A precious metals dealer who sold overpriced gold and silver to older conservatives was sued by the US federal government and 30 states this week for alleged large-scale fraud.
The lawsuit alleges Metals.com and its parent company TMTE defrauded $185 million from at least 1,600 investors and most are elderly—$140 million of the allegedly defrauded money came from retirement funds, according to the suit brought by the Commodity Futures Trading Commission (CFTC) and unsealed today. The company attracted the vulnerable investors by manipulating their fear of the “Deep State” and impersonating Fox News via ads on Facebook.
A retired nurse Quartz spoke with in 2019 lost nearly a third of all of her retirement savings—$83,000—because of her “investment” in precious metals sold to her by Metals.com. A retired aircraft mechanic, who heard about the company through conservative talk radio, told Quartz he lost more than $300,000 (he later sued the company and settled confidentially).
A Quartz investigation last year found the Los Angeles-based company aimed its pitch at older conservatives with microtargeted Facebook ads and that it was led by Simon Batashvili and Lucas Asher, a flamboyant Instagram influencer and indie rock musician, who used an array of psychological tactics to make the sales.
The lawsuit from the CFTC and the states, filed Sept. 22, named Batashvili and Asher as principals of the company who “have engaged and continue to engage in a fraudulent scheme.” Also on Sept. 22, a Texas federal court judge appointed a government lawyer to take over the assets of Metals.com and its leaders in order to fully investigate the scheme, identify the victims, and possibly return their money. That culminated in a federal law enforcement agency serving a warrant on Metals.com’s luxurious Beverly Hills office yesterday, according to the Beverly Hills Police Department in an email to Quartz. The CFTC called it the “largest joint action between CFTC and state regulators in history,” in a press release.
Attorneys for Metals.com didn’t respond to a request for comment. After previous similar allegations from several states’ securities regulators, accusing Metals.com of breaking the law, Metals.com denied all the allegations.
Selling coins to seniors
Metals.com, which at one point had more than 100 sales people, made its money pushing seniors to convert their retirement accounts into supposedly collectible coins, whose value was actually much lower than the price the company charged, according to law enforcement.
In a November investigation, Quartz revealed the company used Facebook ads targeted specifically to reach politically conservative seniors, playing on their politics and fears. After Quartz’s investigation and prior regulatory actions from state regulators, the people behind Metals.com seemed to have abandoned that tainted brand, and instead used several new names and corporations to continue their business as usual, with the same salespeople executing the same playbook from the same desks.
Despite the name changes, the scheme remained the same as before. The pitch—about why to invest in gold and silver coins—was adapted for the coronavirus era. Automated phone calls to potential clients in March from an entity linked to Metals.com said, for example: “the coronavirus is drastically affecting the American economy. The Dow dropped 1000 points this week. Will this affect you?”
“They slowly phased out Metals.com, the website changed, they told us not to use ‘Metals’ anymore,” a former salesman, who asked to remain anonymous for fear of retribution, told Quartz. Instead, the salesmen used the names Barrick Capital, USA Mint, Retirement Insider, and Republican House Committee.
Barrick Capital was named in the federal lawsuit filed this week, but the other names were not.
Prior to the lawsuit, there were no public links between the embattled Metals.com and any of the new names, making it difficult for prospective customers to find out about the company’s legal troubles. One potential customer said the name change fooled her and she didn’t realize the salespeople’s ties to government investigations of alleged shady dealings. (Quartz is withholding the names of customers and potential customers to protect them from being victimized by financial fraudsters.)
Metals.com didn’t answer a detailed list of written questions sent, prior to this week’s federal lawsuit. Instead, an attorney for Asher, Batashvili, and Metals.com parent company TMTE provided Quartz with a statement:
“Metals.com is a leading independently owned industrial and retail technology company. We are not affiliated with any other companies, and we do not own any other brands. As we continue to experience record growth in the industrial metals sector, we have aligned the company to disrupt the nearly 100 billion dollar US Iron & Steel industry. Our algorithms are optimized to offer Copper, Aluminum, Iron, Steel and other metals at competitive prices. We aim to be the largest vertically integrated industrial and retail metals destination online.”
Soon after Quartz received the statement, Barrick Capital’s website dropped references to precious metals investments and instead touted real estate investment opportunities.
Some newly minted names
Dozens of clients from the various companies linked to Metals.com have complained to review websites, state regulators, and Quartz, saying they lost hundreds of thousands of dollars in savings as a result of their investments with Metals.com.
