Following a spate of recent lawsuits by the Attorney General’s Office against gold coin dealers for fraudulent sales practices, including a new lawsuit filed today against a local coin dealer who defrauded citizens around the country, Minnesota Attorney General Lori Swanson and Commerce Commissioner Mike Rothman today announced legislation to provide greater protections to senior citizens and other consumers who invest in gold, silver, and other coins. The bill will be authored by Representative Debra Hilstrom, Chair of the House Judiciary Committee, and Senator Katie Sieben, Assistant Majority Leader-elect.
Lawsuit. The new lawsuit was filed today in Hennepin County District Court against Guardian Gold and Silver Exchange, LLC (“Guardian”), and its officers/owners, Raymond Hanisco and Schaun Waste. It alleges they violated state consumer fraud and deceptive trade practices laws. For example:
· In early 2012, a 76 year old woman received an unsolicited call from Guardian, which convinced her to pay $6,495 for coins. After the company electronically withdrew the money from her account, it never delivered the coins.
· A 75 year old man received high pressure sales calls from Hanisco and Waste in 2012, soliciting him to purchase coins for $5,995. Guardian withdrew the money from his account, but never delivered the coins.
· In 2012, an 80 year old man received an unsolicited call from Guardian, which convinced him to pay $11,990 for gold coins. After Guardian electronically withdrew the money from his account, it never delivered the coins.
“We have repeatedly encountered outfits where dealers with a history of past crimes aggressively market coins as investments to senior citizens and others, leaving a trail of broken promises and missing money in their wake,” said Attorney General Lori Swanson.
For example:
· In February, 2011, the Attorney General’s Office sued Reputable Rare Coins, and its owner, Tory Hughes, who was previously convicted for theft and forgery, and thereafter obtained a judgment barring him from doing business in Minnesota.
· In March, 2011, the Attorney General’s Office sued Crescent Equities, and its owner, Robert Gundy, who was previously convicted for theft and check forgery, and thereafter obtained a judgment barring him from doing business in Minnesota.
· In November, 2012, the Attorney General’s Office sued The Stella Group and its owner Tiffany Grady. The lawsuit is pending in Ramsey County District Court.
Legislation. The proposed legislation would provide greater protections to consumers against fraudulent coin dealers by:
· Banning from the coin industry dealers who have been convicted of a felony, theft, or financial crime;
· Requiring coin dealers and their sales agents to register with the Commerce Department, create a background check screening process, and post a surety bond;
· Prohibiting coin dealers from misrepresenting the value of coins, their delivery date, or the dealer’s professional qualifications; and
· Requiring coin dealers to deliver the coins no later than thirty days after receiving the consumer’s payment.
Although dealers market the coins as investments, the industry is currently unregulated, unlike other industries where consumers make large scale investments, such as the securities, insurance, or mortgage industries.
“Coin and bouillon scams are a serious problem that need to be addressed to protect Minnesota consumers,” said Commissioner Rothman. “This proposed legislation by the Attorney General is an important step to help prevent abuses.”
“These coins are being peddled as investments, but too many times senior citizens and other consumers are being left in the lurch,” said Representative Hilstrom.
“I’m authoring this legislation to provide protections for Minnesota consumers. These coins are being sold to Minnesotans, especially seniors, as investments, but the dealers are completely unregulated. This bill closes the loopholes in current law,” said Senator Sieben.
The Attorney General’s Office has issued a Consumer Alert entitled Beware of Fraudulent Gold Coin Dealers. People who wish to file a consumer complaint may call the Minnesota Attorney General's Office at 1-800-657-3787 or 651-296-3353.