JACKSON, Tenn. (CN) - A state legislator who established a second career as a self-proclaimed Christian financial adviser defrauds people by persuading them to buy gold and silver coins, then withholding delivery, investors say in a federal class action.
Plaintiffs Damian Orlowski of Chicago and Lynn Cechin of Texas say Larry Bates, a Democrat who served in the Tennessee General Assembly from 1971 to 1976, his company, First American Monetary Consultants and a handful of associates, including radio stations, target Christians and the elderly through radio broadcasts and the Internet.
Orlowski and Cechin say Bates "targets devout, Christian believers, elderly individuals, and widow/widowers with significant life savings, all who are seeking advice and help from a trusted Christian adviser and/or a Christian financial company."
Defendants include Larry Bates dba Radio Information Network, INC/IRN USA Radio News; Information Radio Network/IRN USA Radio News; Information Radio Network Inc.; and Barry Denison, a "senior staff economist" for Bates's First American Monetary Consultants (FAMC), "who travels regularly, advertising for FAMC and speaking on the economy, the threat of Islam, and the question of Israel and the church."
The class claims Bates promised to move million of dollars in precious metals quickly on their investors' behalf, but after getting his hands on the money said that delivery of the coins would be delayed by as much as a year. In some cases, orders were only partially filled, according to the complaint.
The complaint includes a list of 26 other people who allegedly suffered at the hands of the defendants.
The class claims Bates uses his radio show, "News and Views," broadcast via Information Radio Network/IRN USA Radio News, to solicit for a wide range of products, including his books, an FAMC publication called "Monetary and Economic Review," DVDs and videos, and for himself, for personal appearances and speaking engagement at conferences.
Bates's and Denison's purported "expertise" is in teaching how to use gold and silver as economic insurance to protect one's assets, including retirement accounts, according to the complaint.
"Multiple methods of media, including, but not limited to, radio, television, books, newsletters, toll free numbers, email, direct mail, and personal solicitation at churches and conferences across the nation are used by Bates and Denison, and other agents of FAMC, Inc. to advertise FAMC Inc., to solicit money from unsuspecting individuals in order to purchase gold, silver and precious metals through defendants ...," the complaint states.
"These certain type of precious metals are advertised by defendants as a 'safe' investment during a period of world chaos and uncertainty, based on Christian beliefs and current political upheavals. ...
"Bates, Denison, FAMC and others promote the idea of maintaining a significant portion of one's assets in certain types of precious metals, specifically certain types of gold and solver with Christian financial advisers."
The two men quote extensively from the Bible in their sales pitch, the plaintiffs say.
"Bates states that: 'FAMC's mission is to raise the level of understanding about how our economy and monetary system works, expose how the economic elite of the world have devised a system we call Commercial Babylon, communicate how that system transfers wealth through dishonest weights and measures in the monetary system, and communicate specific asset allocation recommendation or others to avoid being a victim of their schemes,'" according to the complaint.
The plaintiffs say Bates relies on a "world's end, sky is falling" approach to encourage Christians to buy precious metals from his companies.
The class claims Bates lures Christians with statements such as: "'Life as we have known it in the United States is about to change and change drastically ... '
"'The two things that will determine whether you and your family are wiped out by the storm are knowledge and action ...'
"'When the economic storm hits and you've acted to move part of your assets into the precious metals, you won't be standing in line worrying ... you'll be the wise and faithful steward of the resources God has entrusted to you ...'
"'That's why we've provided this information on how to storm-proof your assets by acquiring previous metals ...'
"'I trust the following information and recommendations will be helpful in the stewardship of storm-proofing your God-given financial assets.
"'The greatest shock of this decade is that more people are about to lose money than any time before in history, but the second greatest shock will be the incredible amount of money just a relatively few people will make at exactly the same time. The following information is designed to place you on the receiving end of the wealth transfer.'" (Ellipses in complaint.)
In fact, the class claims, the defendants' actions are intended solely to benefit themselves: "This pattern and practice is illegal, ongoing, has existed since 1984, and now exists solely for the benefit of defendants, who use the money retained by their actions to further their illegal activity, broaden the network of illicit activity, and continue the pattern of preying on unsuspecting individuals across the country by taking their life savings."
Bates told WMC-TV in Memphis that the lawsuit is "pure nonsense" and was motivated by a disgruntled former employee and political opponents.
Orlowski and Cechin seek $80 million in actual, treble and punitive damages and injunctive relief on claims of breach of contract, unjust enrichment, fraud, tortious misrepresentation, wrongful trover and conversion, breach of trust and fiduciary duty, tortious conspiracy, and mail and wire fraud.
They are represented by J. Houston Gordon of Covington, Tenn.