This section contains law enforcement references and news articles on fraudulent investments which
are sold based on a perceived rarity of the item. Such false
goods will include the collection for investment purposes of wine,
spirits, drinks, liquors ( rare whisky ), coins, art and stamps.
Collectible Coins and Currency
FTC CHARGES FLORIDA RARE-COINS MARKETER WITH FALSE MARKETING
CLAIMS - 02/92
U.S. Rarities, Inc., a Miami, Florida-based rare-coin telemarketer,
has been charged by the Federal Trade Commission with making false
claims that the coins it sold were excellent investments likely to
produce substantial profits for consumers within a short time.
The FTC alleged that U.S. Rarities routinely sold coins for anywhere
from three times to more than 10 times their actual dealer-to-dealer
According to the FTC complaint, which also names U.S. Rarities'
president James A. Fullwood and vice president, Robert
Ramos, since 1989 the defendants have induced consumers to purchase
their rare coins at inflated prices by falsely representing their
competitive pricing and their potential for high- profit return within
a short period of time.
The FTC charged that the defendants falsely represented to consumers
that they sold coins graded by an independent grading service that
applies standards as strict as, or more strict, than the prevailing
Further, the complaint alleges, U.S. Rarities represented that
its coins have regularly traded at or below resale market prices.
In fact, because the independent grading service's standards were
lower than the market standards, the defendants' coins traded at
only a fraction of the prices for coins of the same grades, the FTC
alleged. According to the FTC complaint, the defendants' practices
made it "virtually inevitable" that many consumers would
lose a substantial share of their investments.
RARE COIN TELEMARKETER AGREES TO SETTLE - 05/92
U.S. Rarities, Inc., a Miami, Florida-based rare-coin telemarketer,
and its co-owners, James A. Fullwood and Robert C. Ramos,
have agreed to settle Federal Trade Commission charges that they
falsely portrayed the coins they marketed as excellent investments
likely to generate substantial profits in a short period of time.
Under a proposed settlement agreement, the defendants would be
prohibited from, among other things, misrepresenting any fact material
to a consumer's decision to purchase any coin, investment, or telemarketed
product and would be required to post a $25,000 performance bond
before they engage in any coin, investment or telemarketing sales.
According to the FTC's complaint, since 1989, the defendants have
induced consumers to buy their rare coins at inflated prices by deceptively
representing their competitive pricing and their potential for high-profit
return within a short period of time.
The FTC also charged that the defendants falsely represented to
consumers that the coins they sold regularly trade in the market
close to the prices listed in a numismatic publication recognized
as the industry wholesale pricing guide.
The FTC complaint said that the telemarketer's practices made it "virtually
inevitable" that many consumers would lose a substantial share
of their investments.
The proposed consent decree to settle the charges would prohibit
the defendants from misrepresenting, among other things, that any
coin, investment or telemarketed product or service they offer is
an excellent or low-risk investment and that it is being offered
at or close to the price at which such products or services could
easily be liquidated through a market sale. The proposed consent
decree also would prohibit misrepresentations regarding the likelihood
an investor will realize profits or income on any such product or
The $25,000 performance bond, for the benefit of consumers, is
required for any future coin investment or telemarketing business
that the defendants initiate. The bond requirement would increase
to $50,000 if any two defendants jointly engaged in such activity,
and to $75,000 if all three became jointly involved.
The defendants also would be required to place the following disclaimer
on all brochures pertaining to coins and on the front page of all
"THE INVESTMENT VALUE OF A RARE COIN DEPENDS IN LARGE PART
ON THE PRICE YOU PAY. IT IS STRONGLY RECOMMENDED THAT BEFORE YOU
PURCHASE A RARE COIN AS AN INVESTMENT, YOU SEEK TO DETERMINE ITS
CURRENT MARKET VALUE AND LIQUIDITY BY CONSULTING A COIN EXPERT WHO
IS NOT AFFILIATED WITH THE PERSON SELLING YOU THE COIN."
Before concluding the sale of any coins to consumers, the defendants
would be required to get a signature from the customer, indicating
that the customer has read and understood the required disclosure.
The individual defendants have filed for bankruptcy. Under the
proposed settlement, the Commission would waive payment from the
two individuals whose resources are insufficient to provide a distribution
to the FTC justifying the attendant transaction costs. The defendants
have stipulated to a judgment for $1,750,000, however, so that the
bankruptcy plans can be modified in the future if either individual
defendant has concealed assets.
The proposed consent decree also requires the defendants to turn
over any remaining U.S. Rarities assets to the Commission to be liquidated
and paid to the U.S. Treasury.
CALIFORNIA COIN DEALER AGREES TO SETTLE - 06/92
Hannes Tulving, Jr., president of Hannes Tulving Rare
Coin Investments, Inc., a California retail marketer of numismatic
coins, has agreed to settle Federal Trade Commission charges that
he created and maintained an artificial coin market to induce the
purchase of coins at inflated prices.
