Scattered around the Los Angeles area is a small but robust industry that pours large sums into advertising on right-wing media, from Fox News to Newsmax to Rudy Giuliani’s podcast. Phone salespeople push gold and silver coins to these outlets’ audiences, many of them older people, convincing them to use their retirement savings to purchase considerable quantities of precious metals. The problem is, the markup on the coins is often huge, and many vulnerable customers lose big chunks of their life savings. To date, customers, along with local, state and federal authorities have sued more than a dozen of these companies, alleging fraud.
Scattered around the Los Angeles area is a small but robust industry that pours large sums into advertising on right-wing media.
In July, my colleague Jeremy Merrill and I published an investigation in The Washington Post that mapped out how this industry functions and how it finds its customers. We’ve been following it for years, analyzing its advertising, following dozens of court cases and speaking to former employees, regulators, lawyers and victims.
The picture that emerged from our research was alarming. We found that older people with conservative leanings were likely to be bombarded with the ads, whether on TV, talk radio, podcasts, Facebook, email newsletters or webcasts of Trump rallies. A former executive for one of these companies estimated in an interview with the Post that the industry may be reaching as much as $1 billion in annual revenues. But many of the victims are not wealthy people. We’ve spoken to customers who are disabled, homebound or living only on Social Security, their lives upended by losing their only nest eggs. And although complaints and allegations of fraud against these companies have been public for years, right-wing media outlets have continued to benefit by accepting their advertising.
The companies reach customers across the entire country. In 2021, New York Attorney General Letitia James sued the precious metals seller Lear Capital, which frequently advertises on Fox News, for allegedly defrauding nearly 1,000 New Yorkers by charging them undisclosed commissions that reached 33%, and offering illegal investment advice. The Los Angeles city attorney filed a similar case in 2019 (both cases settled without Lear admitting wrongdoing but agreeing to pay back a total of nearly $9 million and to change some of its business practices; the company has since also gone through bankruptcy proceedings). We’ve seen invoices from other companies in which the markups reached 92%, 115% and even 200% over the value of the metal.
To lure customers, the companies often use fear-based and politically tinged messaging in their advertising and on sales calls.
The coins are priced like collectibles, experts say, but they are sold in bulk, with salespeople frequently convincing customers to transfer their retirement money from savings or pensions into precious metals or gold IRAs. The moment the transaction is complete, a victim loses a large portion of an investment — and often doesn’t recoup it.
To lure customers, the companies often use fear-based and politically tinged messaging in their advertising and on sales calls. “Nancy Pelosi has been on a secret mission to KILL the US Dollar,” read an ad we reviewed for the American Hartford Gold Group that was sent to the Newsmax email list in mid-2021. Hartford has also been sued by several customers who accused it of fraud in the past several years. (Two of those cases settled, and one was sent to arbitration; AHGG previously declined to comment on the cases but said it operates “with a steadfast commitment to doing business legally and ethically.”)
Several years ago, we also reviewed scripts distributed to salespeople of another company, Metals.com. According to former employees, they were instructed to tell customers over the phone that “Janet Yellen, Gary Cohn and their group of merry liberals have decided to attack retirement accounts.”
This is not a new scheme. Companies have been following a similar playbook for more than a decade. One of the first companies to do so was Goldline, a company heavily promoted by Fox News and talk radio host Glenn Beck. Goldline was subject to a congressional investigation and to a consumer protection lawsuit brought by the Santa Monica city attorney in 2010 that accused the company of defrauding its customers (the case settled, with Goldline not admitting wrongdoing and but agreeing to refund $4.5 million in refunds to former customers).
But the internet — with programmatic and social media advertising, podcasts and email mailing lists — has helped supercharge fraudsters’ ability to reach customers. In 2019, in a separate investigation for the business news publication Quartz, we found that whoever was buying ads for Metals.com was using Facebook’s targeting tools to advertise to people who were 59 or older and were categorized as “conservative” or interested in the Republican Party, Donald Trump or right-wing media personalities.
One of those customers was a retired nurse who told us at the time that she was raising her grandkids on her own. She said she invested her entire savings — $83,000 — with the company and ended up losing nearly a third of that amount. Meanwhile, salespeople at the Metals.com Beverly Hills sales floor were chasing hefty commissions. Several of them in independent conversations with us compared the money-hungry atmosphere at the company to the 2013 film “The Wolf of Wall Street” about the penny stock scammer Jordan Belfort. Eventually, in 2020, the Commodities Futures Trading Commission and 30 states sued the company in the largest case of its kind, alleging an $185 million fraud scheme. A court shut down the company.
While there have been many lawsuits against these companies over the years, the industry is generally “extremely thinly regulated.”
While there have been many lawsuits against these companies over the years, the industry is generally “extremely thinly regulated,” as Joe Rotunda, enforcement director at the Texas State Securities Board, told us, and trying to pursue bad actors has been a game of whack-a-mole. The authorities go after one company, and another one pops up in its place — or the same actors set up shop under a different name.
Investors who do want to invest in precious metals can take a number of precautionary steps to avoid losing money. The CFTC has issued a fraud advisory about precious metals and suggests that investors ask about fees up front and get them in writing, while AARP advises that investors check with their state’s securities commissioner to make sure the company hasn’t been in regulatory trouble.
