Gold

ABC News reports that Goldline, a dealer of precious metals, is to pay $4.5 million to settle a case with its defrauded customers and avoid criminal prosecution.  The company was accused of a “bait-and-switch”, advertising the sale of gold bullion and instead selling its customers much less valuable “collectible” gold coins.  California consumer protection attorneys alleged predatory business practices and 19 counts of criminal fraud in the company’s practice of convincing its customers that the government could confiscate gold bullion but not gold coins.  The company would then use this misinformation to justify an enormous markup for the coins.  One customer reports that he had lost half of the $5,000 he spent purchasing the coins due to the discrepancy between Goldline’s markup and the market-set value of the gold itself.  Most customers paid a markup 55% higher than the gold’s actual value.

More interesting than the settlement is the company’s attempt to spin the news.  As part of the settlement, the City of Santa Monica agreed to drop all criminal charges against Goldline.  In a press release issued by the company, they stress this fact first and foremost, making no mention of the $4.5 million to be paid to their victims.  Instead, Goldline identifies the suit as an investigation of “dissatisfied customers” and only  mentions they “continue to set [the] standard for customer disclosures”.  Take this as a lesson to read a company’s press releases with a grain of salt, or in this case, a heaping mound.  Also, if you’re in the market for gold bullion, don’t buy it from a company that advertises on conservation radio talk shows.