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05-08-2011, 11:40 PM
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#1 |
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 A gold mine for scammers
In three decades of investing in gold and silver, Dean Dellinger amassed nearly 27 pounds of coins.
His collection might have been worth more than $645,000 at current prices -- if he still had it. Instead, the 88-year-old Florida resident says his devotion to hard currencies made him an easy mark for a Minneapolis pitchman who cold-called and persuaded him to trade for a class of historic coins called "numismatics." Dellinger alleges in a federal lawsuit that he lost more than $335,000 on a series of swaps. "The guy just skinned me," he said. As gold has surged as high as $1,556 an ounce, many investors are learning the hard way that the marketing of valuable coins is a largely unregulated trade in which shady and sometimes illegal practices abound. Unscrupulous telemarketers misrepresent coin values, sell counterfeits or persuade customers to finance purchases with reverse mortgages or retirement savings. In Minnesota, the state attorney general's office is investigating a half dozen local and national firms. "This industry is somewhat like the Wild West," spokesman Ben Wogsland said. Mass telemarketing of coins began in the Twin Cities in the mid-1970s, and the metro area is a hub of what has become a multibillion-dollar industry, with about 30 Minnesota firms pitching to an estimated half million serious collectors and investors nationwide. Gary Adkins, an Edina dealer who was named Coin Dealer of the Year by the American Numismatic Association in August, says most firms are honest. But he acknowledged that some have persistent problems with fraud, theft and misrepresentation. Adkins recalled examining some coins for an elderly Minnesota woman who took $250,000 from her savings and borrowed more to buy coins from a New Jersey dealer. The coins were worth about a quarter of what she paid, he said. "I hear these kinds of horror stories all the time." Many dealers hire salesmen regardless of criminal convictions or drug, alcohol and mental problems -- providing they can deliver a sale. The successful ones can make six-figure annual incomes. Rising market Investors rally around precious metals as a hedge against inflation, a refuge from political storms that periodically roil world economies. As a result, the price of gold has tripled since 2005, adjusted for inflation, while silver nearly doubled to $48.70 an ounce at its April 28 peak. Such precious metals as gold, silver, platinum and palladium trade in several forms. Bars and uncirculated bullion coins sell at or slightly above the market price of their metallic content, while the more subjective valuation of numismatics and other collectible coins makes them more prone to abuse. Coin buyers are often wealthy elderly people whom firms identify from closely guarded marketing lists. Yet the kinds of protections that have evolved over the years in markets for stocks and other securities generally don't apply to coins unless pitchmen stray from scripts that carefully avoid characterizing them as investments. Dellinger made his trade for the numismatics with Martin Klevens, a salesman who called from the Minneapolis firm International Rarities. He remembers Klevens as a smooth talker with a preacher's knack for instilling trust. He didn't know that Klevens -- known as "Party Marty" by some former associates -- had been sentenced in 1997 to 25 months in federal prison after admitting to defrauding at least four coin buyers out of more than $160,000. No law bars a person with criminal convictions from the coin industry. Klevens was sent to a half-way house in 1999 for violating the terms of his release by drinking alcohol. After walking away from the facility, he was sent back to prison for 10 months in 2000. When he got out, International Rarities took him back. Dellinger, a World War II veteran and former lab foreman for American Cyanamid, said Klevens called a couple dozen times before he agreed to trade his bullion coins for numismatics. He sued to try to recoup the $335,000 he alleges he lost on trades through International Rarities. But his attorney, Joe Zarzaur of Pensacola, Fla., said International Rarities has said it wouldn't even consider paying the damages they are seeking. Neither Klevens nor David Marion, the owner of International Rarities, responded to requests for comment. Attorneys for the company have responded in court and denied any wrongdoing. A growing problem? It's impossible to say how widespread abuses are in the coin business. Minnesota's Commerce Department checks metal dealers' scales but otherwise has no oversight of such firms. The Federal Trade Commission lumps coin complaints in with other art, gems and precious metals. That tally suggests a growing problem with Minnesota firms, with 19 complaints last year compared with an average of five in prior years. Last year, only California and Texas had more. Roseville police detective Marc Schultz says he has fielded complaints from around the country about one firm, Reputable Rare Coins. "What I'm finding is that Minnesota is becoming the poster child for this rare-coin industry fraud," Schultz said in a recent interview. "A lot of these victims are saying, 'What's with these companies in Minnesota?'" Experts say authorities never hear about most swindles, because those who get cheated eat their losses out of embarrassment or lack the money or records to file lawsuits. Few lawyers will tackle the inherently complicated and expensive cases. It's hard