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JG

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Reply with quote  #31 
Quote:
Originally Posted by JG
The Austin American-Stateman has published their article about Bullion Direct.

Thanks to all of those who helped the reporter with the story!


... and a follow-up article about the asset purchase by Charles McAllister's mother.

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gyro

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Reply with quote  #32 
Quote:
Originally Posted by JG
The Austin American-Stateman has published their article about Bullion Direct.

Thanks to all of those who helped the reporter with the story!
Quote:
Downtown Austin vault of precious metals turns up mostly empty
By Eric Dexheimer - American-Statesman Staff
Updated: 3:47 p.m. Friday, September 04, 2015 |  Posted: 1:57 p.m. Friday, September 04, 2015

Gold first caught Ron Barbala’s eye in 2008. With the housing values plummeting and the stock market cratering, the Phoenix engineer felt betrayed by the economy, which increasingly he considered little more than a mirage. “The standard American method of investing, all of it,” he said. “I’d had it.”

Desperate for something of value he literally could put his hands on, he began acquiring gold and silver bullion. “Its value is in its physicality,” Barbala said. “It just is.”

Over the next several years, Barbala bought more than $100,000 worth of precious metals through a little-known downtown Austin company. Started in 1999, Bullion Direct began as an online virtual trading floor where thousands of customers could buy and sell precious metals to each other, with the company taking a cut of each sale.

Later, it began selling the metals to customers directly. It also stored the commodities for those who requested it — such as Barbala — with the glittering coins and bars kept safely in individual piles for each investor in an old bank vault in its Lavaca Street offices.

At least that’s what everyone thought.

By the time auditors and lawyers got access to Bullion Direct’s 14th-floor offices six weeks ago, there were only a handful of gold and silver coins in an office safe. A second vault it had recently rented held only slightly more.

An estimated $30 million in cash, metal bullion and valuable coins, meanwhile, had vanished.

Can’t print metal out of thin air

The cumulative weight of the unaccounted for metal is the equivalent of dozens of standard-sized gold bullion bars and hundreds of silver ones. Also missing are an estimated 1,400 ounces of platinum and palladium.

In recent weeks, as thousands of investors in Texas and across the country have absorbed their bad fortune, there has been no shortage of theories where the precious commodities went — including whether they ever existed at all.

The one person who knows for sure, company founder and owner Charles McAllister, recently moved from Wimberley to Alabama. Officials say that while he is being cooperative, many basic questions about the missing fortune remain unanswered.

McAllister’s Austin attorney, Randy Leavitt, declined to make him available for an interview.

“We are cooperating with the investigations,” Leavitt said.

Emails obtained by the American-Statesman show state and local prosecutors have met to discuss the company. Leavitt confirmed the U.S. attorney’s office also has begun investigating Bullion Direct.

What is clear is that the news has devastated those who believed the company was safekeeping the futures they’d bet on the rounds and bricks of gold and silver. Some lost hundreds of thousands of dollars’ worth of the precious metal with little apparent prospect of regaining it. Jesse Moore, an attorney representing several creditors, predicted that investors can hope to recover 2 or 3 percent of their money, at best.

Bullion Direct filed for bankruptcy protection on July 20, several days after the company abruptly shuttered its operations and let go its dozen or so employees. The company’s new lawyer, Joe Martinec, has hired a local turn-around specialist to try to squeeze whatever value remains out of it.

Several weeks into the job, he has described the company’s finances as a mess. Bullion Direct hadn’t filed a tax return since 2010. What little has been unearthed suggests it was losing money almost from the day it opened its doors. Records also indicate McAllister paid himself hundreds of thousands of dollars in annual compensation.

Philosophically, the disappearance of their precious metal has left many Bullion Direct customers, who turned to gold as a safe port in a turbulent financial world, with a crisis of confidence. Attracted to an investment specifically because of its detachment from a government and financial system they didn’t believe in, now that their treasure has disappeared they find themselves wondering what, really, is permanent.

