The bottom fell out of the precious metals market Thursday for Tory Hughes.
U.S. District Judge Richard Kyle banned the 45-year-old former coin and bullion dealer from the industry and ordered him to serve just shy of six years in federal prison. Hughes took more than $753,204 from 15 mostly older investors who sought a safe haven for their savings, only to find they’d been had by a con man who’s been committing crimes for more than 20 years.
Hughes thrived in the corrupt netherworld of Twin Cities boiler rooms that pitched gold and silver by phone to investors nationwide. That came crashing down around him in 2011 when the Minnesota attorney general won an $882,505 judgment against him and his Roseville business, Reputable Rare Coins.
Hughes personally stole more than $600,000 from nine investors in Minnesota. His crimes came to a halt when he spent 15 months in state prison on an unrelated crime. But after he got out, he set up a new bullion telemarketing operation in Gilbert, Ariz., where he stole more than $100,000 from six other clients before the feds shut him down. “I did wrong,” Hughes told the judge Thursday in St. Paul. “I regret it.”
His lawyer, Paul Edlund, argued for a sentence of 57 months, which he said was enough time to serve as punishment and a deterrence to other fraudsters. He said Hughes has cleaned up his act since he first met him three years earlier, when his client was still gambling, drinking and doing drugs.
“To a certain extent I think he feels a weight lifted now that this life of fraud is behind him” Edlund said.
Assistant U.S. Attorney Karen Schommer countered that Hughes showed no concern for his victims, who were in their 60s, 70s and 80s. “Mr. Hughes has been committing crimes since he was 22 years old,” she said.
Schommer asked that Hughes get 71 months, which she had calculated as the top of the federal guidelines range when he agreed to plead guilty.
In fact, those calculations failed to include the victims in Arizona. If they were factored in, she said, he could face up to 87 months in prison.
Kyle delivered the stiffest sentence he could under the plea agreement, which bars Hughes from appealing if the term is no more than 71 months.
Hughes appeared thunderstruck and slumped briefly at the lectern.
The judge acknowledged victims in the gallery and thanked them for coming. He said that he understands their pain and that although he’s ordering restitution, it often goes unpaid and the government can’t write a check to make the victims whole.
Kyle said that the prison term he gave Hughes ought to deter others from similar conduct, but that after many years on the bench, “I’m not totally convinced anything deters somebody who wants to commit a crime.”
The nationwide telemarketing of bullion and coins began in the Twin Cities in the mid-1970s and grew to about three dozen firms. After the Star Tribune published a series about abuses in the industry in 2011, the Legislature instituted reforms and the U.S. attorney in Minnesota prosecuted David Marion, the owner of one of the state’s largest coin telemarketing firms, for investment fraud.
In addition to Hughes, several other former coin dealers have been convicted of fraud and will soon face sentencing. They include Dennis Helmer, 54, of Farmington; Jay Flynn, 51, of Minneapolis; Tiffany Grady, 49, of St. Paul; and Robert Gundy, 56, formerly of Fridley.