En español | 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.
Nest eggs raided
To bankroll purchases, investors sold stocks, cashed in annuities or life insurance policies, and rolled over retirement funds from 401(k) accounts and IRAs, the complaint says.
The case was filed by the Commodity Futures Trading Commission and joined by 30 states: Alabama, Alaska, Arizona, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Mississippi, Nebraska, Nevada, New Mexico, New York, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Washington, West Virginia and Wisconsin.
While a state-by-state breakdown is not in the complaint, there were 84 investors in Texas, 79 in Colorado, at least 60 in Florida, about 25 in Michigan and 16 in Wisconsin, officials there said.
In February, a Colorado couple bought gold coins from the defendants and later was badgered with 12 to 14 more calls over three weeks, court documents say. On the calls the couple was told they should cash in stock holdings to buy more gold; that “stocks soon would be worthless” and “money would not be spendable because of inflation.”
In Colorado, Chan says because the defendants stoked fears as they touted precious metals as safe, “a perfect storm” ensued. “Be on alert for anything that sounds too good to be true,” Chan advises. If someone pushes an investment and whips up fear or urgency, step back: “Take a beat, take a pause, and look for somebody you trust to discuss it with them before you actually move your money."
And if you already have been aggressively sold precious metals, contact your state's regulatory agency, she urges.
The civil enforcement action alleging a nationwide fraud scheme accuses two Los Angeles men, Lucas Asher and Simon Batashvili, and their companies with ripping off the mostly older investors. Asher also used the names Luke Asher and Lucas Thomas Erb.
The defendants were principals of TMTE Inc. and Barrick Capital Inc. The former firm also did business as Metals.com, Chase Metals LLC and Chase Metals Inc. (Metals.com is no longer accessible on the web.)
On Sept. 22, a federal judge entered a restraining order freezing the defendants’ assets. The judge also appointed a receiver to take control of assets of the two men and their companies.
The federal government and the 30 states pursuing the case want the judge ultimately to order the defendants to pay restitution and civil penalties and give back ill-gotten gains.
Attorneys for the men did not respond to requests for comment.
Seeking a fortune in gold and silver? Don't lose yours when buying
Carefully evaluate a possible purchase of precious metals including gold, silver, platinum or palladium, a rare, silvery-white metal resembling platinum. And by all means, check out a prospective seller beforehand.
To avoid fraud, take the advice of U.S. regulators.
1. Be wary of salespeople who:
- call themselves “metals dealers” or “merchants” and cannot prove they are licensed by or registered with a government agency.
- create a false sense of urgency by claiming a limited supply. “There are only two units left and the Asian market is about to open, so I’d sign up today.”
- offer a favor in return for one: “I’ll give you a break on my commission — half off — if you buy now.”
2. Be skeptical of sales pitches that:
- advertise on radio, TV or online.
- dangle the prospect of wealth. “This gold purchase is guaranteed to rise — double what your current investments are doing.”
3. Be sure to do your homework first:
- Contact the U.S. Commodity Futures Trading Commission (CFTC), a regulatory agency, to check out a sales company’s registration status and disciplinary history.
- Contact an industry self-regulatory agency, the National Futures Association (NFA).
- Contact the appropriate regulatory agency in your state.
- Learn more from the CFTC’s full advisory on precious metals fraud.