Senate to Hold Hearing on Precious Metal Scams
Convicted Telemarketer to Tell Lawmakers How He Defrauded Consumers
Note: Today’s hearing will be streamed live on the committee website. You can watch it, as well as access witness testimony, chairman and ranking member opening remarks and the staff investigation summary
by clicking here circa 2:15 p.m. EDT.
WASHINGTON, DC – The U.S. Senate Special Committee on Aging will hold a hearing on Wednesday to examine precious metal scams that have in recent years defrauded thousands of senior citizens and consumers out of their hard-earned savings.
The hearing, the culmination of a year-long committee staff investigation into unscrupulous precious metals firms, will feature a convicted telemarketer from Florida who will detail to lawmakers how he conned consumers and a Texas investor who was duped out of $170,000. The committee will also hear from federal regulators who oversee the industry and release a summary of its own staff investigation.
Precious metals are a class of metals deemed rare or highly valued, such as gold, silver, palladium, or platinum. They can be bought and sold in the form of bullion bars, ingots, or coins. In the aftermath of the 2008 stock market and real estate collapse, more and more Americans sought the perceived safety of precious metals. As a result, thieves and swindlers entered the precious metals business looking for easy money. Using high-pressure sales tactics, they lured seniors and other consumers with promises of lucrative and safe returns and mislead them into buying large amounts of metals that were either never delivered or hit consumers with exorbitant fees. In many cases, investors were duped into buying the metals through leveraged transactions—or in-house credit—that made it nearly impossible for them to earn money after fees and commissions were applied.
In one such case, the Commodities Futures Trading Commission (CFTC) in 2012 charged a group of precious metals companies, including Hunter Wise Commodities LLC, with deceptively coercing customers into buying precious metals through leveraged transactions. Specifically, consumers entered into leveraged transactions by paying approximately 25 percent of the metal’s total purchase price, with the remaining 75 percent financed through in-house credit. Consumers believed the metals they purchased were actually bought and stored on their behalf since they were charged storage fees and interest on the loans used to purchase the metals.
However, the CFTC alleged no metal was actually bought by Hunter Wise, therefore no metal was stored on the customer’s behalf. More than 180 telemarketing firms placed their precious metal orders through Hunter Wise Commodities, with firms spread out across the country, from Florida to New York to Texas and California.
UNITED STATES SENATE SPECIAL COMMITTEE ON AGING
HEARING: Exploring the Perils of the Precious Metals Market
2:15 p.m., Wednesday, April 30, 2014
Dirksen Senate Office Building, Room 562
Joe Melomo, Precious Metal Fraud Victim from Texas
Dama Brown, Director, Southwest Region, Federal Trade Commission
Rosemary Hollinger, Regional Administrator and Deputy Director, Division of Enforcement for the Central Region, Commodity Futures Trading Commission
Karl Spicer, Former Precious Metals Telemarketer from South Florida