CFTC Wins $6.9M Restitution, $11.5M Penalty In Metals Fraud Case

The Commodity Futures Trading Commission (CFTC) has announced a consent order and a default judgment in a metals fraud case involving three individuals and three Florida-based firms. The U.S. District Court for the Southern District of New York ordered Ross Baldwin and his inactive firm National Coin Broker, Inc. to comply with a permanent injunction and equitable remedies. Separately, Robert Jeffrey Johnson, Kathleen Hook, Precious Commodities Inc., and NCB Wholesale Co. were subject to a default judgment.

Together, the defendants must pay $6.9 million in restitution, jointly and severally, to compensate victims of the scheme. Additionally, defendants in the default judgment order were hit with an $11.5 . The orders impose permanent bans on trading, registration, and further violations of the Commodity platform Act and CFTC regulations.

These rulings resolve a CFTC enforcement action filed in July 2021. The case centered on a fraudulent scheme that ran from June 2014 through October 2019, soliciting millions of dollars in cash and silver through a so-called Silver Lease Program. Customers were misled into believing they were participating in a legitimate leasing operation when in fact the program was used to defraud them.

Takeaway

Fraud Scheme And Criminal Proceedings

The fraudulent Silver Lease Program promised investors income from leasing precious metals, but in reality, funds were misappropriated. From 2014 to 2019, defendants solicited activity. The scheme unraveled as regulators and prosecutors uncovered the misuse of funds and false representations to clients.

In related criminal proceedings, Johnson , Hook admitted to conspiracy to commit wire fraud, and Baldwin pleaded guilty to two counts of conspiracy to commit wire fraud, two counts of wire fraud, and one count of making false statements to CFTC officials. These admissions highlight the overlap between regulatory enforcement and criminal accountability in tackling fraud.

The CFTC acknowledged the cooperation of the U.S. Attorney’s Office for the Southern District of New York, the FBI, the U.S. Mint, and the UK Financial Conduct Authority in supporting the investigation and prosecutions. Together, these efforts reinforce the importance of cross-agency collaboration in financial crime enforcement.

Takeaway

Consumer Protection And Ongoing Risks

The CFTC cautioned that even with restitution orders in place, victims may not recover their funds if defendants lack sufficient assets. This underscores the ongoing risk customers face when dealing with unregistered or fraudulent firms. To assist prevent similar cases, the CFTC has published fraud advisories, including a Precious Metals Fraud Advisory, that outline warning signs of scams.

The Commission strongly encourages the public to verify company registration on the National Futures Association’s BASIC database before committing funds. It also highlights the role of whistleblowers in surfacing misconduct, noting that whistleblowers may receive 10–30% of monetary sanctions collected if their information leads to successful enforcement.

Customers can report suspicious activity through the CFTC’s hotline, online complaint system, or the Whistleblower Office. These channels, Protection Fund, are central to ensuring ongoing vigilance against fraudulent schemes in commodity markets.

Takeaway