For instance one investor allegedly paid $1,992,316 for silver coins that were, at the time, worth only $912,667. (Gold and silver prices have risen to record highs lately; however, the coins are still worth far less than what the investors paid for them.) Many of the customers Quartz identified lost much of their retirement savings as a result of their investments.
Before the rebranding, a prospective customer Googling for Metals.com might have seen any number of red flags that could dissuade them from using the company’s services: Quartz’s investigation, or online references to administrative actions against the company by state securities regulators in several states. Or they might have seen a banner on review site Trustpilot’s Metals.com page warning it “discovered a large number of fake reviews on this domain.”
So, it made sense for Metals.com to rebrand and use new names, like Barrick Capital, USA Mint, and Retirement Insider.
Those first two names are remarkably similar to the names of unrelated companies. Barrick Gold is a large Canadian gold-mining company. A spokesperson for Barrick Gold said the company was “absolutely not” related to Barrick Capital. A spokesperson for the US Mint, which is part of the Treasury Department, said that the government agency had no relation to USA Mint.
(This naming scheme appears to be part of the company’s playbook. Metals.com previously used the brand name Chase Metals. It had no relationship with Chase Bank. The name supposedly came from “chasing gold,” a Metals.com spokesman told Quartz in October.)
“I would call some of my old leads,” a second former salesman said. “I was calling people who didn’t do business with us because of the reviews online about Metals.com. And I would go in as a completely new gold company as if we were never Metals.com. I would call them as Barrick Capital or USA Mint and re-pitch them.”
Paying $50,000 for $22,000 worth of coins
A retired teacher in Iowa seems to have been on the other side of that experience, she told Quartz. In 2019, she was pitched on investing with Metals.com but says she simply didn’t get around to it. In February of this year, she was contacted, seemingly out of the blue, by a salesman who said he worked for USA Mint. She was considering that offer too, until she found Quartz’s reporting. In the end, she didn’t invest with USA Mint.
One elderly Alabama woman was less fortunate than the retired teacher. She invested with Metals.com and kept in touch with another Metals.com salesman. In January, that salesman visited her home, and left with a check for $50,000 that she had made out to Barrick Capital, her son told Quartz. That money paid for modern Canadian coins, mostly silver, some gold, which were actually worth less than half of that amount at the time, about $22,000.
In January, the salespeople say they and many other colleagues were asked to sign new contracts—“they called us into the office and essentially they fired us on the spot and rehired us on the spot,” one said—listing a new company as their employer, instead of Metals.com’s parent, TMTE. (Quartz couldn’t confirm the name of the new company.)
The new brand names came with new corporate structures too.
USA Mint’s legal name is USA Marketing. Legally speaking, USA Marketing Inc. was founded 13 years ago as PlanTech Productions, Inc, according to corporate registration documents—but all it appears to have ever done, before late last year, was sit online, listed for sale for $6,995. It was purchased as a “shelf company”—a corporation created to sit “on the shelf,” unused, until a buyer comes who will pay a few thousand dollars for a corporate structure that makes their business appear older than it really is.
TMTE, the old Metals.com parent company, used the same strategy: It used to be named Access Unlimited LLC.
In November, PlanTech’s name was changed to USA Marketing Inc, according to corporate registration documents. In January, when it registered to do business in California, it listed Conor O’Reilly as its registered agent—the same name as Metals.com’s in-house lawyer at the time.
O’Reilly didn’t respond to requests for comment via voicemail and LinkedIn.
Barrick Capital, for its part, was incorporated in Delaware, using a registered agent service. Both Delaware and Wyoming are notorious for providing near-total anonymity for the actual owners of companies established there.
Despite the name changes and new legal structures, the former salespeople described a continuity of their work from the Metals.com era. They both worked with the same senior broker, who would close the deal after the salespeople found a promising prospective client. Company leader Asher was still running morning meetings with staff—though in smaller groups, rather than company-wide, as before, which the former salesperson said was rumored to be a measure to stop leaks. In both the Metals.com days and in the Barrick Capital/USA Mint days, the salespeople both reported to work in the same office on Wilshire Boulevard in Beverly Hills, California—with an elevator lobby that still had a sign saying Tower Equity, the name of a sister company of Metals.com.
The first former salesperson said that he left the company earlier this year over a pay dispute; the second lost his job as part of broader layoffs, also earlier this year.
