In October 2007, a telemarketer calling himself a "precious metals analyst" told Joao Curalov he could double his money in a few months by investing in silver through a company called American Precious Metals LLC. With a dramatic rise in the value of precious metals in the news, Curalov decided it was a golden opportunity, and he poured money in.
See also: Avoid these 10 investment traps.
Today, says the 74-year-old Philadelphian, he's out $558,000 — most of his life savings.
"I invested everything I had, and they stole it," Curalov tells the Bulletin. "When I wanted to sell the silver I purchased a few months later because the price went up, they wouldn't let me. They said I had to invest more money — another $100,000 — or I would lose my investment. That is when I learned the truth."
That truth, according to the Federal Trade Commission, was that American Precious Metals bilked customers, most of them older people, out of more than $37 million starting in 2007.
After an FTC investigation, a federal judge shut down the Florida-based company and appointed a receiver to oversee its affairs, the commission announced Tuesday. The agency also filed suit against the company's owners, the married couple Harry and Andrea Tanner, alleging violation of federal law and the FTC's rules for telemarketing sales.
'Massive fraudulent scheme'
Separately, the Commodity Futures Trading Commission brought charges against the company, Harry Tanner and another man, alleging they had engaged in "a massive fraudulent scheme" in connection with the business.
A hearing is scheduled for next week, says FTC attorney Dama J. Brown. "We have sued to immediately stop the company's bad conduct, and will seek the court [to provide restitution] to consumers harmed by its practices."
With gold and silver prices having generally risen in recent years, many retirees have been tempted to invest in these metals, often viewing them as a protection against future inflation. But precious-metal price swings in the short term can be powerful — silver reached almost $50 an ounce in late April, then fell below $40 in a matter of days.
The FTC says the scheme at American Precious Metals went like this: Company telemarketers purchased telephone lists — largely numbers belonging to retirees — to make unsolicited, high-pressure pitches to consumers to invest in precious metals such as gold, silver and platinum.
"Seniors were told these were low-risk investments that could double or triple their money within 90 days," Brown tells the Bulletin.