A 69-year-old West Chester, Pa., man has been sentenced to 65 years in prison after being found guilty of wire fraud, mail fraud, and five counts of tax evasion.
Judge Maryellen Noreika handed down the lengthy sentence to Robert Leroy Higgins, citing the “scope and brazenness” of Higgins’ crimes in what prosecutors called “the largest theft from a precious metals depository in the history of the United States.”
The jury took less than four hours to convict Higgins on fraud and tax evasion charges related to the activities of gold and silver storage companies he founded in Delaware.
Background
Tax-favored Delaware has long attracted metals traders and investors. That’s was part of the appeal when Higgins established his first precious metals storage company in 2006 in The First State.
As part of his business model, Higgins promised to store gold and silver bars and coins belonging to taxpayers who wanted to include precious metals in their retirement accounts.
Traditional individual retirement accounts (IRAs) allow taxpayers to hold stocks, mutual funds, and other investments. But under existing IRA rules, gold and other precious metals are considered “collectibles” and aren’t generally allowed in IRAs. There’s an exception in the statute for highly refined bullion that is in the physical possession of a bank or an IRS-approved non-bank trustee—personal storage of the gold, such as at home or in a safe, is prohibited.
(If you’re a regular reader, you’ll recall that I tackled this topic in a recent issue of our free tax newsletter, Tax Breaks.)
Higgins’ gold and silver storage business filled that hole, and thousands of customers took advantage of his services. Approximately 2,100 customers stored gold or silver in labeled boxes similar to those used for bank deposits with Higgins’ companies.
Other customers used Higgins’ services for investment purposes.
Cracks Began To Show
According to court records, Higgins’ business ran out of money in 2012 and was unable to repay a sizable loan. Despite complaints filed against him, prosecutors say Higgins just opened a new company and then stole from his customers, using the company as his personal piggy bank. He also recruited help—his son, Eric, testified at his trial that Higgins told him to create false customer holding reports as part of the fraud.
Prosecutors also assert that, beginning at least as early as 2015, Higgins began filing false income tax returns, claiming that he had almost no income—he also claimed that he was not associated with either company (the original company and the new company he created).
By 2022, Higgins had attracted the attention of the Federal Bureau of Investigation (FBI), the Internal Revenue Service (IRS), and the Commodities Futures Trading Commission after customers complained that they were unable to recover their investments. That same year, Higgins filed for bankruptcy (he had also filed for bankruptcy in 2016).
Allegations And Charges
Higgins was eventually charged with fraud and tax evasion, and his businesses were turned over to a court-appointed receiver in 2022. A receiver is a neutral third-party who typically takes possession of assets at the request of the court in an effort to account for and protect them.
When federal agents seized Higgins’ businesses, they took its vaults and a framed picture of Russian President Vladimir Putin that Higgins kept near his office desk. The seizures allowed the receiver to return some assets to clients. By 2023, the receiver had recovered $64 million of precious metals to return to the owners. Still, former customers reported they were missing over $76 million. (As part of his sentence, the judge ordered Higgins to pay $76.5 million in restitution, despite Higgins characterizing the value of the losses as “speculation.”)
Prosecutors allege that Higgins used customer deposits to maintain a lavish lifestyle, including family vacations, private school tuition, shopping sprees, and new vehicles—all while representing to the IRS that he was not earning a living. He also told the court that he couldn’t afford an attorney. However, when investigators searched Higgins’ home, they discovered gold worth tens of thousands of dollars hidden in the ceiling of his million-dollar home in Pennsylvania. This, despite Higgins saying under oath that he had no gold in his possession. The search also turned up text messages on Higgins’ phone, which reportedly showed that he attempted to purchase a Hummer (vehicle) with gold.
Impact On Victims
After his conviction, the government received 91 victim impact statements. Many of the victims were retired or near retirement—the IRA piece of the business had appealed to them. One victim explained that she was forced to live out of her truck and left without a home after losing her investments, while another detailed how he had invested his life savings and his daughters’ college funds with Higgins. Yet another claimed she woke up “many nights worrying about the future” because her IRA retirement savings were lost.
Those statements were in addition to the nearly 800 claim forms submitted by victims seeking the return of funds. Investors are unlikely to be repaid in full.
Sentencing And Related Factors
Despite the widespread damage Higgins is alleged to have caused, the government claimed he had a “complete lack of remorse.” And while Higgins himself was also a senior citizen, the government notes that “his age didn’t stop him from perpetrating this massive fraud. And it did not stop him victimizing those who were of an even more advanced age.”
Prosecutors also pointed to more evidence they claim showed that Higgins demonstrated a lack of concern for others. On May 17, 2022, Higgins drove to Ohio to obtain replacement metals for an account owned by a customer who had grown frustrated with Higgins’ stonewalling. While on the way, Higgins caused a car crash that killed one person and seriously injured another.
According to the sentencing memorandum, in an interview with police, Higgins admitted that his driver’s license was suspended, and that he caused the crash after he reached onto the floorboard of his armored vehicle while driving 66 mph in a 45 mph work zone. Additionally, the license plate on his vehicle was registered to a different vehicle. That behavior, prosecutors allege, was indicative of recklessness. Tellingly, when Higgins made his initial appearance on tax evasion charges, he did not inform the court about what had happened (he was subsequently charged with vehicular homicide in the crash).
The judge had little sympathy for Higgins’ defense. “Over many years, you lied, over and over and over,” the judge told Higgins before handing down what will be, effectively, a life sentence.
Read the full article here