FOR RELEASE: AUGUST 13, 1993
FTC CHARGES RARE-COIN SELLERS MISREPRESENTED
PROFIT POTENTIAL AND RISK OF INVESTMENTS
The Federal Trade Commission has charged a California-based
rare-coin marketer and its principals with deceptively telemar-
keting 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 sub-
stantial 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 promo-
tional materials, through which they allegedly represented to
prospective investors that:
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Goddard--08/13/93)
-- 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 representa-
tions 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 purchase. 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 capital."
The Commission vote to file the complaint was 5-0. It was
filed under seal on Aug. 3, 1993, in the U.S. District Court,
Central District of California, in Los Angeles. The seal was
lifted late yesterday.
NOTE: The Commission files a complaint when it has "reason to
believe" that the law has been or is being violated, and it
appears to the Commission that a proceeding is in the public
interest. The complaint is not a finding or ruling that the
defendant has actually violated the law. The case will be
decided by the court.
The FTC has issued a consumer alert titled "Investing in
Rare Coins," which is available free by writing the FTC's Public
Reference Branch, Room 130, 6th Street and Pennsylvania Avenue,
N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing
impaired 1-866-653-4261. Copies of the complaint are available
from the same address.
MEDIA CONTACT: Bonnie Jansen, Office of Public Affairs
202-326-2161
STAFF CONTACT: Hugh G. Stevenson, Bureau of Consumer Protection
202-326-3511
or
Michael C. McCarey, Bureau of Consumer Protection
202-326-3303
(Civil Action No. 93-4602JMI(GHKx)) (FTC File No. 922 3340) (goddard)