How Carlson Law Handles Gold and Silver Coin Cases

Most of the gold and silver coin cases we handle follow a single pattern. A retiree or careful saver moves an entire IRA or 401(k) into “precious metals” through a nationally advertised dealer. Weeks later, the custodian’s first statement shows the account is worth 35% to 65% of what went in, even though the price of gold and silver has not fallen.

The money did not disappear in the market. It disappeared at the moment of purchase, because the dealer sold coins at two to three times what they could be resold for. In two recent matters our clients put in roughly $640,000 and $710,000 and were left holding coins the custodian valued at about $250,000 each.

This post explains how we investigate and prosecute these cases, from the first phone call to the arbitration award.

How the scheme works

The dealers do not hide. They buy heavy airtime on cable news and AM radio, sponsor “financial” talk shows, and pay celebrities and hosts to vouch for them. Their websites promise to “protect your retirement savings” and point to A+ ratings and thousands of five-star reviews, many of which were earned with a free safe or free silver in exchange for a review.

When a listener calls, a salesperson describes gold and silver as a hedge against a collapsing dollar and steers the conversation toward moving the whole retirement account. The customer agreement is signed by e-signature on the same call.

Unfortunately, the coins are sold at prices drastically more than they are actually worth. The result is an instant loss the client does not see until the custodian’s statement arrives. Customers’ life savings are often decimated due to the coin dealer’s greed.

Step 1: We prove the loss with the dealer’s own paperwork

These cases are won on documents. We start by assembling:

• The purchase confirmation, which lists each coin, the quantity and the per-coin price charged.
• The custodian’s statements, which show what the same coins were worth days or weeks after the sale.
• The spot price of gold and silver on the purchase date, so the markup can be stated as a percentage over melt value.

From these we build a simple table: what was paid, what it was worth, and the gap. In our recent cases the gap was $238,000 to $450,000. That number, not an opinion about the metals market, is the heart of the claim.

We also collect the dealer’s marketing, the radio or TV program that generated the lead, the salesperson’s online profile, and the public complaints from other customers. Those show the conduct was a business model, not a one-time mistake.

Step 2: We file where the contract sends us

Every dealer agreement we have seen requires binding arbitration, usually through a forum called JAMS. The dealers wrote those clauses to keep customers out of court.

We file a demand for arbitration in JAMS. The agreements also choose which state’s law governs; the anti-fraud and punitive-damages statutes of the states where these dealers are based generally reach this conduct.

The demand lays out the facts, the contract, the purchase and valuation records, and a compilation of other customers’ complaints as exhibits. It is written to be read by a single arbitrator, who will decide the case after a hearing.

Step 3: We plead the claims that fit the conduct

A coin dealer that induces a customer to liquidate a retirement account is not just a retailer that overcharged. We bring the claims that match what actually happened:

• Fraud and negligent misrepresentation. The salesperson described the purchase as protection for retirement savings while knowing the coins would lose a third to two-thirds of their value on day one.
• Securities-law violations. The SEC has charged coin dealers under Section 10(b) and Rule 10b-5 for persuading investors to sell securities in their retirement accounts to buy coins at undisclosed markups. We plead the same theory, along with Sections 206(1) and 206(2) of the Advisers Act and the governing state’s securities anti-fraud statute. State securities laws commonly entitle a prevailing purchaser to attorney’s fees.
• Breach of fiduciary duty. The dealer and its salesperson held themselves out as advisors, took the client’s trust, and put their own commissions first. The contract’s boilerplate that “no fiduciary duty” exists does not undo what the salesperson said on the phone.
• Agency liability. The dealer is responsible for its salesperson and for the radio or TV host who steered the client to it, under respondeat superior and actual or apparent authority.
• Breach of contract, negligence, gross negligence and negligent supervision, to cover the conduct from every angle.

We expect the dealer to point to the agreement’s acknowledgments: that the client did his own research, relied on no representations, and understood the spread. We address those head-on. A disclosure does not disclose a 100% or 500% markup, and an oral explanation that contradicts the fine print is exactly the kind of misrepresentation the anti-fraud statutes reach.

Step 4: We ask for everything the law allows

In every demand we request:

1. Compensatory damages: the full overpayment, measured by the gap between what was charged and what the coins were worth.
2. Punitive damages under state law, which generally permits exemplary damages where fraud, oppression or malice is shown by clear and convincing evidence. We ask for a multiple of compensatory damages, and the Supreme Court confirmed in Mastrobuono v. Shearson Lehman Hutton that arbitrators may award them.
3. Attorney’s fees under the governing state’s securities statute.
4. Return of all commissions and fees the dealer earned on the account.
5. Forum and arbitration costs, including expert witness fees.
6. Pre-award interest from the date of the purchase.

What to bring to a first conversation

You do not need to have figured out the law. Gather what you have and we will do the rest:

• The signed customer agreement
• The purchase confirmation or invoice listing the coins and prices
• Custodian statements
• Notes, emails or texts with the salesperson

Carlson Law represents investors and their families in gold and silver coin cases nationwide. If you or a loved one have suffered investment losses, please call us at 888-976-6111 or complete our contact form for a free and confidential consultation.