Coin fraud prompts reform efforts
- Article by: DAN BROWNING
- Star Tribune
- May 8, 2011 - 8:04 PM
Bill Voss is on a mission to bring regulation to the coin industry.
The Texas lawyer said he's seen so many elderly people in the past five years who were cheated on large coin deals that he dedicated part of his law practice to pursuing rogue dealers. His website, coinlawfirm.com, offers tips on buying coins safely and seeks clients who've been defrauded.
"This shouldn't be happening against senior citizens, but it is. It's happening everywhere," Voss said.
He predicts the problem will worsen unless coin firms are regulated like other financial industries that provide investment advice.
Things may move in that direction. U.S. Rep. Anthony Weiner, D-N.Y., said in a recent interview that he plans to reintroduce legislation this year that would require coin dealers to disclose the melt value of the coins they sell, along with any fees and markups on their products.
Weiner sponsored the Precious Coins and Bullion Disclosure Act last fall, which drew support from the Federal Trade Commission and passed the House but failed to get through the Senate before the session expired. He said he's "not optimistic" that it will pass in a GOP-controlled House, however.
"There is this sense among my Republican colleagues that this is somehow an attack on Fox [Television] and their hawkers of gold, so I think their inclination is to defend it," Weiner said.
He took some heat for issuing an investigative report last May about Goldline International, a coin dealer based in Santa Monica, Calif., noting that it began growing rapidly after it started sponsoring Fox program host Glen Beck and other conservative pundits who touted investments in precious metals.
The report described Goldline as "a company that uses conservative rhetoric, high pressure sales tactics and tall tales about the future of gold to sell overpriced coins that can be bought somewhere else for cheaper."
Scott Carter, an executive vice president at Goldline, defended the firm's sales practices at a hearing in September before the House subcommittee on Commerce, Trade and Consumer Protection. He said Goldline already provides full disclosure and characterized the legislation as unworkable.
In Minnesota, a 2009 law that aims to protect the elderly from financial exploitation makes it easier to sue and potentially much more costly for defendants who lose. The law allows a vulnerable adult who is a victim of exploitation to recover damages of $10,000 or up to three times the loss -- whichever is greater -- plus attorney fees and costs. Minnesota Attorney General Lori Swanson has not proffered any legislation specific to coin dealers, but a spokesman said she would welcome a state measure similar to the one Weiner has pitched in Congress.
Spokesman Ben Wogsland said coin dealers are pitching gold and silver as an alternative investment to stocks, bonds or mutual funds. "It's investment advice," he said, "so it seems to me that there's some kind of a regulatory role there."
Dan Browning • 612-673-4493
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