Across the U.S., two Los Angeles men allegedly cheated at least 1,600 people — mostly older investors — and raked in more than $185 million by selling them gold and silver at wildly inflated prices, according federal and state regulators.
There were victims in all 50 states and most often, they bought bullion coins, says Rachel Millard, spokeswoman for the Commodity Futures Trading Commission (CFTC).
The allegations reflect a trend: an “aggressive push by individuals involved in this industry” to lure seniors into gold and silver investments, Colorado Securities Commissioner Tung Chan tells AARP. Hers is one of 30 states that joined a federal regulatory agency in the civil enforcement action.
Another is Florida, where Ashley Moody, the attorney general, said: “I am sickened by the way these fraudsters preyed on vulnerable investors’ fears of market instability and economic uncertainty."
In Texas, officials said because investors paid “grossly inflated” prices, their losses “occurred at the moment they entrusted their savings to the defendants.” On average, investors paid for coins and bullion priced from 100 percent to more than 300 percent over prevailing market prices.
The men were not licensed or registered to sell precious metals, authorities said.
Inexperienced investors 60 and older targeted
Details of the alleged fraud, dating to September 2017, emerge in state court filings and a 106-page civil complaint in federal court in Dallas, where the multistate case is being heard. Court documents allege:
- The two men and their companies preyed on people ages 60 to 90.
- They targeted “vulnerable” seniors with little experience investing in precious metals.
- They and their associates reached potential investors through cold calls from boiler-room operations.
- They also sought investors with ads on Facebook and conservative radio programs, zeroing in on Christians and political conservatives.
Buyers were encouraged to tap their nest eggs based on the defendants’ claims:
- A California investor was told there was going to be an imminent stock market crash “worse than the 2008 crash."
- A Maryland investor was advised gold would climb to $3,000 an ounce and there was “no risk” in converting securities to buy bullion. (Gold sold at $1,923 an ounce on Oct. 9, the Federal Reserve Bank of St. Louis says.)
- An Alabama investor was told the government would seize money held in an IRA or other retirement account.
The defendants received more than $140 million from investors’ retirement savings; other sales totaling more than $45 million were in cash or credit, the complaint says.
"Be on alert for anything that sounds too good to be true. Take a beat, take a pause, and look for somebody you trust to discuss it with them before you actually move your money."
— Colorado Securities Commissioner Tung Chan