Department of Law Files Lawsuit in Fraudulent Precious Metals Investment Scheme Targeting Elderly and Political Investors
September 25, 2020
(Anchorage, AK) — The Alaska Department of Law announced a nationwide enforcement action to stop a fraudulent precious metals investment scheme that has solicited more than $185 million from seniors and other investors. This action is against TMTE Inc., also known as Metals.com, Chase Metals Inc., Chase Metals LLC, Barrick Capital Inc., Simon Batashvili, Lucas Asher, and Tower Equity LLC (Defendants).
Today the Alaska Department of Law, the U.S. Commodity Futures Trading Commission (CFTC), and 29 other states, unsealed a complaint filed Monday, September 21, 2020, in the U.S. District Court for the Northern District of Texas. The complaint alleges that defendants "had a reckless disregard for the truth" and virtually all targeted investors lost a majority of funds invested in fraudulently overpriced precious metals bullion. The complaint alleges that the defendants violated the federal Commodities Exchange Act, CFTC regulations, and various state laws, including Alaska's Unfair Trade Practices Act.
"The defendants solicited $185 million from seniors and other vulnerable investors nationwide, including $1,518,366.90 from Alaskan seniors by touting precious metals at grossly inflated prices," Acting Attorney General Ed Sniffen said. "Investors lost substantial portions of their retirement savings by relying on the defendants unfair and deceptive sales tactics."
The defendants are accused of targeting elderly Christian and politically conservative investors through telephonic solicitations, social media, and internet advertisements. The defendants' solicitations were "designed to instill fear in elderly and retirement-aged investors and build trust with investors based on representations of political or religious affinity," according to the complaint. The investors were advised to liquidate their holdings at registered investment firms in order to fund investments in precious metals.
The defendants are also accused of failing to disclose what Metals.com and Barrick Capital charged investors for their precious metals products, including gold and silver coins, and that as a result of the defendants' exorbitant markups, most investors lost the majority of their funds immediately upon purchasing the metals. The complaint further states that the defendants sold a variety of gold and silver coins at prices averaging from 116% to 312% over the prevailing market price.
The complaint asks the court to order defendants to cease sales activity, return money to investors, stop violating federal and state laws, and pay civil penalties. The complaint also requests that a receiver be appointed to take over the companies to marshal funds for the benefit of investors across the country.
Metals.com and its agents have been under regulatory scrutiny for the past two years. Prior to today's action, 12 state regulatory agencies have taken separate enforcement actions against the firm and its sales representatives. This includes a Temporary Cease and Desist Order and Notice of Final Order issued July 20, 2020 by Alaska’s Department of Commerce, Community, and Economic Development, Division of Banking and Securities ("DBS"), ordering TMTE, Inc. and six TMTE agents to comply with the Alaska Securities Act and to cease and desist from acting as investment adviser representatives and broker-dealer agents in Alaska without proper registration.
Today's action was the result of a collaboration between Alaska's Department of Law and Division of Banking and Securities, the Commodity Futures Trading Commission’s Office of Cooperative Enforcement, and state agencies from Alabama, Arizona, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Kansas, Kentucky, Maine, Maryland, Michigan, Mississippi, Nebraska, Nevada, New Mexico, New York, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Washington, West Virginia, and Wisconsin.
The Alaska Department of Law and Division of Banking and Securities encourage investors to come forward if they suspect they have been targeted by an investment scheme. Please contact Alaska's Division of Banking and Securities at firstname.lastname@example.org or (907) 269-8140.
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Department Media Contact: Assistant Attorney General Maria Bahr at (907) 269-5285 or email@example.com.