Goldline Customers Get $4.5 Million Refund
SANTA MONICA (CN) - A Los Angeles county judge signed an injunction Wednesday that orders one of America's largest precious metal dealers, Goldline International, to pay up to $4.5 million in customer refunds.
The Santa Monica city attorney had just sued Goldline in Superior Court, claiming that it dupes people into buying overvalued gold coins under the pretext that Uncle Sam could seize gold bullion at any time.
Santa Monica City Attorney Marsha Jones Moutrie filed The People of State of California v. Goldline International in Superior Court.
California claims that Santa Monica-based Goldline, "one of the country's largest precious metal dealers," targets elderly victims by using "false and misleading sales techniques" to persuade them to buy marked-up gold coins.
The state filed a 19-count criminal complaint against Goldline in November 2011, with substantially the same allegations.
The new civil complaint states: "Since in or about February 2008, Goldline has falsely stated and implied to consumers that gold bullion can be, and is likely to be, recalled by the U.S. government; while also falsely promising that the marked-up coins are immune from such recall. Goldline also has referred to the 'confiscation' of gold by the U.S. government in the 1930s, falsely implying to consumers that gold was taken without compensation at the time.
"Since in or about February 2008, Goldline has falsely stated and implied to consumers that the marked-up coins are 'private,' or not 'reportable' to the government, while all bullion is reportable and public. This is false and misleading in two ways: (1) In fact, there are no tax advantages to the marked-up coins over bullion as a class since the profits of the former must be declared for tax purposes the same as those from bullion; and (2) There is no 'privacy' advantage to the marked-up coins as a class since only certain limited quantities and types of bullion even require reporting of any information upon liquidation.
"Since in or about February 2008, Goldline has trained its salespeople to use, and they have used, false and misleading statements and omissions to intentionally conceal Goldline's more than 50 percent price markup over its buyback price for the marked-up coins.
"Since in or about February 2008, Goldline has offered gold bullion for sale, and collected payments from consumers while promising them gold bullion products, without intending to give them the promised bullion products. Once this money was received, Goldline has persuaded the consumers to instead purchase the marked-up coins using false and misleading tactics including those described above."
Unlike gold bullion, pricing of gold coins can be problematic because they come in various weights and sizes, according to the complaint. That frees Goldline to inflate the value of the coins without detection, the state claims.
On Thursday, Judge Lisa Hart of the Los Angeles County Superior Court signed an injunction and a refund of up to $4.5 million to former Goldline customers. The order also requires Goldline to pay $800,000 into a future claims fund. All criminal charges against Goldline and its employees were dismissed.
Under the injunction, Goldline will have to disclose actual price markups to customers and must refrain from making claims that the government can confiscate gold bullion. The court has also appointed a monitor to ensure Goldline adheres to the court order.
"This injunction requires Goldline to overhaul its business model," Adam Radinsky, deputy city attorney and head of the Consumer Protection Unit at Santa Monica City Attorney's Office, said in a statement. "Consumers will now know the company's true price markups, and they won't be scared or tricked into buying something they don't want. False and misleading fear-mongering, bait and switch tactics, and vast hidden markups cannot be tolerated. All consumers deserve to be treated fairly."
Goldline said in a statement that Santa Monica investigators had identified 43 customers who were unhappy with their purchases.
"This represented less than one tenth of one percent (or 0.001) of Goldline's customers for the relevant three year period. To address those rare instances where a client was dissatisfied with a purchase, the company agreed to allow these customers to return their precious metals for a refund if they so desire," Goldline said in the statement.
The criminal complaint created a stir when it was filed. ABC News reported that Goldline had "used endorsements from Glenn Beck and other conservative icons to sell hundreds of millions of dollars in gold products to consumers."
Beck has pitched for Goldline on his radio show, which has been a sponsor of the show. Beck echoed the company's claims by citing in Goldline promos that under FDR's 1933 executive order the federal government would take all gold, except antique coins.
Beck is not named as a defendant in the lawsuit and has not been accused of any wrongdoing.
Other prominent conservative radio hosts, including Sean Hannity, Lars Larson, Mark Levin and Monica Crowley also promote Goldline on the company website, goldline.com.
Beck did not immediately respond to an emailed request for comment.