Many Seniors Lost Retirement Savings to 'Safe' Investments Bought on Credit
The Federal Trade Commission charged a telemarketing operation with running a deceptive investment scheme that took in at least $10 million from predominantly elderly consumers, many of whom invested their retirement savings buying precious metals on credit without knowing the significant costs and risks. As part of its ongoing efforts to stop scammers who target the elderly, the FTC seeks to stop the allegedly illegal practices and make the defendants pay refunds to consumers.
According to the FTC's complaint against Sterling Precious Metals LLC, Matthew Meyer, Francis Ryan Zofay, and Kerry Marshall, the defendants promised consumers they could earn large profits quickly by investing in precious metals with very little risk of loss, without telling customers of the likelihood that they would have to pay more money later or lose their investment. The investments were typically not profitable and carried a high risk of loss.
As alleged in the complaint, the defendants failed to clearly disclose the investments' total cost, and often failed to disclose that about 80 percent of the purchase would be financed through a loan with interest. The defendants also allegedly misrepresented or failed to clearly disclose fees and commissions, such as a $200 account opening fee and that consumers would be charged as much as 39 percent of their investments in commissions. The defendants also failed to tell consumers they were likely to receive equity calls on their accounts. When a consumer's equity decreased to a certain level, an equity call was issued, and the consumer had to invest more money or allow the investment to be liquidated at a loss. In some instances, consumers were not told their accounts were liquidated.
The FTC alleges that most of the defendants' customers lost money. Likewise, consumers lost the equity in their investments through the accumulation of fees and commissions, including storage fees and interest charges on the leveraged portion of their accounts. The FTC charged the defendants with violating the FTC Act and the FTC's Telemarketing Sales Rule.
The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Southern District of Florida.
For consumers considering investing in precious metals, the FTC offers advice, including Investing in Gold? What's the Rush?, Investing in Bullion and Bullion Coins and Investing in Collectible Coins.
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 Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.(FTC File No. 1223027)
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