Issues Related to the Purchase and Sale of Gold Coins
This post is being provided for informational purposes only. The associations referenced below are not being endorsed by the writer but are solely being provided for the convenience of the reader.
The gold coin business as well as the sale of other precious metals is unregulated. However, if you do decide that you want to take a “shot” at investing in gold coins there are a few things that you can do to attempt to minimize your risk.
The Goldline International Customer Agreement:
As indicated in an earlier Goldline International blog, a case seeking class action certification was filed in the United States District Court for the District of South Carolina, Greenville Division styled Tim Clark; Johanna Clougherty; Michael Clougherty; on behalf of themselves and all other similarly situated v. Goldline International, Inc., case no. 6:10-Civ-01884. The basis of the complaint is set forth in an earlier blog. The alleged underlying facts do not have a bearing on the importance of the court’s ruling on Goldline International’s Motion to Dismiss or Stay Proceedings and Compel Arbitration, which was granted. What the court’s order does demonstrate are the perils and risks of not only dealing with Goldline International but how far some firms will go to protect themselves and disadvantage their customers for their alleged wrongdoing.
The first issue or importance that was discussed by the court related to arbitration. Goldline International requires its clients to “read” and sign an Account and Storage Agreement (Account Agreement), which contains an Arbitration Agreement. Paragraph K of the Account Agreement states as follows:
Goldline International:
California based, Goldline International, Inc. was recently accused of deceptive sales practices in a lawsuit filed in the United States District Court of South Carolina, Greenville Division. More specifically, the plaintiffs charged Goldline International with violating the Racketeer Influenced and Corrupt Organizations Act (RICO) and for the use of unfair and deceptive trade practices and unjust enrichment.
According to the complaint, the plaintiffs took the action to recover for the economic loss suffered by the plaintiffs as a result of Goldline’s systematic scheme to fraudulently induce market-wary consumers into purchasing numismatic coins and bullion at grossly inflated prices.
Precious Metals Fraud:
As an example of precious metals fraud, the reader need look no further then what recently happened to a California gold dealer, Superior Gold Group LLC, which was seized and whose assets were frozen by a court order.
Recently, a California judge froze the assets of Superior Gold Group LLC of 100 Wilshire Boulevard, as well as another office in Woodland Hills, after it was accused of fraudulent business practices in a civil lawsuit filed against the company and owner Bruce Sands by the Los Angeles County district attorney and the Santa Monica city attorney.
NASAA Cautions Investors Mining for Golden Opportunities:
WASHINGTON (October 20, 2010) – With gold prices reaching record highs, investors are increasingly turning to gold-related investments. The North American Securities Administrators Association (NASAA) today reminded investors to be cautious about jumping onto the gold bandwagon.
“The soaring price of gold has sparked a modern-day gold rush among investors eager to recover stock market losses. But it’s still a Wild West out there and dangers abound for prospective gold investors,” said David Massey, NASAA President and North Carolina Deputy Securities Administrator.
SEC Charges Three with Promoting and Selling Forex Offering:
As a reminder of the risks associated with commodities and precious metals trading, please read the below litigation summary, which relates to the case of Securities and Exchange Commission v. Clifton K. Oram, et al., Case No. 2:10-CV-01173-DB (D. Utah). This real life example demonstrates how far unscrupulous individuals will go to separate investors from their money.
The Securities and Exchange Commission’s (“Commission”) complaint alleges that Clifton K. Oram, Don C. Winkler and William R. Michael engaged in fraud by offering and selling investments in a foreign currency exchange trading (“Forex”) program issued by a Mexican entity known as MexGroup or MexBank.
December 14, 2010:
Four men at a now-defunct South Florida precious metal company have been charged with stealing up to $1.3 million from investors who wanted to capitalize on the rising prices of gold and silver. The president of The Bullion Trading Group and three company brokers face mail fraud charges, accused by federal prosecutors of diverting clients’ funds for their personal use. The business had offices in West Palm Beach and Stuart, soliciting customers across the country from March 2008 to March 2009, court records show.
The head of The Bullion Trading Group – Christopher A. Kertatos, 40, of Orlando – and the brokers, Richard Eugene Engel, Robert Mitchael Henry and Richard Lutz, have pleaded not guilty to the charges and are to be tried at the Fort Pierce federal courthouse. All four are now free on bond.
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