St. Louis, Mo., March 15, 2011 - St. Louis area consumers should be on the alert for two Texas companies that are using newspapers to advertise gold bullion coins “completely free of dealer mark-up,” the Better Business Bureau (BBB) warns.
The BBB said the companies appear to be using the ads to entice consumers to buy more expensive “collector coins” at prices significantly higher than they could be bought elsewhere.
The companies are United States Rare Coin & Bullion Reserve and United States Coin and Gold Reserve, both with addresses in the same office building in Austin, Tex. United States Rare Coin & Bullion Reserve, which also uses the name U.S. Money Reserve, was founded by Texas businessman Milton Verret who has a history of legal problems in the coin and movie business. Milton Verret’s son, Colt Verret, is a former sales manager for United States Coin & Bullion Reserve and the president of United States Coin and Gold Reserve.
United States Rare Coin & Bullion Reserve took out a full-page ad in the St. Louis Post-Dispatch in January. United States Coin and Gold Reserve took out full-page ads in the Post-Dispatch in October 2010 and in the Belleville, Ill., News-Democrat last month. All three ads have striking similarities; the ad copy is identical in many parts of the ads.
Michelle Corey, BBB president and CEO, said the at-cost advertising offers invite consumers to call toll-free phone numbers to speak with company salesmen, called “gold advisors.”
“These seem to be typical bait-and-switch ads where the salesmen use the bullion offer to convince callers to buy higher grade, so-called collector coins, at highly inflated prices,” Corey said. “There also is concern that these salesmen may be targeting senior citizens, some with little or no knowledge of the gold market.”
The BBB also is concerned with the content of the companies’ advertising, which pictures the U. S. Capitol building and which could lead consumers to believe the companies have an affiliation with the U.S. government.
An investigator with the BBB called the toll-free number listed on the Belleville advertisement and spoke with a salesman who identified himself as a senior investment advisor and senior gold advisor with United States Coin and Gold Reserve. He said that people are “fed up” with low interest rates offered by banks, and retirees are “looking for a better way to save money.” He said he works largely with retirees.
While he said he could sell some of the advertised bullion coins, he recommended that between 85 and 90 percent of a gold investment portfolio be in what he called Congressional proof, extremely high-grade, collectible coins that “tend to appreciate far better than bullion does.” He said the coins contain ¼ ounce of gold and could be purchased at a cost of $639 each, or $12,780 for a tray of 20 coins.
The price quoted for the proof coins is markedly higher than the price they could be bought elsewhere. A longtime St. Louis area coin dealer said his business would sell the same high-grade coins for between $340 and $360 each, or around $7,000 for 20 coins.
A check of prices on the online site eBay shows the coins selling for between $335 and $420 each. The St. Louis coin dealer called the price being charged by the Austin coin company “outrageous.” He said the proof coins are neither rare nor particularly collectible, despite the salesman’s claims. “I could sell you thousands of them,” the local dealer said.
The United States Coin and Gold Reserve was incorporated in October 2009. United States Rare Coin & Bullion Reserve was incorporated in 2001. Consumers have filed more than 40 BBB complaints about United States Rare Coin & Bullion Reserve in the past 36 months.
Milton Verret’s legal problems are well documented:
- In 1984, the U.S. Postal Service filed a complaint against Verret and others alleging that they were selling circulated silver dollars as more valuable uncirculated coins, and using names and addresses that made it appear their businesses were connected to the U.S. government. An administrative law judge decided that Verret and others were “engaged in a scheme to obtain money through the mail by means of materially false representations.”
- In 1998, a federal court in Texas ruled on Securities and Exchange Commission allegations that Milton Verret and others misled investors about the projected revenues of the animated film “Happily Ever After.” The court enjoined Verret from further violating the SEC’s antifraud and reporting provisions, ordered disgorgement of trading profits and prohibited Verret from acting as an officer or director of any public company.
- In 2004, Milton Verret’s United States Rare Coin & Bullion Reserve ran into trouble with the Georgia Office of Consumer Protection. That office alleged that the company’s advertising implied it was associated with the federal government or the U.S. Mint, that it ran ads containing exaggerated claims about the potential increase in the value of gold and that it made unsubstantiated claims that the nationally advertised price of similar coins was $20 higher than the coins sold by the company. The company agreed to no longer market its products in that state.
- In 2007, Milton Verret was among those sued in a Texas court by the heirs of a man who claimed he was convinced through misleading and high-pressure sales tactics to purchase more than $400,000 in gold, platinum and silver coins. That case ultimately was settled; details of the agreement remain confidential.
A man from Houston, Tex., told the BBB that he paid United States Rare Coin & Bullion Reserve $50,000 in 2005 for what a salesman told him at the time was $50,000 worth of gold coins. He said that he tried to sell the coins for a profit in 2009 after the price of gold had more than doubled, but ended up receiving just $26,000 through a prominent national auction company. After complaining to the BBB, United States Rare Coin & Bullion Reserve refunded half of the $24,000 he had lost in the transaction. “I have no love lost for those guys,” he said of United States Rare Coin & Bullion Reserve.
A man from Torrance, Calif., said he received a postcard solicitation from the same company about three years ago and bought $7,000 in what he was told were investment quality coins. Last summer, with the price of gold up dramatically, he tried to sell the coins back to the company. He said the company offered to buy them for about half of what he had paid for them. Eventually, after complaining to the BBB, he said the company agreed to buy back his coins at the full purchase price. “They bait you with the good deals on gold bullion, but then switch you to this other crap,” he said.
The BBB offers the following tips to consumers looking to buy coins as investments:
- Before buying anything, make sure you know the name of the company, its address and, preferably, the company’s top officials.
- Do not be pressured into making an immediate decision. Some sales representatives may push you to buy during their initial presentation, but do not buy anything until you have had an opportunity to compare their prices with prices offered by reputable coin dealers in your area, or through Internet auctions.
- When you compare prices, make sure you are comparing identical items. A vintage $5 gold coin, for instance, is usually worth more than a newer $5 coin. The value of coins minted the same year likely will vary depending on the condition.
- Check www.bbb.org or call 314-645-3300 for a BBB Business Review.
Contacts: Michelle Corey, President & CEO, 314-645-3300, email@example.com, or Bill Smith, Trade Practice Investigator, 314-645-3300, firstname.lastname@example.org