The Office of the Attorney General and the Secretary of State announced this week that Georgia is participating in a consolidated nationwide enforcement action to disrupt an alleged fraudulent precious metals scheme that has solicited more than $180 million from seniors and other investors.
“Our office believes these defendants may have solicited more than 180 million dollars from seniors and other vulnerable investors nationwide, including around 5 million dollars in Georgia, by touting precious metals at grossly inflated prices,” said Attorney General Chris Carr. “Along with our partners in the Secretary of State’s Office, we are concerned that the defendants capitalized on investor fear of market instability and economic uncertainty causing investors to suffer substantial losses from retirement savings. We will continue working together to protect older Georgians.”
“Preying on the elderly and vulnerable is terrible at any time. Doing so during pandemic driven economic uncertainty compounds the egregious wrong done to Georgia’s seniors,” said Secretary of State Brad Raffensperger. “Through our Securities Division, and in partnership with the hardworking officials in the Attorney General’s office and federal and state partners around the country, we are dedicated to protecting Georgia’s vulnerable from investment scams that rob them of their hard-won savings.”
Over the weekend, the U.S. Commodity Futures Trading Commission, and 29 other states filed a petition in the U.S. District Court for the Northern District of Texas alleging that Metals.com “had a reckless disregard for the truth that virtually every one of their … investors … lost the majority of the funds invested in fraudulently overpriced Precious Metals Bullion.”
The petition names TMTE Inc., also known as Metals.com, Chase Metals Inc., Chase Metals LLC, Barrick Capital Inc., Simon Batashvili, Lucas Asher, and Tower Equity LLC. The unregistered Beverly Hills, California-based firm and its sales representatives are accused of targeting elderly investors through traditional and social media, providing unregistered investment advisory services designed to “instill fear in elderly and retirement-aged investors and build trust with investors based on representations of political or religious affinity,” according to the petition. Investors were advised to liquidate their holdings at registered investment firms to fund investments in precious metals through self-directed individual retirement accounts and bullion coins, the petition said.
The defendants also are accused of failing to disclose, among other things, what Metals.com and Barrick charged investors for their precious metals bullion products and that investors could lose the majority of their funds immediately upon completing a transaction. The defendants charged investors prices for gold or silver bullion averaging from 100 percent to more than 300 percent 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.
In addition to claims under federal law, Georgia alleges that the defendants also violated Georgia’s state securities laws, including a failure to register as investment advisors, fraud in the sale of commodities and securities, and the unlawful sale of commodities.
The petition requests the Court order the defendants to cease sales activity, return money to investors, and stop defrauding investors and violating federal and state laws going forward. The petition also requests that a receiver be appointed to take over the companies to marshal funds for the benefit of investors across the country.
Metals.com and its agents have been under regulatory scrutiny for the past two years. Prior to today’s action, twelve states have taken separate enforcement actions against the firm and its sales representatives. Despite these regulatory measures, the firm, in new iterations, continued to prey on elderly investors. Today’s coordinated state and federal action was a result of a multi-state collaboration by members of the North American Securities Administrators Association (NASAA), of which Georgia is a member, and the Commodity Futures Trading Commission’s Office of Cooperative Enforcement.
