Prosecutors in Santa Monica, CA have filed 19 criminal charges against the gold sellers Goldline International for allegedly running a "bait and switch operation" using prominent spokespeople like Fox News' Glenn Beck.
Goldline, which encourages potential customers to convert their assets into gold to prepare for the supposedly inevitable market collapse, was charged by the Santa Monica city attorney with counts that "include grand theft by false pretense, false advertising, conspiracy and elder abuse," according to the Santa Monica Daily Press.
Each of the 19 misdemeanor counts carries a sentence of one year in prison and possible fines between $1,000 and $10,000. City Attorneys filed charges on Tuesday against the company itself, and against several top executives, including former CEO Mark Albarian, current CEO Scott Carter, executives Robert Fazio and Luis Beeli, and salespeople Charles Boratgis and Stephanie Howard.
A statement put out by the the consumer affairs division of the Santa Monica City Attorney's office alleges 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."
Officials say that Goldline's salespeople were trained to "get the money in" from customers who wanted to buy gold bullion, with the intent of switching the sale and delivering overpriced coins with a more than 50% markup. The salespeople were also told to leave out pricing information when dealing with customers, and were incentivized for selling the overpriced coins with 2,000% more in commission.
Goldline executives are also accused of false advertising for allegedly offering the gold bullion for sale in commercials and on the website, but without any intention of actually selling it.
The charges also include that the company told salespeople to fear-monger about government confiscation of the gold bullion to potential customers, and then claim that the overpriced coins would be exempt from it, according to the Santa Monica Mirror.
Goldline denied the charges on Wednesday, saying in a statement that "the so-called bait and switch allegation is preposterous because bullion accounts for more than 40% of the ounces of gold sold by the company during the past year."
"We believe Goldline has industry best-practices in customer disclosures enabling the most informed decisions," said Brian Crumbaker, Goldline's Executive Vice President.
In July 2010, the City Attorney's office announced an investigation into the gold seller in conjunction with the Los Angeles County District Attorney's office after it received over 100 complaints from customers, some of whom alleged that gold was sold to them under false pretenses and others who claimed they did not receive the gold as advertised.
Former Rep. Anthony Weiner (D-NY) had held a House Commerce subcommittee that July hearing over Goldline, after alleging that the company "uses aggressive sales tactics and conservative spokespeople such as Fox News' Glenn Beck to sell overpriced gold coins."
An arraignment is scheduled for January 4 at the Los Angeles Superior Court.