to prove fraud, especially when elderly clients have memory problems or dementia. But some consumers do fight back. Carlton Whetsel complained to the South Dakota attorney general after he had problems with Reputable Rare Coins. The 71-year-old from Watertown, S.D., said in an interview that his troubles began five years earlier when he swapped some coins through Twin Cities Gold & Silver. He said the salesman on that transaction, Anthony Kloiber, told him the coins were worth $68,800. But last year, when Whetsel went to swap them, he says he learned they were worth far less even though the price of gold had roughly doubled. Kloiber has been civilly committed twice because of heroin and crack abuse and mental problems, and has convictions for theft and passing bad checks. Whetsel said a number of Minnesota coin dealers called pitching deals, and he finally agreed to a $48,800 trade offered by Reputable Rare Coins. This time, Whetsel said, he got nothing at all. "I don't think I'll ever get anything out of it," he grumbled. "I'm not buying any more coins, I can tell you that." The firm's owner, Tory Hughes, had prior felony convictions related to drugs, forgery, theft and receiving stolen property. Local and federal authorities are investigating, but Hughes has not been charged. He could not be reached for comment. Echoes of FDR Many coin firms play on history by warning prospects that the government could seize their gold. In 1933, President Franklin Delano Roosevelt signed an executive order requiring the liquidation of most privately held gold, with compensation paid in greenbacks. The order exempted "rare" or "collectible" coins and metals used in dentistry and jewelry. The limitations on private gold ownership were lifted in 1975. But many coin firms foment fear of another "confiscation" as they pressure consumers to buy historic or commemorative coins. Esther Lass, 84, of Grand Haven, Mich., said that was the pitch she heard from Michael Duff McNamara III, then with International Rarities. Lass said he convinced her that the government might seize her gold and that she should send it to him so he could swap it for collectible coins. "I did, and that's the last I ever heard of him," Lass said. After repeated attempts to reach McNamara over several weeks, he responded Friday and said it was up to the company to ship the coins and that if they weren't shipped, it wasn't his fault. Lass said she originally got the coins from Barber Coin and Collectibles in Lakeville, but didn't want to go back there because she believes the firm shortchanged her on an earlier trade. The company's attorney, Daryl Bergmann, said he investigated her claim in 2008 and found no irregularities. The prices for each coin were based on market prices at the time, he said. Lass said she wrote to the Minnesota attorney general's office but was told it couldn't help. Her son, an attorney in New York, told her that without a written contract she didn't have a case, so she dropped the matter. In the end, Lass said she took a loss on her transaction with International Rarities. "I claimed it last year on my income tax," she said. "Put their asses all in jail or send them straight to hell!" Coin dealers court prospective clients as if they're old friends. The consumers often have no idea they might be getting ripped off. Sometimes, the frauds aren't discovered until they die and their heirs open their safe-deposit boxes. Linda Keith said McNamara befriended her 85-year-old father last year by taking him out for meals and visiting him at his home. By then, McNamara had become managing director of Barber Coin, also known as BCC Precious Metals. Keith's dad had suffered a stroke in 1999. A seizure in October 2009 left him with memory and reasoning impairments, she said. His problems gradually worsened until he was hospitalized for two weeks in December as he recovered from cerebral bleeding. Keith filed a lawsuit last month against Barber Coin, its president, Leonard Barber Jr., vice president of sales Robert Boyd and McNamara alleging that they cheated her father, a vulnerable adult, out of at least $65,768. The newspaper agreed not to name her father, who has a different surname, because he has cognitive impairments. McNamara, 56, is a fast talker who invokes religion in his sales pitch. He has been convicted of check forgery, possessing counterfeit checks, theft and driving under the influence, but it hasn't stopped him from working at several Twin Cities coin dealers. He now is managing director at International Gold & Silver Exchange in downtown Minneapolis. "I'm in recovery. I've got three years clean," McNamara said. After he left BCC in June, Keith said in her lawsuit, Boyd took over her dad's account and began "repositioning" his holdings, first selling gold and buying silver, then reversing the process. Keith says her parents built their own home and never carried a mortgage until last year. Then she alleges that Boyd persuaded her dad to withdraw just over $174,000 from a reverse mortgage to buy more coins. He bought some at huge markups, Keith's complaint says. For instance, she alleges that BCC sold him an 1862 half-dollar for $18,000 that appraisers valued at $4,000. While Keith's father was in the hospital, BCC initiated transactions to convert some of her parents' gold in an individual retirement account to silver, the suit says. Her parents denied "knowingly" authorizing that. Bloomington police say an investigation is pending. Boyd declined to comment. McNamara said he conducted one transaction with Keith's father and gave him a good deal. He said what happened after that, though, "was absolutely