Another name the company was using to conduct business is Retirement Insider, an entity that sells financial software, according to both its website and the account of a Los Angeles man in his 20s who told Quartz he interviewed with the company in February. (He asked to remain anonymous because he doesn’t want his current boss to know he was looking for a new job.)
Allegations from state regulators
State securities boards in several states have accused Metals.com of breaking the law. For instance, Kentucky alleged last September that Metals.com had misled its customers about its pricing and illegally acted as an investment advisor when it told customers to sell their stocks in order to invest in precious metals. Metals.com at the time denied all the allegations.
The website for Metals.com was replaced in mid-February with one that emphasizes the company’s supposed sale of industrial metals products, like aluminum tubing.
But, the content of the site appears to have been cribbed from a company that really does sell industrial metals. The photos on Metals.com’s site were taken at the offices of OnlineMetals.com, a bona fide retailer of industrial metals, said Greg Raece, the president of OnlineMetals.com. Raece told Quartz his company had no connection to precious metals company Metals.com.
OnlineMetals.com came up with its own stock-keeping unit numbers (SKUs) to identify the products it sells. Those exact same SKUs appeared on product listings on Metals.com’s new site, too. And the Metals.com site doesn’t seem to have been set up for actual purchasers. Raece pointed out that the erstwhile precious metals seller’s website didn’t list essential details for a purchase of, say, aluminum tubes—like their length.
And, he noted, drily, “I don’t think they have prices on there. That’s another option that people would be curious about.”
The name of the Facebook page for “Metals.com” has been changed to “TMTE,” the parent company, and invites people with a banner: “Welcome to TMTE, we offer among the lowest priced bullion and retail metals in the Nation.”
Meanwhile, Asher appears to have launched a public relations charm offensive following the legal trouble and Quartz’s coverage of Metals.com
Earlier this month, he wrote an op-ed for CNBC about the “hyperloop.” He landed glowing interviews in Forbes, the Jewish Voice, and Resident Magazine. The stories portray him as “one of the most prominent millennial investors” and as a “hobbyist skydiver who made his first million before he was 20.”
None mention precious metals sales or his company’s legal troubles.
Coronavirus and the Fake PAC
Like virtually any crisis—real or imagined—the coronavirus is an opportunity for precious metals salespeople to market their products, claiming that, despite experts’ warnings, they’re a “safe” asset.
Americans received hundreds of automated phone calls in March purporting to come from the Republican House Committee that were supposedly conducting a survey—“the coronavirus is drastically affecting the American economy. The Dow dropped 1000 points this week. Will this affect you?”
But there’s no such thing as the “Republican House Committee.”
And there is no real survey.
It is another ploy by the individuals behind Metals.com to find potential customers.
The coronavirus “survey” robocall was recorded by RoboKiller, a spam call blocking app. RoboKiller provided a recording of the call to Quartz, along with numerous other Metals.com-linked “surveys” about Trump’s impeachment, “why Republicans are rushing to buy gold in this economy” and about the coronavirus.
When people responded to the supposed survey, the phone was answered by sales representatives at Metals.com’s offices. One of them was Kohl, who told one caller who later spoke to Quartz that his employer was Barrick Capital. One of the former salespeople says he started taking inbound calls and quickly learned the callers were not trying to buy gold, but thought they would be taking a survey. And so he adjusted: “I try to give them a little survey and transition it to my pitch,” he told Quartz.
“Before this coronavirus really got big, Lucas [Asher} was telling us to really hit hard with this virus, that it would be coming, and it would cause a recession, and [that] you should protect your retirement accounts now,” said the former salesperson.
“We had a script, and we would open up the calls saying, ‘Hey, have you heard the big news? And people are like, ‘well, what’s the big news?’ This virus, it’s a threat to our financial system,’” the other salesman said.
The Republican House Committee was “the worst” of the company’s sales ploys, the second former salesperson said. “It makes them [prospective clients] believe it’s the Republican House Committee, but obviously it’s not. I was mad as hell. I think I got sick from that, I was stressed,” he told Quartz.
Like Retirement Insider, the Republican House Committee is not a new Metals.com moniker. The company has seemingly used the latter name in marketing since at least 2018, including in microtargeted Facebook ads. And, in a phone call where Metals.com leader Lucas Asher talks with a potential client, he claims “I’m on the board of directors of the Republican House Committee. It’s a PAC to help keep the House.” The Federal Election Commission appears to have no records of a political action committee (PAC) by that name.