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Washington DFI Among 30 States Joining CFTC In Charging Metals Dealer With $185 Million Scheme Targeting Seniors

The Washington State Department of Financial Institutions Division of Securities and Washington Attorney General’s Office announced today participation in a consolidated nationwide enforcement action to halt a fraudulent precious metals scheme that has solicited $185 million from at least 1,600 seniors and other investors.

DFI joins the Commodity Futures Trading Commission and 29 other states in filing a complaint in the U.S. District Court for the Northern District of Texas alleging Metals.com and Barrick Capital Inc. defendants solicited $185 million from seniors and other vulnerable investors nationwide by touting precious metals at grossly inflated prices that were not disclosed.

These defendants showed great disregard for the truth in failing to disclose that virtually every investor lost the majority of their funds in the investments the firm was hawking,” Bill Beatty, DFI Securities Administrator said. “These people capitalized on investor fears of market instability and economic uncertainty. As a result, investors who least can afford it suffered enormous losses from retirement savings – more than $140 million in this case – by relying on the false representations made by the defendants and their sales representatives.”

This historic joint effort between the CFTC and 30 state regulators is an important step toward rooting out fraud across the country,” said CFTC Chairman Heath P. Tarbert. “This case highlights just how geographically broad commodities fraud can be in our rapidly-evolving financial markets and how important it is for regulators at all levels of government to work together to pursue bad actors and protect market participants.”

This enforcement action is the largest joint filing in CFTC history with state regulators, and the first resulting from a 2018 information sharing agreement(link is external) between the CFTC and NASAA, which represents state and provincial securities regulators in the United States, Canada, and Mexico.

The complaint names Los Angeles, California-based companies TMTE Inc., also known as Metals.com, Chase Metals Inc., Chase Metals LLC, Barrick Capital Inc., along with Simon Batashvili, Lucas Asher, and Tower Equity LLC. The defendants are accused of using cold calling, television, radio, and social media advertisements designed to “instill fear in elderly and retirement-aged investors and build trust with investors based on representations of political or religious affinity.” Investors were advised to liquidate their holdings at registered investment firms to fund investments in precious metals bullion through self-directed individual retirement accounts and bullion coins, the complaint states.

The defendants also are accused of failing to disclose, among other things, the markup 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% 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.

Washington DFI assisted the task force in contacting purchasers in our state through an investor questionnaire and then conducting interviews of those who returned the questionnaire. Washington victims shared stories similar to those found in the Federal complaint. DFI found that Metals.com largely targeted elderly victims and made material misrepresentations in convincing victims to liquidate and transfer IRA funds to purchase precious metals. Washington’s Attorney General represented DFI’s findings in filing the complaint requesting the emergency cease and desist order.

“Scammers often target seniors and other vulnerable Washingtonians in an effort to cheat them out of their hard-earned money,” Attorney General Bob Ferguson said. “I appreciate the Department of Financial Institutions, in partnership with my office, taking this action to halt this fraudulent precious metals scheme. Remember, if a deal seems too good to be true, it probably is.”

The complaint 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 complaint 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 attempted to evade previous regulatory actions from 12 states by, among other tactics, changing its business name. This coordinated state and federal action to put a stop to the company’s efforts to continue to prey on elderly investors is the result of a multi-state collaboration by members of the North American Securities Administrators Association (NASAA), of which DFI’s Division of Securities is a member, and the Commodity Futures Trading Commission’s Office of Cooperative Enforcement.


This news release was provided by the Washington State Department of Financial Institutions


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