atrocious." He said he's cooperating with police. "I do have ethics and I do not believe in taking advantage of people, especially the elderly," McNamara said. Bergmann, Barber's attorney, issued a statement saying Keith's accusations appear to be based on "suspicion and misinformation." He said BCC, Barber and Boyd are cooperating with police. "I know some things look bad. He's got some employees who had some bad records," Bergmann said. But he said he expects Barber to prevail. Bill Voss, a Texas lawyer helping victims of coin fraud, says the fallout from coin rip-offs is only beginning. With prices near record levels, coin companies are popping up left and right and people are buying. But eventually, he said, they'll want to sell. "When they start realizing that what they bought, they shouldn't have bought, and that they bought it way too high ... I think there's going to be a major, major problem." http://www.startribune.com/local/121...tml?page=1&c=y |
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05-09-2011, 12:13 AM
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#2 |
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I'm assuming that 88 year old man has lost some, if not all of his marbles. How else do you explain that he had the vision and knowledge to acquire all of that gold and silver, but then falls for the bogus sales pitch? |
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05-09-2011, 12:28 AM
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#3 |
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05-09-2011, 12:52 AM
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#4 |
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"I don't think I'll ever get anything out of it," he grumbled. "I'm not buying any more coins, I can tell you that."
Thats right, stay in nice safe paper investments that are federally regulated and taxed |
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05-09-2011, 01:14 AM
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#5 |
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I have seen this with older folks including relatives, they start to have lapses of judgment that can be quite serious.
Unfortunately there is no law that can fix business ethics ... in olden days, what would have happened if you ripped off an 88-year-old? I think the posse would be out in force... |
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05-09-2011, 02:11 PM
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#6 |
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Poor guy had a moment, or two. From what I see is the older they get the more trusting they are of other people and even strangers. "But the government gives me free money just for being old. I assumed everyone else had my best interests at heart too." |
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05-31-2011, 09:26 PM
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#7 |
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Post removal or Cleanup
Thursday, May 26, 2011 10:09 AM From: "xxxx@xxxx.com To: xxx@xxxxx.xxx http://gold-silver.us/forum/general-...73160055bf05ed I am writing in regards to this Blog post. We are working on a lawsuit against all groups allowing this information to be posted including the Star and Tribune and your Site as it mentions my client directly and is giving him bad publicity and he is losing business and this a suit that can be considered Libel and truly hurt anyone who is not removing the data. We have already notified the Star and Tribune as well as multiple other Blogs to remove or block my client from this post. Please let me know how you would like to move forward with this. Thanks XXXXXXXXX ------------------------------------------------------------------------------------- Re: Post removal or Cleanup Thursday, May 26, 2011 12:52 PM From: xxxxx To: XXXXXX@comcast.net Mr. XXXXXX: This is not a blog post. It is a link to the Star Tribune article in a discussion forum. It was posted by a forum member. Who is your client? Many people are mentioned. Are you an attorney? What is your name, state of practice and bar number? XXXXXXX |
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05-31-2011, 10:04 PM
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#8 |
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takeaway here ; investing in coin, is RISKY! Next time try a "safe " investment like bonds or etf's! :lol
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05-31-2011, 10:07 PM
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#9 |
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05-31-2011, 10:21 PM
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#10 |
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05-31-2011, 10:31 PM
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#11 |
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"I don't think I'll ever get anything out of it," he grumbled. "I'm not buying any more coins, I can tell you that." |
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06-01-2011, 01:54 AM
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#12 |
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As gold has surged as high as $1,556 an ounce, many investors are learning the hard way that the marketing of valuable coins is a largely unregulated trade in which shady and sometimes illegal practices abound. Unscrupulous telemarketers misrepresent coin values, sell counterfeits or persuade customers to finance purchases with reverse mortgages or retirement savings. I think this is hilarious. It is different from the paper market in what way exactly?
