors eventually demanded the return of their silver and/or the funds they had invested in the Silver Lease Program. Investors primarily contacted BALDWIN in their efforts to receive the return of their silver and/or their funds, and BALDWIN frequently forwarded these communications from disgruntled investors to JOHNSON.
Despite the repeated attempts by numerous Silver Lease Program investors to obtain the return of their silver and/or their money, these investors never received the return of either.
BALDWIN’s False Statements to the CFTC
In October 2018, BALDWIN participated in a sworn deposition with the CFTC that occurred in Manhattan, New York. During that deposition, BALDWIN made numerous material false statements, including by lying about the role he played in obtaining insurance for PCI and by lying about visiting a storage vault at the Florida Storage Facility with an associate of JOHNSON and observing silver, when in reality this associate of JOHNSON’s never had any storage units at the Florida Storage Facility and did not otherwise have access to any storage units at the Florida Storage Facility.
* * *
JOHNSON, 55, of West Palm Beach, Florida, is charged with two counts of conspiracy to commit wire fraud and two counts of wire fraud, which each carry, respectively, a maximum sentence of 20 years in prison. HOOK, 59, of West Palm Beach, Florida, is charged with one count of conspiracy to commit wire fraud and one count of wire fraud, which each carry, respectively, a maximum sentence of 20 years in prison. BALDWIN, 60, of Miami, Florida, is charged with two counts of conspiracy to commit wire fraud and two counts of wire fraud, which each carry, respectively, a maximum of 20 years in prison, and is also charged with one count of making false statements to federal officials, which carries a maximum sentence of 5 years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Ms. Strauss praised the investigative work of the FBI. Ms. Strauss also thanked the CFTC, which has filed a civil enforcement action against the defendants.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Noah Solowiejczyk is in charge of the prosecution.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
Posts
No comments:
Post a Comment