City Sues Goldline International for Fraud, Conspiracy

The Santa Monica City Attorney’s Office today filed a 19-count criminal complaint against Goldline International, Inc., one of the nation's largest gold coin dealers. The complaint also names former CEO Mark Albarian, current CEO Scott Carter, executives Robert Fazio and Luis Beeli, and salespeople Charles Boratgis and Stephanie Howard.
 
The complaint charges that Goldline runs a bait and switch operation in which customers, seeking to invest in gold bullion, are switched to highly overpriced coins by using false and misleading claims.
 
The charges, all of which are misdemeanors, include grand theft by false pretenses, false advertising, and conspiracy.
 
Albarian, Fazio and Beeli are charged with conspiracy to commit grand theft by false pretenses. The specific acts alleged against them as part of the conspiracy include:
 
1. Training salespeople to “get the money in” from customers on the promise of delivering gold bullion, with the intent to later switch the sale to far more overpriced coins;
 
2.  Training salespeople to turn over, or “T.O.,” transactions in which the customer sought to buy bullion, to senior salespeople for the purpose of converting the customers to buying the overpriced coins;
 
3.  Paying salespeople approximately 2,000 percent more commission for sales of the overpriced coins than for sales of bullion;
 
4.  Training salespeople to induce in customers fear of government confiscation of bullion and to tell customers that the overpriced coins were exempt from such confiscation;
 
5.  Training salespeople to induce in customers fear of the alleged "public" or "reportable" nature of bullion transactions, while telling customers that the overpriced coins are "private" or not "reportable";
 
6. Training employees to disguise the more than 50 percent markup on the overpriced coins when answering customers’ questions on the subject;
 
7.  Reprimanding a salesperson for making a large bullion sale and failing to convince the customer to buy the overpriced coins;
 
8.  Reprimanding a salesperson for allowing a customer to undo a transaction in which the customer had been converted from buying bullion into buying the overpriced coins; and
 
9. Punishing salespeople for failing to sell a certain amount of the overpriced coins in a specified period, while not counting Bullion sales toward that quota.
 
The alleged acts of false advertising by Goldline, Albarian and Carter include making the following false or misleading statements to the public:
 
            ●  Stating that the European coins they were promoting could be “liquidated privately”; and
 
            ●  Offering gold bullion for sale, in commercials and on Goldline's website, with no intention of selling it;
 
            ●  Stating that bullion could be "purchased online" with a button on Goldline's website, when in fact it could not be purchased online;
 
            ●  Referring to the European coins they were promoting as “rare.”
 
The complaint also alleges 12 counts that include grand theft, false advertising and elder abuse stemming from transactions with individual customers in the past three years.
 
Goldline's corporate headquarters and business operations are located in Santa Monica, California.
 
The defendants will be arraigned in the Los Angeles County Superior Court, Airport courthouse, on January 4, 2012.
 
Each of the charged offenses is a misdemeanor and carries a maximum penalty of one year in County Jail and maximum fines of between $1,000 and $10,000 per offense.

The Santa Monica City Attorney’s Office is continuing to investigate the case. Consumers who believe they have been defrauded by Goldline should contact the City Attorney’s Consumer Protection Unit at 310-458-8336 or file a complaint online at gold.smconsumer.org.