Several fraudulent coin investment firms have popped up in the Minneapolis-area, misrepresenting coin values, selling fake coins and persuading the elderly to take out reverse-mortgages on their homes to pay for coins at excessive prices, the Minneapolis Star Tribune reported Saturday.
The newspaper said there are about 30 Minnesota firms marketing coins to about a half million serious collectors and investors in a multibillion-dollar industry nationwide. The Minnesota attorney general's office is investigating a half dozen companies for possible fraud.
"This industry is somewhat like the Wild West," spokesman Ben Wogsland told the Star Tribune.
Investors turn to gold -- now over $1,500 an ounce -- silver, platinum and other precious metals as a protection against inflation. The valuable metals are sold and traded in many forms with bars and uncirculated bullion coins being the most profitable for consumers. Many coin buyers are elderly people, whom scam artists see as easy targets for fraud, the newspaper said.
Few lawyers will take on these cases as fraud is difficult to prove, even though the problem is on the rise; 19 complaints have been made to the Federal Trade Commission in the past year while five complaints had been average in previous years.
Experts say the problem is worse than statistics show because many people who are swindled never contact authorities because they are embarrassed or lack documentation of their losses.
"What I'm finding is that Minnesota is becoming the poster child for this rare-coin industry fraud," says Roseville, Minn., police Detective Marc Schultz.
Edina dealer Gary Adkins, who is the American Numismatic Association's Coin Dealer of the Year, says most firms are on the up-and-up but acknowledges there are problems in the industry.