Coin dealers targeted for rules against fraud by state

However, some people have wondered if the proposed legislation goes far enough since coin exchanges, which at the moment aren't regulated in Minnesota, often accompany precious metal purchases, which can give reputable dealers a bad name.

These are growing industries in this time of continued financial uncertainty, and don't have state rules in place to exclude known thieves from their ranks or some other questionable business practices, critics said.

But local counties have the authority to monitor the separate, but sometimes linked, practice of precious metal dealing, officials noted.

The Minnesota Attorney General's Office and Commerce Department commissioner recently took aim specifically at coin dealers. They issued warnings, made arrests, filed suits and barred some coin dealers accused of taking advantage of residents from conducting business in the state.

Minnesota officials said their actions were necessary after numerous residents complained they'd been taken advantage of, most often by underpaying or not compensating customers at all.

Many of the scammed were taken advantage of because they faced debt, foreclosures or unemployment and were often in need of quick cash infusions.

Koochiching County Sheriff Brian Jespersen said his office had received some complaints after the newcomers came to town.

“I believe the problem was we had some checks bouncing,” Jespersen said.

However, I. Falls Police Chief Mike Musich said his office hasn't encountered any problems with precious metal buyers at least who usually would set up shop for a week at a time in banquet and conference rooms. In fact, Musich said they've been compliant by coming in to his department after and providing officers with sales sheets and other receipt information.

“We've never had any problems,” the chief said.

But Lori Jorgenson of I. Falls told The Journal she regretted selling her gold jewelry to Treasure Hunters Roadshow & Associates in May. The Ohio-based company's regular cross-country visits previously included Borderland, too.

Jorgenson said she ignored any red flags because she needed the money. She claims she sold items at a loss only then to be paid with a bad check.

The company did eventually pay her, but she said only after she aggressively pursued them, a situation shared by a few other Borderland residents.

At the moment, the coin industry is unregulated in Minnesota, according to all state laws found online at www.revisor.mn.gov.

Attorney General spokesman Ben Wogsland said the bill they've suggested to the Legislature focuses on coin dealers as a direct result of "lots of complaints" about them.

Minnesota does have some precious metal laws in place. For instance, those businesses and their branches must post minimum prices and weigh the gold “in plain view” on a state-approved scale with a Commerce Department seal. Gold buyers are required to register, pay a fee and be licensed annually with the state.

The precious metal dealer statutes can be found on the Legislature's website in chapters 325F.73 to 325F.744. But unlike the coin dealer proposal, the state laws do not appear to address sellers' criminal histories and actually requires them to pay by check rather than cash.

Instead, Wogsland noted that the law places much of the oversight and licensing for precious metal dealers on individual counties. That doesn't mean there may not be some separate regulation bills in the works elsewhere among lawmakers, he said Tuesday.

He added, "Certainly we want to hear from people with complaints." Wogsland said people can contact the Attorney General's Office toll free at (800) 657-3787 or fill out an online complaint form found at www.ag.state.mn.us.

Unlike a growing number of cities across the United States, I. Falls does not have an exclusive coin or precious metal buyer, but established jewelers have been known to buy and sell gold and silver.

Across the U.S., storefront owners with longtime community ties reportedly have expressed concerns they might get lumped in with fly-by-night operations with questionable practices and criminal histories.

Earlier this month, Swanson responded, in part, to the statewide (and national) problem of coin cons by filing lawsuit against Guardian Gold and Silver Exchange out of the Twin Cities for alleged fraudulent and deceptive trade practices.

Actually, Guardian Gold is just the latest company pinched in a string of suits from her office after “a spat of complaints,” according to a Jan. 4 Attorney General's Office news release.

Swanson and Commerce Department Commissioner Mike Rothham went on to accuse numerous coin dealers of engaging in predatory practices and flat-out ripoffs as people seek a sturdy long-term investment.

Rothham added his office has and will continue to bar fraudulent coin companies and their owners from ever again conducting business in Minnesota.

Going even further, Rep. Debra Hilstrom and Sen. Katie Sieben joined Rothham and Swanson in announcing new legislation intended to provide much greater protections and oversight for senior citizens and other consumers who invest in coins.

“I’m authoring this legislation to provide protections for Minnesota consumers,” said Sieben, DFL-Newport, Minn., in a statement. “These coins are being sold to Minnesotans, especially seniors, as investments, but the dealers are completely unregulated. This bill closes the loopholes in current law.”

Sieben's office declined to discuss the proposed bill, saying it's not their practice for ongoing legislation.

Guardian Gold and Silver owners Raymond Hanisco and Schaun Waste are the latest accused of preying upon at least three men and women in their 70s and 80s with unsolicited, high-pressure calls to buy coins for thousands of dollars and then never delivering the product, according to a news release from the Attorney General's Office in St. Paul.

Other companies Swanson sued are Reputable Rare Coins and owner Tory Hughes, Crescent Equities and owner Robert Gundy and The Stella Group and owner Tiffany Grandy. Many of the accused have previous convictions for forgery, fraud, identity theft and a host of other crimes.

Hilstrom, chairwoman of the House Judiciary Committee, said she'll author the bill, which Sieben will champion on the Senate side as assistant majority leader.

The new law would:

*Ban coin industry dealers who have been convicted of a felony, theft or financial crime.

*Require coin dealers and their sales agents to register with the Commerce Department, have a background check done and post a surety bond.

*Prohibit coin dealers from misrepresenting the value of coins, their delivery date and the dealer’s professional qualifications.

*Require coin dealers to deliver the coins no later than 30 days after receiving the consumer’s payment.

“We have repeatedly encountered outfits where dealers with a history of past crimes aggressively market coins as investments to senior citizens and others, leaving a trail of broken promises and missing money in their wake,” Swanson said in a statement.

The Attorney General’s Office also has issued a consumer alert, “Beware of Fraudulent Gold Coin Dealers.” For more information, folks also can go online to www.ag.state.mn.us/Consumer/Publications/FraudulentGoldCoinDealers.asp.

To file a Commerce Department consumer complaint, call (800) 657-3787 or 651-296-3353.