Under the proposed settlement filed in federal court, Tulving would
be prohibited from misrepresenting, among other things, the degree
of risk or any other fact material to a consumer's decision to purchase
any investment offering. The order also imposes a monetary judgment,
which will be partially satisfied by the payment of $260,000 over
a five-year period.
In August 1990, the FTC filed a complaint against Tulving and his
company, Hannes Tulving Rare Coin Investments, Inc., of Newport Beach,
alleging that they misrepresented the degree of risk and appreciation
of their coins, falsely represented that the figures published in
their coin price guide reflected the actual wholesale market price
of their coins and that their customers' portfolio updates reflected
the current value of the customers' coins; and that they failed to
maintain a reserve of funds to enable them to honor their buy-back
guarantee. The case against the corporate defendant, Hannes Tulving
Rare Coin Investments, Inc., is still pending.
Under the terms of the proposed consent order settling the charges
against Hannes Tulving, Jr., he would be prohibited from, among other
things, falsely representing that his coins are an excellent, low-risk
investment or that they have consistently appreciated in value; that
portfolio updates given to customers reflect the current value of
their coins; and that the prices he charged for his coins were at
or near the prevailing market price.
He also would be prohibited from falsely representing the profitability
of any investment offering, the services he offers in connection
with such an offering, or the earnings of any of his customers.
Further, the proposed order would prohibit Tulving from falsely
representing that he has a reserve of funds sufficient to honor any
buy-back guarantee for a substantial number of customers, if he offers
such a guarantee; misrepresenting any other fact material to consumers'
decisions to purchase any investment from him; and from representing
that the FTC endorses or approves his activities. Misrepresenting
the terms of the settlement also would be prohibited.
The proposed settlement would further require Tulving to place
a written notice on all coin-related promotional material to alert
consumers to the risk of investing in rare coins. If he offers a
buy-back option, he also would be required to disclose clearly and
conspicuously the following notice on all promotional material:
"BUY-BACK OF COINS: We cannot guarantee that, when you desire
to liquidate your coins, we will be able to repurchase them from
you. Moreover, if we are unable to repurchase your coins and you
are forced to sell them to another dealer at the current wholesale
price, you will probably receive much less for the coins than what
you paid for them."
Defendant Tulving has agreed to the imposition of a $10 million
judgment. In light of his recent filing for bankruptcy and the absence
of security, however, the Commission cannot be assured that it will
collect the full judgment. The $10 million judgment against him would
be non-dischargeable in bankruptcy -- that is, he still would owe
it. Under the settlement, Tulving would pay $50,000 within 14 days
of the entry of the court order, $210,000 over five years, and the
remainder at the end of the five years.
The Commission vote to file the consent order was 4-1, with Commissioner
Deborah K. Owen dissenting. Owen stated, "I find no financial
justification for reducing the defendant's required monthly payments
from $5,000 to $2,500 after two years. More- over, I disagree with
imposing, on paper, a monetary judgment that may be 'empty' in practice.
Such an empty judgment is a departure from recent practice, and could
give the impression that the Commission's monetary judgments are
RARE-COIN SELLERS MISREPRESENTED PROFIT POTENTIAL AND RISK -
The Federal Trade Commission has charged a California-based rare-coin
marketer and its principals with deceptively telemarketing rare coins
as investments to consumers by misrepresenting the value and risk
of such investments, as well as the markups on the coins they sell.
As a result, the FTC charged that consumers were misled into buying
overpriced coins and risked losing a substantial part of their investment
money. In addition, the FTC alleged that, by holding themselves out
as providing expert information and advice on rare-coin investments,
the defendants falsely implied that their coins are offered at prices
similar to those that could be obtained by informed investors elsewhere.
The FTC asked the federal district court to permanently bar the
defendants from engaging in the alleged deceptive practices. In the
meantime, at the FTC's request, the court has appointed a receiver
to handle the defendants' financial affairs, frozen the defendants'
assets to preserve funds for consumer redress, and temporarily ordered
them to halt the alleged practices.
The FTC's complaint names Goddard Rarities, Inc. (Santa
Barbara, California), its affiliate, Goddard Rarities of Los
Angeles, Inc. (Encino, California), as well as Dennis S.
Goddard and Iraj Sayah-Karaji, who are officers and directors
of one or more of these firms.
The FTC complaint, which details the charges, cites several statements
made in the defendants' telemarketing calls and promotional materials,
through which they allegedly represented to prospective investors
--they are a large full-service brokerage firm providing expert
investment advice on the purchase and sale of rare coins;
--they sell coins that are excellent, low-risk investments; and
--they offer competitive prices and low markups.
According to the FTC complaint, the latter two representations
are false and misleading.
The FTC charged that, by holding themselves out as providing expert
information and advice on rare-coin investments, the defendants have
implied that the coins they sell to consumers are offered at prices
similar to those at which an informed investor could obtain the same
or similar coins elsewhere.
