Posted on: Friday, May 25, 2001

Rare-coin ring charged with fraud

USA Today

NEW YORK — In a twist on an old con game, six New Yorkers have been charged with bilking investors out of $25 million by selling them rare coins at inflated prices.

"You could call this a case of the movie 'Boiler Room' meets 'Antiques Road Show', only this wasn't entertainment, this was real life," said Eliot Spitzer, the attorney general of New York, who brought the indictment.

He said the six people, along with a ring of more than 20 others, used high-pressure telemarketing sales tactics to get thousands of investors across the nation, many of whom were seniors, to overpay for rare coins.

The six individuals, who controlled five related rare-coin operations, allegedly racked up the sales between 1993 and 2000.

"The coins were real, but just about everything else about the operation was a lie," Spitzer said.

As an example, he said the group would sell a coin such as an 1846 $5 Liberty coin. In its actual used condition, the coin has a value of $2,000, but the telemarketers would hype it as being in mint condition and sell it for $9,500.

If an investor questioned the coin's value, he or she would be referred to an "independent" dealer from one of the five companies controlled by the telemarketers.

While thousands of investors were defrauded in the scheme, Spitzer said that at least 20 victims lost $100,000 each, and some were bilked for more than $750,000.

Steve Bobbitt, spokesman for the American Numismatic Association, said the indictment is the biggest case of fraud he's ever encountered in the world of rare coin collectors.

"We don't recommend that people buy coins as an investment," he said. "Coins are much more treacherous than stocks unless you understand what you're buying or have a good dealer."

So far, the government has frozen more than $5 million in cash from the operation.