By MATTHEW MOSK and BRIAN ROSS
July 20, 2010 —
Congress will ask top executives from Goldline, the precious metals dealer that is a major sponsor of Glenn Beck’s television and radio programs, to testify about the company’s aggressive sales tactics.
Rep. Anthony Weiner (D-New York) and Rep. Bobby Rush (D-Illinois) announced the hearing Tuesday after an ABC News report in which some customers of Goldline described how they felt cheated by the company. Consumer complaints have also prompted an investigation by local officials in California, who said they were disturbed to hear about the high pressure approach used by Goldline and one other company, Superior Gold Group. And they have prompted a class action lawsuit, filed in South Carolina Tuesday morning against the company on behalf of customers who allege they have been ripped off.
The most pervasive complaint focused on what one former Goldline employee described as a push to convince customers to invest their money in collectible gold coins, rather than in gold bullion. Unlike bullion, the coins carry a hefty mark-up. Goldline customers told ABC News that they found the coins were also much more difficult to sell without taking a loss.
But as the ABC News investigation revealed, the questions about Goldline appear to be moving beyond political theatrics. In addition to the joint investigation launched by the Los Angeles County District Attorney and the Santa Monica City Attorney, a law firm in Texas announced Tuesday that it has filed a class action lawsuit against Goldline in the U.S. District Court in Greenville, South Carolina.
“Goldline grossly overcharges for its numismatic coins and bullion, falsely and deceptively claims that its products are ‘good’ investments, and its sales persons misrepresent themselves as ‘Investment Advisors’ or ‘Financial Advisors’ able to give ‘investment advice’ and imply that they have a fiduciary responsibility to get customers the most return on their investments,” the lawsuit alleges.
“Goldline products are, in fact, a bad investment, and its marketing scheme is nothing more than a scam designed to induce market-wary investors to purchase numismatic coins and bullion worth far less than represented by Goldline and its outside associates,” said the lawsuit filed by Houston attorney W. Craft Hughes.
Carter, the Goldline executive, attempted to address the question of whether the company offers investment advice during his interview on Good Morning America this morning.
“You’re talking about investments here but in fact your sales people are not investment advisers,” George Stephanopoulos noted to Carter during the interview. “And the reason for that is so they can avoid regulation by state regulatory authorities and the [Securities and Exchange Commission]. They don’t have this legal and fiduciary responsibility to look out for the customer.”
Exclusive: Glenn Beck’s Golden Advertiser Under Investigation
By MATTHEW MOSK, JOSEPH RHEE and BRIAN ROSS
July 19, 2010 —
Authorities in California said today they have opened an investigation into Goldline International, a company that pioneered the practice of weaving its sales pitches into broadcasts by popular conservative political personalities — including two former presidential candidates and Fox News host Glenn Beck — to sell hundreds of millions of dollars worth of gold every year.
“There are two main types of complaints we’re seeing,” said Adam Radinsky of the Santa Monica City Attorney’s office, which has launched what it described as a joint investigation with the Los Angeles County District Attorney’s office.
“One is that customers say that they were lied to and misled in entering into their purchases of gold coins,” he said. “And the other group is saying that they received something different from what they had ordered.”
But the potent blend of conservative talk and gold sales has brought scrutiny, initially from the political left. U.S. Rep. Anthony Weiner, a New York Democrat, called the relationship between Goldline and the conservative talk shows an “unholy alliance.”
“There is an unholy alliance, I call it, between the commentators on Fox News and Fox News’ advertising policies to sell ads to these guys,” Weiner said. “If you’re going to advocate for buying gold, it’s certainly your right to do that. But you should tell your viewers there’s a dumb way and a smart way to buy gold And very often those advertisements are for a very dumb way to buy gold.”
Weiner’s congressional office conducted its own investigation into the firm’s sales practices and said his complaints about Goldline are not just a matter of politics. Weiner told ABC News that neither the sale of gold nor the promotion on conservative broadcasts is the real problem. The rip off, as he called it, was in Goldline’s push to get consumers to buy gold coins instead of pure gold.
“Once they get people on the phone, they basically steer them into these so-called collectible coins and that’s where the rip off becomes really profound,” Weiner told ABC News Chief Investigative Correspondent Brian Ross.
ABC News interviewed a number of Goldline customers who said they were concerned they had been persuaded to buy gold coins that did not hold the same financial promise of buying pure gold.
One of the customers was 63-year old Joe Kismartin of suburban Detroit. He says what he heard from Beck and elsewhere on TV about gold and the Goldline company made a lot of sense.
