Goldline Executives Accused of Theft and Fraud in a 19-Count Criminal Complaint
Goldline International Inc., one of the nation’s largest retail precious metals dealers headquartered in Santa Monica, CA, has been charged with theft and fraud in a 19-count criminal complaint filed by the Santa Monica City Attorney’s consumer protection unit.
According to an ABC News report, the consumer affairs division of the Santa Monica City Attorney’s office filed a complaint on November 1st alleging that Goldline “runs a bait and switch operation in which customers, seeking to invest in gold bullion, are switched to highly overpriced coins by using false and misleading claims.”
The ABC News report continues “The company has been charged in the court filing with misdemeanors that include theft by false pretenses, false advertising, and conspiracy, the City Attorney’s office said. In addition to the charges against the company, the complaint accuses former CEO Mark Albarian, executives Robert Fazio and Luis Beeli, and salespeople Charles Boratgis and Stephanie Howard of defrauding customers. Current CEO Scott Carter is accused of making false or misleading statements. Each of the charged offenses carries a maximum penalty of one year in jail and maximum fines of between $1,000 and $10,000 per offense.”
Goldline quickly responded to the allegations in a posting on their website saying the “complaint filed by the Santa Monica City Attorney’s office is without merit.” and that Goldline ” will vigorously contest the allegations.”
The Goldline site continued… “Brian Crumbaker, Goldline’s Executive Vice President, said the complaint filed Tuesday has numerous errors. He noted that a core allegation of the complaint cites the company for “offering Bullion for sale on Goldline’s website with no intention of selling it. The so-called bait and switch allegation is preposterous because bullion accounts for more than 40% of the ounces of gold sold by the company during the past year.”
Goldline was the subject of an “investigation” in April of 2010 when now former NY Congressman Anthony Weiner (NY)started looking into the sales practices of one of TV Talk show host Glen Beck’s sponsors, Goldline International . Weiners “concern” was twofold: First, that Beck and other conservative talk show/TV personalities had formed a “unholy Alliance” with Goldline by unduly influencing their trusting viewers to purchase gold from Goldline and second, that Goldline was ripping its customers off with “bait and switch ” and hard sell tactics, and “peddling overpriced collector coins.”
Basically, Beck was seen as scaring his viewers with doom and gloom analysis and then inappropriately influencing his viewers to buy gold from one of his sponsors, who were paying Beck a handsome sponsorship fee. In short, Weiner accused Beck of being a shill for Goldline, who in turn was running a scam and grossly overcharging customers. Many people at the time considered Weirner’s “investigation” little more than political theater aimed at discrediting Beck based on the sales techniques of one of his sponsors.
Subsequent to the Weiner assault, Brian Ross at ABC News ran and “expose” about Beck and Goldline (07-19-10) outlining in greater detail the “questionable” practices of Goldline and the connection to Beck and other conservative TV and Radio personalities. The report included interviews with individuals who were “ripped off”, each describing pressure tactics used by the Goldline sales people: directing them away from low margin bullion coins to the high margin foreign gold coins.
After a short lived congressional hearing, amid the consistent denial of any wrongdoing by Goldline or Beck, the story sort of faded away until yesterday’s surprise announcement.
Although Weiners attacks in 2010 might have been uncomfortable for Goldline at the time, yesterdays criminal complaint is a whole other matter. Goldline will not be able to rely on the “we have an A+ rating from the Better Business Bureau” defense. These are serious charges directed at the upper level current and former executives of the firm and a couple of the salespeople.
Goldline is not one of those shady backroom telemarketing companies we occasionally read about getting busted in the newspapers. This is a company with a long history and over 500 Million in annual sales.
According to ABC News “In filing the complaint, officials have opened a new front in a long-running and very public dispute over the way Goldline has turned the sale of gold into a massive retail operation…..At the heart of the complaint is the suggestion that Goldline profits not so much by selling pure gold bullion, but by persuading customers who want to capitalize on the rising value of gold to purchase collectable coins. The coins are subject to a significant mark-up in price, and several Goldline customers told ABC News that they found it difficult or impossible to resell those coins without taking a loss.”
Whatever the reality of the situation turns out to be, the spotlight will certainly be shining on the sales practices within the bullion and rare coin industry, warranted or not.