Mainers may have been conned out of $700K, state says in federal lawsuit
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Maine residents invested $700,000 in an allegedly fraudulent investment scheme, now the subject of a federal lawsuit joined by the state.
Maine is joining a federal lawsuit to stop a precious-metal investment scheme that allegedly bilked $185 million from hundreds of investors nationwide, including Mainers who have invested over $700,000.
Maine Securities Administrator Judith Shaw on Friday said her office has signed on to the complaint filed by the federal Commodity Futures Trading Commission and 29 other states in the U.S. District Court for the Northern District of Texas.
The suit claims Los Angeles-based TMTE Inc. and six other corporate and individual defendants solicited “seniors and other vulnerable investors nationwide by touting precious metals at grossly inflated prices that were not disclosed,” according to a news release.
Shaw said, “The defendants had a reckless disregard for the truth by failing to disclose that virtually every investor lost the majority of their funds in the investments the firm was peddling.
“They capitalized on investor fear of market instability and economic uncertainty. Investors suffered substantial losses from retirement savings by relying on the false representations made by the defendants and their sales representatives.”
The defendants are accused of using cold calling, television, radio and social media advertisements designed to “instill fear in elderly and retirement-aged investors and build trust with investors based on representations of political or religious affinity.”
The investors were advised to liquidate their holdings to fund investments in precious metals bullion through self-directed individual retirement accounts and bullion coins, the complaint said.
Some of the defendants also are accused of failing to disclose the markup they charged for the bullion products, which averaged from 100% to more than 300% of the market price.
At least 1,600 seniors and other investors nationwide were solicited in the scheme, according to the release. Shaw didn’t disclose how many Maine investors may have been affected, but said data show residents paid over $700,000 to Metals.com, operated by TMTE Inc. Metals.com and its affiliates have attempted to evade previous regulatory actions from 12 states by changing business names and through other tactics, the release said.
The complaint requests the court order the defendants to cease sales activity, return money to investors, and stop defrauding investors and violating federal and state laws. The office of the Maine Attorney General is representing Shaw in the suit.
Heath P. Tarbert, chairman of the Commodity Futures Trading Commission, said, “This case highlights just how geographically broad commodities fraud can be in our rapidly-evolving financial markets and how important it is for regulators at all levels of government to work together to pursue bad actors and protect market participants.”
Shaw encouraged investors to come forward if they suspect they have been targeted by Metals.com or similar precious-metals investment schemes. Information is available at investors.maine.gov, by calling 877-624-8551 or at the Maine Office of Securities, 121 SHS, Augusta, ME 04333-0121.
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