The Bullion Reporter on CoinWeek........
Nobody outside of Hannes Tulving, Jr. and his inner circle knows exactly what went wrong, as one of the nation’s largest gold and silver bullion dealers watches his business come crashing down around him.
After months of growing complaints and financial troubles, Orange County, California-based Tulving Company closed shop on March 3 and has filed for bankruptcy. The firm, which as recently as 2013 claimed to have done over $600 million in business, has told the state of California that it now has less than $50,000 in assets.
On Wednesday, March 12, California Federal Judge Edward J. Davila ordered these assets frozen temporarily, as hundreds of clients claim losses adding up to more than $100 million. “It’s staggering,” one industry insider--who wishes to remain anonymous--said, “just how quickly things got away from them.”
An anonymous industry blogger who publishes on the site About.Ag has been following the Tulving Company as it disintegrates. Over the past six months, this blogger has meticulously catalogued the company’s cash flow problems exposed by frequent delays in order fulfillment.
Said the Executive Vice President of a nationally-known bullion firm, who spoke on the condition of anonymity: “The only reason why you have delays in filling orders is because you don’t have the cash on hand to pay for the product. In our industry, you pay as you go. There are no terms. Nobody is willing to take on that exposure.”
According to About.Ag’s timeline of events, Tulving Company’s woes began shortly after contracting with a third party on the East Coast to drop ship orders. “While this could have been done to reduce shipping costs, it introduced risk into the system,” the blogger said. “The method was no longer fool-proof.”
But questions remain whether the onset of order fulfillment delays was related to a change in purchasing strategy or whether something else was unfolding behind the scenes. “In 2010, the firm had no Better Business Bureau complaints. In 2011, only two. That number began to pick up in 2012 and by the end 2013 and the beginning of 2014 things had gotten so bad that the company was receiving as many complaints as orders.”*
Tulving’s Current Legal Woes Echo 1992
Those familiar with the industry know this isn’t the first time Hannes Tulving has faced legal scrutiny for his business practices.
In 1992, Tulving and his firm Hannes Tulving Rare Coin Investments, Inc. attracted the attention of the Federal Trade Commission. The FTC determined that the company had used deceptive marketing practices (such as a doctored price guide) to sell coins at inflated prices. Tulving declared bankruptcy and accepted a $10 million dollar judgment.
The settlement allowed him to re-enter the coin investment business, but barred Tulving from misrepresenting the degree of risk associated with investing in coins and bullion.
Tulving Silent and Class Action Lawsuit Filed
On March 6, the law firm of Kronenberger Rosenfeld, LLP filed a class action lawsuit in the United States District Court of the Northern District of California.
Nevertheless, the company’s telephones remain active. After a dozen rings, a recorded message tells you how to place orders during off hours. The website remains online as well. There’s no mention that the firm is out of business and no longer accepting orders.
There is, however, a short video presentation explaining the advantages of doing business with Hannes Tulving, Jr., and a page listing hundreds of customer testimonials--a sad reminder of better times.
As of this writing, Tulving has yet to make a public statement.
*The BBB has handled 338 complaints about the Tulving Company in the last 12 months.