August 20, 2024 | Where You Store It: Don’t Trust, and Definitely Verify

When negotiating with the Soviet Union, Ronald Reagan’s oft-repeated slogan was “Trust, but verify.”

Something similar applies to the world of precious metals, especially remote storage firms. But let’s go even further to: Don’t trust, and always verify.

Here’s an example of why:

A San Diego couple thought they’d invested in gold. Instead, they and hundreds of others say they were scammed.

Proposed class-action lawsuit accuses a Beverly Hills company of closing its doors and disappearing with millions of investors’ dollars.

(San Diego Union-Tribune) – With a fickle stock market and broader economic uncertainty around the globe, Howard and Heather Short were looking for a safe harbor for their savings and financial stability.

The San Diego couple settled on gold.

After months of hearing advertisements promoting the Oxford Gold Group on a local talk radio station, the Shorts began transferring chunks of their retirement portfolio to the Beverly Hills company.

“I thought, it’s silver and gold. It’s tangible. It’s not going to lose value,” Heather Short said in a telephone interview. “We did one lump sum from each of our retirement accounts.”

Oxford Gold told clients their assets would be deposited with Equity Trust Co., an Ohio firm specializing in so-called self-directed investment accounts focused on precious metals, cryptocurrency and other alternative assets.

But earlier this year, the Shorts and hundreds of other investors received a letter from Equity Trust indicating that the money they directed to Oxford Gold had not been properly recorded.

“What this means is that our records reflect that i) the metals you purchased from Oxford Gold were not yet fulfilled and delivered to your designated depository, and/or ii) that your Equity Trust account(s) has not received the cash proceeds from the precious metals that you sold to Oxford Gold,” the unsolicited correspondence said.

The letter from Equity Trust advised the Shorts to review their statements and to contact Oxford Gold for further information. Equity Trust was no longer doing business with the gold purveyor, it said.

“Thank you for being a valued client,” the letter concluded.

Now the Shorts are among hundreds of people who have lost millions of dollars of retirement savings to Oxford Gold, which according to news reports out of Los Angeles has shut its doors and closed without a trace.

They also are the lead plaintiffs in a proposed class-action lawsuit filed late last week in San Diego federal court alleging fraud, breach of fiduciary duty, violation of federal securities laws and unfair competition.

The plaintiffs, who live in at least 27 different states, say Equity Trust failed to make sure that investments were being properly credited to their retirement accounts, the lawsuit says.

“Business records generated at defendant Equity Trust Co. in connection with the transfer of the millions of dollars from investor accounts showed substantial and material amount of precious metals transactions with OGG were not being settled,” the complaint alleges.

That means “the investor funds were going unaccounted for by Equity Trust Co. in violation of defendant Equity Trust Co.’s fiduciary duty to investors,” it added.

Equity Trust, a Westlake, Ohio-based investment house that claims more than $45 billion in total assets under management, said in a statement that the company does not comment on pending litigation.

The lawsuit also names a host of principals at Oxford Gold Group, including chief executive Pedram Granfar, chief financial officer Johnathan Adler and Patrick Granfar, another executive and co-founder.

None of the Oxford Gold Group executives could be reached for comment.

According to state records, the California Franchise Tax Board suspended the company April 2 — about seven weeks after Equity Trust alerted account holders that their deposits had not been recorded.

In early May, the company filed documents with the secretary of state indicating that it moved from a Wilshire Boulevard office in Beverly Hills to a midtown Sacramento address.

Over the past several weeks, news reports in Los Angeles said Oxford Gold was no longer responding to questions from clients. The company website is not operational, and its telephone number does not work.

The lawsuit, filed last Friday in the Southern District by the San Diego law firm Aguirre & Severson, alleges that plaintiffs were duped by Oxford Gold Group advertisements largely broadcast on radio, television and social media platforms.

“In defendants’ nationwide advertising campaign delivered through television, radio, YouTube, social media and written brochures represented that plaintiffs’ funds would be obtained and held in safety in trust,” the complaint says.

The allegation is backed up by a slew of negative reviews that have turned up online in recent months.

“Even Jesse Kelly the radio guy told us all how great Oxford Gold is!” a client identified as Scott D. from San Francisco posted on Yelp last month. “I emailed Jesse Kelly and let him know the OGG is a scam but no reply from him.

“As far as I know, he still sings their praises on the radio paid for by our stolen money,” he said.

Never Let This Happen

To avoid this fate, do the following:

• Ignore celebrity endorsements. Paid shills are a dime a dozen and cannot be trusted. In fact, the slicker the pitch, the more wary we should be.
• Check the Better Business Bureau rating. This isn’t foolproof because a scam company can behave well right up to the point where it absconds with its customers’ money. But a long record of good customer service is mandatory for consideration.
• Find out who owns the storage company. Young and slick is suspect, while older with a long record of honest success is vastly preferable.
• Know who is auditing and insuring the storage company’s holdings. Both should be established firms with long records of stability.
• Pay attention to fees. Outliers (too high or too low) are suspect.
• Diversify. NEVER put an excessive part of your net worth in any one place. This goes for mining stocks, bank safe deposit boxes, and tin cans buried in the backyard. Nothing is completely risk-free and diversification is the only reasonable response.

John Rubino August 20th, 2024

Posted In: John Rubino Substack

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