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06-01-2011, 02:34 AM
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#13 |
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Its an exaggerated boating accident. 
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06-01-2011, 03:10 AM
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#14 |
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"Re: Post removal or Cleanup
Thursday, May 26, 2011 12:52 PM From: xxxxx To: XXXXXX@comcast.net Mr. XXXXXX: This is not a blog post andIt is a link to the Star Tribune article in a discussion forum and It was posted by a forum member and Who is your client and Many people are mentioned andAre you an attorney and What is your name andstate of practice and bar number? Gotta fight run-ons with run-ons....... Looks like he got his law degree from the Phoenix University. XXXXXXX |
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06-01-2011, 03:30 AM
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#15 |
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As gold has surged as high as $1,556 an ounce, many investors are learning the hard way that the marketing of valuable coins is a largely unregulated trade in which shady and sometimes illegal practices abound. Unscrupulous telemarketers misrepresent coin values, sell counterfeits or persuade customers to finance purchases with reverse mortgages or retirement savings. Many investors in mortgage-backed securities are learning the hard way that the marketing of MBS, CDO, CDS and other derivatives is a largely unregulated trade in which shady and sometimes illegal practices (such as front-running, REMIC violations, knowingly with-holding information about the items, etc.) abound. Uncrupulous companies like JP Morgan, Goldman Sachs and the now-defunct Lehman Bros. misrepresent MBS values, knowingly commit fraud, ink self-serving mortgage servicing deals, and persuade customers to part with their clients' hard-earned pension funds or city government earnings. How's that? |
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06-01-2011, 05:01 AM
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#16 |
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Post removal or Cleanup Martin Klevens, a salesman who called from the Minneapolis firm International Rarities... known as "Party Marty" by some former associates -- had been sentenced in 1997 to 25 months in federal prison after admitting to defrauding at least four coin buyers out of more than $160,000... Klevens was sent to a half-way house in 1999 for violating the terms of his release by drinking alcohol. After walking away from the facility, he was sent back to prison for 10 months in 2000. When he got out, International Rarities took him back. Dellinger, a World War II veteran and former lab foreman for American Cyanamid, said Klevens called a couple dozen times before he agreed to trade his bullion coins for numismatics. You, Mr. XXXXX, and your client can each take a broom, bend over, and with adequate force and careful determination, shove the handles up each others asses. Shame on you for defending this scumbag. |
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08-31-2012, 11:19 PM
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#17 |
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Bankrupt Minneapolis coin dealer asset sale a family affair?
Two of three potential buyers have links to the defunct coin company's owner. Bidders continue to materialize for the Sept. 6 auction of customer lists and used office furniture remaining after the liquidation of bankrupt Minneapolis coin dealer International Rarities Corp. The coin company, known as IRC, filed for bankruptcy in August 2011 after the Star Tribune reported allegations by some customers that owner David Marion had sold shares in a failed expansion effort under false pretenses. Marion stepped down as CEO and hired Stephen J. Hastings of Eden Prairie to run IRC in bankruptcy. Federal investigators seized IRC's computers and business records last September on suspicion of securities fraud and other possible crimes. The matter remains under investigation. IRC struggled for a year to reorganize its debts, but failed to do so. The case was converted to a Chapter 7 liquidation in July on a motion by trustee John Stoebner. He has since hired a forensic accountant to determine whether any fraudulent transfers took place. Meanwhile, the auction of IRC's remaining assets was set into motion after a newly formed company called Fidelity Gold & Silver offered $10,000 for the customer lists and furnishings. Fidelity looked like a reincarnation of IRC. It was registered by Hastings, and at least one customer says Marion called him to pitch coins for Fidelity. Cottage Grove resident Denny Kenyon filed a motion in mid-August seeking to outbid Fidelity for IRC's assets. Kenyon has owned a used car dealership, a collectibles company, and an investment company. This week, Marion's ex-wife, Dana Golden, filed notice that she also intends to put in a bid for the assets. She formed a company called Golden Coin & Collectibles at her Shorewood home address just days after IRC filed its initial bankruptcy petition. She also worked at IRC, reportedly for no pay, in an effort to help turn it around. Marion, Hastings, Golden and Kenyon could not be reached for comment Friday. http://www.startribune.com/local/168184606.html |
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