FOR RELEASE: JANUARY 21, 1993
CALIFORNIA RARE COIN MARKETER AND ITS PRESIDENT AGREE TO HALT FALSE CLAIMS, MONITORING OF FUTURE ACTIVITIES TO SETTLE FTC CHARGES
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 Palisades, California.
According to the FTC complaint spelling out the allegations, Golden Oak's coins were marked up as much as several hundred per- cent, making it "virtually inevitable" that many consumers would lose most of their investment. The complaint was filed in federal district court in Los Angeles in December 1991. In January 1992, the defendants agreed to the issuance of a temporary restraining order halting the allegedly false claims, freezing the defendants' assets, and appointing a receiver to manage the company. The defendants later agreed to a preliminary injunction extending the prohibitions and asset freeze.
- more - Golden Oak Settlement--01/21/93)
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 telemarket- ing 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 bro- chures 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 is uncertain.
The proposed consent judgment was filed in U.S. District Court for the Central District of California, in Los Angeles, yesterday. It requires the court's approval. (Golden Oak Settlement--01/21/93)
NOTE: This consent judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.
Copies of the proposed consent judgment are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY 1-866-653-4261.
The FTC has developed a consumer fact sheet titled, "Investing in Rare Coins," that offers tips and advice. Free copies are available from the same address.
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MEDIA CONTACT: Bonnie Jansen, Office of Public Affairs 202-326-2161
STAFF CONTACT: Hugh G. Stevenson, Bureau of Consumer Protection 202-326-3511
(FTC Matter No. X920007) (Civil Action No. 91-6741) (golden2)