“What’s safer than some bars of metal in a vault?” said Kenneth Burns, a South Carolina physician. “They can’t print metal out of thin air. It can lose value. But it can’t get to zero. At least that’s what I thought.”

Subversive investing

“A lot of the people who invest in gold and silver either distrust the financial system, or they’re convinced the world as we know it will collapse, and gold and silver will be used for barter. A lot of survivalists,” said Joshua Gibbons, who follows the industry from Massachusetts on his website, about.ag. (Ag is the chemical designation for silver.)

Some advocate a return to the gold standard — tying the value of currency to the existing gold supply, a system the U.S. hasn’t used for half a century. Precious metal forums host animated debates over the legality of the Federal Reserve, which controls the country’s money supply.

Sam Painter of Augusta, Ga., said he became a Bullion Direct customer after reading “The Creature from Jekyll Island,” a book that blames the Federal Reserve for everything from economic policy failures to wars. “It really opened my eyes,” he said. “The dollar is just out there without anything to support it. You believe it’s worth a dollar, and I believe it’s a dollar. But it’s really just paper.”

Austin machinist David Kirschner said he started buying metals from Bullion Direct in 2010 to protect himself against the inevitable collapse of the financial system. “Somebody’s going to get a big haircut, and I didn’t want it to be me,” he said.

Yet it’s simplistic to dismiss gold bugs as financial conspiracy theorists. Collectors accrue gold and silver coins as a hobby. Many large investors buy bullion as a hedge to protect against the decline of other investments. Former Texas congressman and presidential candidate Ron Paul, among others, has advocated for the gold standard.

The Legislature also has succumbed the lure of physically possessing precious metals. Lawmakers this year passed a law creating a Texas bullion depository in preparation for accepting hundreds of millions of dollars in gold owned by University of Texas Investment Management Co., which manages the university system’s investments. The approximately 5,500 gold bars are currently held in a New York bank.

“A state depository would remove much of the uncertainty and safety concerns associated with the storage of precious metals elsewhere,” according to the analysis of House Bill 483. Yet state Sen. Lois Kolkhorst, R-Brenham, who co-sponsored the bill, said Texas’s superior security was only part of the reason to repatriate the bullion.

“New York will hate this,” she told the Houston Chronicle.

Indeed, for a certain percentage of investors, hoarding gold is as much a political statement as an investment. “The beauty of bullion is that it cannot be tracked; it cannot be accounted for,” said Barbala. “It’s called subversive investing. You are subverting the entire U.S. economy. It’s the only, last investment vehicle outside of government control.”

Bullion Direct promoted such light-handed regulation. The company “is not, nor required to be, registered with the SEC since we are not trading securities,” its website promised. “Furthermore, we are not required to register with any other regulatory body.”

Always paid in full, on time

Some who had assumed their gold and silver was safely under lock and key with Bullion Direct said they learned of the company’s sudden collapse only when they happened to log on to its website this summer to check their holdings and saw a notice it had filed for bankruptcy. Others received an email.

“At first I thought it was spam,” said John Washburn of Wisconsin. (Washburn, a political activist, made Texas headlines four years ago when he wrote a computer program to automatically request Rick Perry’s emails at regular intervals, effectively preventing the governor from deleting any of the correspondence.) Washburn is missing 57 ounces of gold from Bullion Direct’s vault — worth about $65,000 at current prices.

It is an indication of how unregulated the precious metal business is that investors and officials associated with the case say they know little about McAllister. Public records show that before Bullion Direct, he owned a Houston coin store.

Clayton “Sonny” Toupard purchased Royal Precious Metals Co. from McAllister in 1999. “I think he knew the collectibles business was phasing out, and bullion was the future,” Toupard said.

