HOUSTON -- A scam in counterfeit copies of South African gold Krugerrands has been operating for 18 months and has bilked banks, jewelry stores and coin shops in at least four Texas cities, investigators say.
Houston Police Detective J.C. Davis said an Amarillo man arrested in Houston and charged with theft in the case is believed to have distributed 100 to 1,000 of the counterfeit coins a week.
A Secret Service agent said the Tascosa National Bank in Amarillo authorized a $270,000 loan backed by the fake coins.
In Lubbock, as many as 300 of the bogus Krugerrands could be afloat, Lubbock County District Attorney John Montford said.
Evidence of the illegal activity has also turned up in Dallas.
The coins attracting all the attention are filled with lead and coated with 22-karat gold. The ones Davis has seen cost about $60 to $100 apiece to mint, he said. Krugerrands currently sell for around $590.
'I've never seen any (fake coins) this good,' he said. 'They are good copies. The information we have is that one of the dies they use to stamp these things out with is from South Africa.'
The Krugerrand is minted and distributed by the South African government. Intergold Corp. South Africa's marketing arm for Krugerrands, said in New York, 'We have never seen good copies of the Krugerrand.' Michael Vigil, general manager at Intergold said it 'always appreciates reports of any such activity.'
Davis disclosed Monday that Sidney James Heard, 39, a 'swap shop' owner from Amarillo, and another man were arrested Feb. 18 in Houston after a coin dealer tipped police to an unusually good Krugerrand sale being offered him.
Heard, who Davis called a 'middle man' in the operation, was charged with two counts of theft and one count of possessing cocaine after the jeweler purchased the fake coins from him at the Chemical Bank & Trust Co.
A Houston man who acted as a broker in the deal was arrested but not charged, Davis said.
The police went public with their information about the operation to educate potential victims.
My best advice to anyone buying Krugerrands is to buy from a reputable concern, or let the buyer beware,' Davis said.
A New York coin dealer said 'The weight and density of gold is almost impossible to duplicate. Any experienced dealer can tell a fake immediately and a reputable firm would not risk its reputation or its business in selling them.'