Key Takeaways
- Coin scams often steer retirees from fairly priced bullion into commemorative coins marked up to four or five times their value, sold as safe investments.
- Once a seller represents coins as an investment and makes claims about their quality or value, buyers may have claims for fraud, misrepresentation, deceptive trade practices, breach of contract, and unjust enrichment.
- Statutes of limitations vary by state, but the discovery rule can let victims sue after they learn they were defrauded, and federal and state regulators actively pursue these schemes.
A salesperson calls with advice: gold is good, but these special commemorative coins are even better, a safe way to protect your retirement savings. When does a pitch like that cross the line from aggressive sales into fraud?
In this TalksOnLaw Brief, Joel Cohen talks with Bruce Steckler, a Dallas trial lawyer and founder of the firm Steckler Wayne, who has represented victims of precious-metals and commemorative coin schemes. He explains how the scams work, the legal claims available, and how victims can try to recover their losses.
How the Scheme Works
Steckler explains that coin companies typically solicit elderly people, selling coins as safe, stable investments. A customer may call wanting bullion, gold or silver with a market price anyone can look up. The salesperson then steers the customer to commemorative coins described as a much better investment. Where a typical bullion markup is around 3 to 5 percent, these coins are often sold at four to five times their actual value, which makes it very hard for them ever to work as an investment.
People are free to buy collectibles that may not hold their value, he notes. The difference comes when a seller represents the coins as an investment and makes claims about their character, quality, or value. At that point, it is no longer simply buyer beware, because the customer is relying on those representations. Valuing coins is the work of specially trained numismatists, much as valuing a painting by a master requires an art expert, so a seller who claims that expertise and promises appreciation can face liability. The losses, he says, can reach six or seven figures, often from lonely older people who wanted to leave something for their grandchildren.
The Legal Claims
Depending on the facts, Steckler lists several possible causes of action: breach of contract; claims under state deceptive trade practices acts, which most states have; statutes that specifically protect senior citizens or disabled persons from deception; misrepresentation and fraud; and unjust enrichment.
Timing matters. Each state sets its own limitations periods, so victims should get legal advice promptly. Steckler explains that his firm has successfully invoked the discovery rule, under which the clock may not start until a victim discovers the fraud, especially where sellers obscured it through their paperwork. Results are case by case.
Recovering Losses
His goal, Steckler says, is to make clients whole and put them back where they started, including expenses and legal fees where possible. In some instances, the law also allows treble damages. His first priority is getting clients their money back as quickly as possible.
What to Know Now
Regulators remain active against these schemes. In April 2024, the Commodity Futures Trading Commission announced a consent order against Red Rock Secured and two executives, requiring about $39 million in restitution, $5.1 million in disgorgement, and $12.25 million in civil penalties, after allegations that the firm sold coins to older customers, often from retirement accounts, at undisclosed markups of 100 to 130 percent. A separate action by the CFTC and 30 state regulators against Metals.com and related companies, alleging a $185 million scheme, has continued in federal court in Texas. Under the Texas Deceptive Trade Practices Act, knowing violations can support up to three times economic damages. Anyone who suspects a problem can report it to the CFTC or a state securities regulator, and should keep all sales materials and account statements.
