Precious Metals Investor Schemes Millions Of Dollars From US, Colorado Investors

DENVER (CBS4) - Colorado joined federal authorities and other states in a nationwide crackdown on a precious metal investment firm that the government agencies allege defrauded seniors and other investors of much of the $185 million they have given to the firm. The Colorado Division of Securities, along with the Colorado Attorney General and the U.S. Commodity Futures Trading Commission, filed a petition in U.S. District Court in Texas on Tuesday. A total of 30 states participated in the filing.

The petition alleges Metals.com "had a reckless disregard for the truth" and that "virtually every one of their … investors … lost the majority of the funds invested in fraudulently overpriced precious metals bullion."

Beverly Hills-based Metals.com - also known as TMTE Inc., Chase Metals Inc., Chase Metals LLC, Barrick Capital Inc., Simon Batashvili, Lucas Asher, and Tower Equity LLC - had been under regulatory scrutiny for two years. In fact, 12 states, including Colorado, had already taken separate enforcement action against the firm and its representatives. Colorado Securities Commissioner Chris Myklebust issued a cease-and-desist letter in July 2019 demanding the company immediately stop conducting business in the state.

An investigation at that time by the Colorado Division of Securities discovered the company was advising its clients to open a separate self-directed IRA (Individual Retirement Account) with company, then guided them into liquidating securities in existing accounts for transfer into Metals.com's new one. Advising clients specifically violated the company's licensing agreement with the state.

In response to Colorado's case-and-desist, the company admitted no wrongdoing and agreed to repay Colorado investors who requested to be reimbursed.

However, in Tuesday's action, state and federal authorities claim Metals.com "continued to prey on elderly investors," as stated in a press release Friday.

"The defendants allegedly solicited more than $185 million from seniors and other vulnerable investors nationwide," Securities Commissioner Tung Chan said, "including over $5 million in Colorado, by touting precious metals at grossly inflated prices. The defendants appear to have capitalized on investor fear of market instability and economic uncertainty. Investors suffered substantial losses from retirement savings."

"Metals.com must be held accountable for the money it took unfairly from Coloradans," Colorado Attorney General Phil Weiser added, "and that money must be returned to those who, especially during a pandemic, cannot afford that loss."

According to its website, Metals.com is an independent retailer of gold and silver products, including bars, rounds, and coins. Authorities allege the company charged investors prices for gold or silver bullion averaging from 100% to more than 300% the melt value or spot price of that gold or silver bullion. In many cases, the market value of the precious metals sold to investors was substantially lower than the value of the securities and other retirement savings investors had liquidated to fund their purchase.

"That vulnerable populations were exploited by way of their fears and financial worries makes this crime particularly contemptible," said Patty Salazar, Executive Director of the Colorado Department of Regulatory Agencies, which oversees the state's division of securities. "The perpetrators of this fraud will be brought to justice."