Goldline Customer Lost $60K by Turning Retirement Savings Into Gold Coins

In September 2010, Goldline was investigated by Congress after hundreds of complaints from clients who had lost a substantial portion of their investment. One of those who testified was Dr. Julius Bazan, who had lost around $60,000 after converting his entire IRA into gold coins.

Dr. Bazan’s loss

In the fall of 2009, Dr. Julius Bazan decided to invest in gold after seeing one of Goldline’s adverts. His initial intention was the purchase of gold bullion using his entire $140,000 IRA savings. However, when he called Goldline, the representative advised him to buy gold coins instead.

After consultation with his wife, he agreed to purchase $140,000 in gold including several eagle proofs that cost over $3,000 each. The Goldline representative promised him that the value of Gold per ounce would reach $3,000 in less than a year.

After around six months, Dr. Bazan was concerned that the expected rise in Gold was not forthcoming and opted to sell back the coins to Goldline. However, he was told that the total value of his coins was under $85,000. In total, he had lost approximately $60,000 despite the value of gold increasing.

Additionally, the representative had suggested that he should invest his entire IRA rather than only 20 percent according to Goldline policy. Dr. Bazan told the congressional committees that he was not properly briefed on the policies surrounding gold coins. On the other hand, Scott Carter, Goldman vice president, claimed that the sales representative had fully briefed Dr. Bazan on the risk of purchasing gold coins.

Goldline’s deception

ABC News aired an investigative piece where one of the former Goldline representatives, Carl Homes, said that the company instructed them to try to convince customers who want to buy gold bullion to invest in collectors’ gold. Representatives would get a higher commission when they convinced customers to purchase specialty gold instead of gold bullion.

Homes further added that any representatives who could not convince the customer to buy specialty gold were asked to turn over the calls to agents who were more experienced at convincing clients.

You may wonder how Dr. Bazan lost his money even though the value of gold appreciated. The problem was the investment in specialty gold. When you turn over to a gold IRA, you have the option of investing in standard gold bullion or specialty gold. Gold bullion has a more realistic value compared to the gold exchange market.

On the other hand, specialty gold can be inflated by between 25 and 55 percent. Representatives were asked to convince to invest in specialty gold coins and immediately lost a considerable amount of money due to the inflated value. However, representatives would scare customers that gold bullion could be confiscated by the government and that they should instead invest in specialty gold that was highly inflated. Additionally, most victims were attracted by the benefits of rolling over to gold bullion and were not highlighted on the risk when they were convinced to shift to specialty gold.

In 2011, a criminal complaint was filed by the Santa Monica Attorney’s office. By February 2012, Goldline was found guilty of 19 counts of fiduciary fraud. Goldline opted to pay the victims $4.5 million in settlement and $800,000 into a future claim fund. Dr. Bazan stated that justice, even though delayed, was served.