Senior Scam Alert: Precious Metals Firm Bilks Elderly for More Than $37 Million
When it comes to senior scams, all that glitters is not gold. Especially for seniors who believed the telemarketing pitch from American Precious Metals, LLC, in Deerfield Beach, Fla. According to the Federal Trade Commission, owners Harry R. Tanner and his wife, Andrea Tanner…
…ran a telemarketing scheme that conned senior citizens into buying precious metals on credit without disclosing the costs and risks involved — including the fact that victims were usually forced to pony up more money or risk losing their entire investment.
The FTC said the Tanners and their company, American Precious Metals LLC, of Deerfield Beach, Fla., fleeced elderly victims out of more than $37 million dollars. Pending trial, a federal judge has shut down the Tanner’s company, placed it in receivership, and frozen the defendant’s assets.
According to the FTC’s complaint, the Tanners targeted elderly consumers with a get-rich-quick scheme that promised huge profits by investing in precious metals such as silver, gold, platinum and palladium. American Precious Metals’ telemarketers used strong-arm sales tactics to convince consumers they were being offered low-risk investments that stood to quickly double or triple in value.
…But despite the hard-sell tactics and other lies the Tanners fed their customers, they never used their victims’ money to buy any precious metals at all. Instead, after pocketing fees and commissions that were never clearly disclosed to consumers, they deposited the rest of the money in a clearinghouse account that recorded the investments without buying the precious metals.
The FTC also accused the defendants of regularly failing to inform their customers that their investments were leveraged and, as such, were agreeing to take out a loan and pay interest on up to 80 percent of the purchase price of the precious metal investments — which, of course, were never made.
Since the FTC took action against American Precious Metals, LLC, in May, the court-appointed receiver has liquidated the assets of the bogus business, and begun distributing the funds to the Tanner’s victims.
But it’s not likely that anyone will get back everything they lost. And the even greater tragedy is that senior scam victims often don’t have the luxury of time to make back their losses.
Older Americans were hit really hard by the real estate collapse and financial crisis of the last several years. After a lifetime of saving, retirement accounts were devastated. Home equity lifelines disappeared. And foreclosure rates skyrocketed. Add fears of another Great Depression, inflation, and a universal distrust of financial institutions, and it’s no wonder that so many seniors have turned to hard assets like precious metals for peace of mind.
Thinking about investing in physical silver or gold? Do you homework first — and keep these tips from the FTC in mind:
• If you are buying bullion coins or collectible coins, ask for the coin’s melt value – the basic intrinsic bullion value of a coin if it were melted and sold. The melt value for virtually all bullion coins and collectible coins is widely available.
• Consult with a reputable dealer or financial advisor you trust who has specialized knowledge.
• Get an independent appraisal of the specific gold product you’re considering. The seller’s appraisal might be inflated.
•Consider additional costs. You may need to buy insurance, a safe deposit box, or rent offsite storage to safeguard bullion. These costs will cut into the investment potential of bullion.
• Some sellers deliver bullion or bars to a secured facility rather than to a consumer. When you buy metals without taking delivery, take extra precautions to ensure that the metal exists, is of the quality described, and is properly insured.
• Walk away from sales pitches that minimize risk or sales representatives who claim that risk disclosures are mere formalities. Reputable sales reps are upfront about the risk of particular investments. Always get a receipt for your transaction.
• Refuse to “act now.” Any sales pitch that urges you to buy immediately is a signal to walk away and hold on to your money.
• Check out the seller by entering the company’s name in a search engine online. Read about other people’s experiences with the company. Try to communicate offline if possible to clarify any details. In addition, contact your state Attorney General (www.naag.org) and local consumer protection agency (www.consumeraction.gov). This kind of research is prudent, although it isn’t fool-proof: it may be too soon for someone to realize they’ve been defrauded or to have lodged a complaint with the authorities.
For more useful information from the FTC about investing in precious metals, click here.