More than 250 customers who filed fraud complaints with the city of Santa Monica against a local coin dealer will be paid $2 million in restitution under a settlement announced this week.
It is the that the City Attorney's consumer protection unit has announced judgments and injunctions against a major coin dealer operating in Santa Monica.
Along with county prosecutors, the city filed a consumer protection lawsuit against Superior Gold Group and its owner Bruce Sands in 2010 over allegations that the company was taking customers' money for coins "but providing nothing in return."
Under the settlement, Sands will pay $200,000 up front, and between 20 and 25 percent of his net income in the years after until the judgment is paid down. He is also barred from owning any precious metals businesses, the city said in a press release.
"With this settlement, we get what little money is available, directly to consumers, and far sooner than if we had gone to trial," said Adam Radinsky, who heads the consumer protection unit.
After the lawsuit was filed in December 2010, the business was placed under a preliminary injunction that froze all of its and Sands' assets. Additionally, a Los Angeles Superior Court judge appointed a receiver to take control of the books. Prosecutors said they then sifted through financial records attempting to find any assets that could be used to reimburse customers, but were unsuccessful.
"We suspected going in that Sands had few remaining assets," Radinsky said. "Our main goal was to stop the wrongful practices in their tracks. We achieved that with the business being shut down and placed under court receivership."
Only the 250 customers who have already filed complaints with the City Attorney's office are eligible for restitution. Some customers filed their own lawsuits against Sands.
The city's civil lawsuit, filed under California's Unfair Competition Law, also alleged Superior Gold and Sands charged far higher than the fair market value of coins while "concealing that markup through false and deceptive pricing practices."
The trial was to take place later this year.
Superior Gold also operated in Woodland Hills.