Minneapolis coin dealer is indicted, jailed

David Laurence Marion won't make it to his favorite slots at Mystic Lake Casino this weekend.

The 52-year-old founder of what once was a $24-million-a-year gold and silver telemarketing firm in downtown Minneapolis was arrested Wednesday after a federal grand jury indicted him for allegedly defrauding his clients and investors out of $2.7 million.

The indictment says Marion laundered his customers' money to gamble, live large, support his ex-wife and prop up his coin firm, International Rarities Corp., as it careened into bankruptcy in the wake of a fraudulent securities offering that was supposed to be used for an expansion effort.

Marion bristled Thursday as deputy U.S. marshals led him into the St. Paul courtroom of U.S. Magistrate Judge Tony Leung for his initial appearance. He grew agitated when his attorney, Craig Cascarano, explained that he'd be spending the weekend in jail.

Assistant U.S. Attorney Karen Schommer said Marion is "a danger to the community" and asked that he be held without bond. Leung ordered him to jail, pending a detention hearing Monday afternoon.

Marion has been under investigation for more than a year.

He started International Rarities in 2000 and hired a number of ex-cons, addicts and drunks as salesmen. The company grew to be the second-largest telemarketer of precious metals in the Twin Cities, according to industry sources. But at a time when gold and silver prices were skyrocketing, its revenues plummeted, dropping from $24 million in 2009 to $15.7 million in 2010. When it filed for bankruptcy in August 2011, the company listed just $1.35 million in assets and $3 million in debts, which included promissory notes, unfulfilled coin orders and rescission claims arising from a stock sale.

Don Sather, 89, of Aptos, Calif., said this month that Marion took him for about $25,000 by undervaluing the coins Sather sent in on an exchange, and replacing them with worn coins that weren't as valuable as he expected.

"I was so dumb to ever get into this thing. I know nothing about coins and values," Sather said.

The indictment alleges that from December 2010 through August 2011, when International Rarities filed for bankruptcy protection, the company received more than $2 million in coins, precious metals and money from customers seeking to buy or trade coins.

The company failed to fulfill the orders, and when customers complained, Marion and his staff falsely told them that their orders were being processed, forestalling legal actions and allowing Marion and his staff to make more deals.

Customers lost about $1.7 million as a result, the indictment says. It says Marion also violated securities laws when he formed a Nevada company called International Rarities Holdings Inc. in 2009 and had his staff sell about $1 million in shares to 26 investors in Minnesota and 11 other states.

The government charged Marion with conspiracy to commit wire and mail fraud, securities fraud and money laundering.