In fact, according to the FTC, the defendants sell coins for as
much as two to six times their market value and at markups that are
much higher than the prices the consumer would pay through a market
Thus, the FTC charged that the coins are neither a low-risk nor
an excellent investment, adding that it is "virtually inevitable
that many consumers will lose a substantial part of their investment
CALIFORNIA RARE-COIN MARKETERS SETTLE FTC CHARGES - 10/94
Dennis S. Goddard and his Santa Barbara, California-based firm Goddard
Rarities, Inc., agreed in a settlement to post a $100,000 bond for
the protection of their customers, before they market any coin or
other investment opportunity in the future.
Goddard Rarities of Los Angeles, Inc. and Iraj Sayah-Karaji have
agreed to a settlement with the Federal Trade Commission that would
prohibit them from making a host of false and deceptive representations
in connection with the future marketing of any coin or investment,
and in any future telemarketing effort.
The settlement also requires Sayah-Karaji and one other individual,
who is not a defendant in the case, to release their claims to various
real estate and other assets so that the assets can be liquidated
for consumer redress or disgorgement to the U.S. Treasury.
The settlement specifically would prohibit them from making
-- that the item is an excellent or low-risk investment;
-- that it is being sold at a reasonable, competitive, low, or specified
markup price, or a price that is close or equal to the item's liquidation
value or market price;
-- that its price is based on an analysis of the market for similar items;
-- regarding the likelihood that consumers will profit from the investment;
-- about the past appreciation, earnings potential or current customer
earnings for the item.
The settlement also would require these defendants, when selling
coins to consumers, to include a clear, prominent and specifically-worded
disclosure in sales brochures and on invoices warning consumers about
the risks of investing in coins. Further, these defendants have agreed
under the settlement to comply with all state registration, filing
and bond requirements before engaging in any telemarketing business
in the future.
CALIFORNIA COIN DEALER CHARGED IN DECEPTIVE TELEMARKETING SCHEME -
Golden Oak Numismatics, a rare-coin marketer based in Marina
Del Ray, California, has been charged by the Federal Trade Commission
with making numerous false and misleading representations to consumers
to induce them to invest in coins with markups of several hundred
According to the FTC complaint, Golden Oak and Ronald H. Michel have
made numerous deceptive claims -- through direct-mail solicitations
and telemarketing -- about the investment value of the coins they
sell. The defendants allegedly have told consumers, for example,
that their coins are excellent, low-risk investments, that Golden
Oak offers competitive prices, and that the company charges low markups
over its cost to acquire the coins.
In fact, the FTC alleged, the defendants sell many coins for as
much as four to five times their market value. In addition, the defendants
falsely represented that their coins are sold at prices close to
their resale value, the FTC alleged.
In sum, according to the FTC complaint, the defendants' practices
make it "virtually inevitable that many consumers will lose
a substantial part of their investment capital."
CALIFORNIA RARE COIN MARKETER AND ITS PRESIDENT AGREE TO HALT
FALSE CLAIMS - 01/93
California rare-coin telemarketer Golden Oak Numismatics, Inc. and
its president, Ronald H. Michel, have agreed to settle Federal Trade
Commission charges that they made numerous false and misleading representations
to consumers to induce them to invest in rare coins.
The settlement contains several prohibitions against, among other
things, false claims regarding the risk, price, mark-up, or likely
earnings associated with investing in the defendants' rare coins.
It also enables the FTC to monitor any future telemarketing or investment
promotion Michel under- takes, and requires written disclosures to
consumers in connection with future coin sales.
Golden Oak is based in Marina Del Ray, and Michel resides in Pacific
Now the defendants have agreed to a permanent injunction that would
prohibit them, in connection with the marketing or sale of coins,
investments or investment services, or with the telemarketing of
any product or service, from falsely representing:
-- that they are excellent or low-risk investments;
-- that they are promoted or sold at, or close to, the price at which
they could be liquidated through a market sale;
-- that they are sold or promoted at reasonable, competitive, low, or
specified mark-ups over the defendants' cost to acquire them;
-- the likelihood of profit or income;
-- past or likely future earnings or returns on the investment; and
-- any other fact material to a consumer's decision to purchase such
products or services.
In addition, if approved by the court, the settlement would require
Golden Oak and Michel to place in all promotional brochures and order
acknowledgement documents for coin sales the following boxed disclosure:
"The investment value of a rare coin depends in large part
on how the price you pay compares with the coin's current resale
value. If the markup over resale value is sufficiently large, you
risk losing money even if the coin later goes up significantly in
value. You can get information that may help you to determine a coin's
resale value from other coin dealers and coin experts not affiliated
with the person selling you the coin."
The defendants further would be required to obtain a signed statement
from all customers indicating that the customers have received and
understand this disclosure.
The settlement includes a $5 million judgment against Golden Oak
and a $1 million judgment against Michel. Recovery on these judgments