“They got the commercials on TV and the way the economy’s going I was figuring well, maybe I’ll just do it for a little bit, save it for inflation, you know, in case something happens to the economy, it bottoms out and I’ve got something to fall back on, gold, rather than money,” he said.
But Kismartin says he ended up losing almost half of the $5,000 he spent, because, he says, the Goldline salesman pressured him to buy overpriced gold coins, not the gold bullion he had seen in the commercials.
“I wanted to go bullion, I didn’t want coins,” he said. “I told the gentleman I don’t want coins. He said I got the deal here, the special deal, I got Swiss coins. He more or less talked me into buying the coins.”
When Kismartin took the coins to a local coin shop, he was told the $5,000 worth of gold coins he bought from Goldline five months earlier was worth just over $2,900, a loss of $2,100. “You know, I’m living month to month, that’s a big loss.”
Zoanne Martz of Sacramento says the same thing happened to her with Goldline when she was persuaded to buy $13,000 of overpriced Swiss gold coins. Each one priced at $250 dollars.
“I was recently laid off so I was looking for getting back some of my money and I found that the most I could get back for one of those was $207 now,” she said.
And that’s despite the fact the price of gold has almost doubled since she bought the coins three years ago. “I just really felt like, I kind of, that I was suckered. I really was. And I really felt that this was a reputable company that I could feel pretty safe with.”
Some angry customers say Goldline invokes Glenn Beck as a way to steer them to their collectable gold coins, citing his frequent warnings that only gold coins are safe from government seizure.” You see, back in 1933, FDR said, ‘Okay, we’re going to take all your gold and gee, it’s worth $8 an ounce.’ But some people got smart and they said, ‘Well, wait a minute. I’ve got antique coins, you can’t melt these down.'”
That’s what Martz says she was told by Goldline “that would make your investment more secure because the government couldn’t come in and take your gold basically,” she said.
And that’s what a Goldline salesman told a researcher for a liberal media watchdog group, Media Matters, who set out to buy gold from Goldline to see what would happen. Media Matters provided ABC News with a copy of the sales call it recorded.
“When it comes to holding physical gold, there’s a couple concerns our clients have. Are you concerned with what happened in 1933? Glenn Beck talks about this very often,” the Goldline sales associate says.
“Yeah, I wanted to ask you about that,” the Media Matters researcher says on the recording, which was conducted with the permission of the salesman.
The salesman replies: “So Glenn Beck just says, ‘Look, they’ve confiscated bullion before. I want to have what they exempted from confiscation, cause I don’t want them messing with my gold. So they exempted any coins that had a recognized, special value to collectors.”
Weiner told ABC News that the entire claim is built on a fiction. “It is absolutely not true that the government has any power to confiscate your gold or confiscate your currency,” he said. “But that fear is profound & and very often the very same commentators that are stoking that fear are also selling these coins.”
All Things Considered – John’s Commentary:
This investigation and class action lawsuit comes as no surprise whatsoever – it is actually long overdue. As my wife said, “It is about time someone brought their unscrupulous sales tactics to light!”
The Pre-1933 coins and rare coins being immune from confiscation argument is completely unfounded. In fact, it is a lie. And that is what Goldline Intl., Superior Gold Group, and the majority of gold retailers want their customers to believe…. and the list goes on and on. If you have ordered a gold “investment kit” from the internet or television, this is the sales pitch you will eventually receive.
The Executive Order that President FDR issued in 1933 “confiscating” gold was rescinded by President Ford in 1974. In fact, only 7% of all gold was turned in and no one ever went to jail.
Again, rare coins and most pre-1933 coins are for collectors ONLY! Few individuals recoup their initial investment in rare coins.
Return to the reason why you are buying gold in the first place. In virtually all cases, buy the least expensive form of gold bullion coins or bars available. If you would like more detail, please contact me.
Action to take: Continue to add low premium gold and silver bullion coins and bars to your holdings. Avoid any and all rare coins and/or pre-1933 gold coins. Buy cheap bullion only!
What to buy: Specials! Numerous 1 and ½ oz. gold coins at 6% premium to spot price or less! Including 1 and ½ oz gold eagles, 1 and ½ oz gold Medallions, Australian, Isle of Man, Mexican and Singapore and more. 50 ounce silver bars at $0.78 over spot. Great Buys! Free Delivery over $5,000.
Quote of the day: “If you don’t trust gold, do you trust the logic of taking a beautiful pine tree, worth about $4,000 – $5,000, cutting it up, turning it into pulp and then paper, putting some ink on it and then calling it one billion dollars?” – Kenneth J. Gerbino