McAllister and a partner, Vivek Katyal, incorporated Bullion Direct in August 1999. (Katyal, who now works for an accounting firm in California, stopped answering his phone after initially agreeing to discuss the company with the American-Statesman.) That same year, McAllister and Katyal also patented software allowing metals customers to buy and sell to each other.

Toupard said he did business with McAllister’s new company. “We would sell to him, mostly bullion. He was always up front; always paid on time and in full” — a track record that made Bullion Direct’s sudden collapse all the more incomprehensible. “I don’t think (McAllister) is the kind of person who would embezzle or take money from the company,” Toupard said. “That’s not him.”

For 15 years, Bullion Direct’s public face was one of success. Customers said their orders were processed without a hitch. Those who requested delivery of gold and silver received it on time.

Painter, the Augusta customer, recalled the company hosted a forum in which customers could connect. “Many posted photos of their metals delivered, all wrapped up like a Christmas present,” he said.

Over the years, Bullion Direct boasted an estimated 60,000 customers and handled transactions worth hundreds of millions of dollars.

A tale of two companies

Beneath the surface, however, financial documents from Bullion Direct’s bankruptcy depict a startlingly different picture. James Hoeffner, an Austin attorney representing a Florida customer missing an estimated $250,000 in cash and metal from the company’s vault, said Bullion Direct filed only a single income tax return, in 2010, covering the previous decade.

It showed the company lost money for all but two of those years. By 2009, the documents show, the company was carrying $17 million in losses — not counting the tens of millions of dollars’ worth in eventually missing money and metal. Records also show McAllister had hired a bankruptcy attorney in 2012, but never filed.

At the same time, he paid himself as much as $365,000 annually, and borrowed an additional half-million dollars from the company, according to the documents.

Officials said they are still trying to reconstruct Bullion Direct’s finances for the past five years. In the meantime, in creditors meetings and online forums, investors have traded theories in about what might have happened to their precious metals.

Barbala — whose 437 ounces of gold, silver, palladium and platinum in Bullion Direct’s safe appears to have evaporated — hypothesized that fraud was part of McAllister’s business plan from the start. “He saw all of us coming a mile away, and played his cards very well,” Barbala said. “If you steal bullion, unless you’re caught in the act, it’s impossible to trace.”

Martinec’s reading of the company documents he’s seen suggests something closer to “a slow-motion Ponzi-like scheme.” McAllister scrambled to keep Bullion Direct afloat by dipping into investors’ precious metals and cash to support newer transactions. The system appears to have collapsed this summer, Martinec said, when investors got spooked by a sudden rash of complaints over tardy deliveries and demanded the company ship their gold and silver immediately.

Yet even if McAllister wasn’t siphoning off customers’ gold and silver for his own use, and was trying to prop up his failing business, “this appears to have been going on 14 years,” said attorney Peter Ruggero, whose California client had at least $344,000 in silver and gold disappear. “When is it reasonable to stop taking people’s money?”

Bullion Direct’s collapse has been life-changing for many. Barbala said his losses represented 2o years of savings. Burns estimated he will have to put off retiring by a decade to replace the worth of his vanished metal.

To some, it has been just as crushing to acknowledge the pieces of metal they thought would shield them from an uncertain world might have been only a glittering illusion. Martinec said he continues to field calls from Bullion Direct customers who can’t grasp their gold and silver doesn’t exist.

“They still think they have some ounces of gold or silver sitting in the vault, and just want to come pick it up,” he said.
[8107739] 
This is a photograph of precious metals that are purchased for investments, such as those once sold and stored by Bullion Direct in its 14th-floor offices in downtown Austin. Six weeks ago, auditors and attorneys found only a handful of gold and silver coins in an office safe. A second vault held only slightly more. An estimated $30 million in cash, metal bullion and valuable coins bought by investors from across the country has vanished.

Quote:
If You Can’t Touch It You Don’t Own It: Austin Gold Vault Comes Up Mostly Empty
by IWB · September 8, 2015

(Thomas Dishaw)  If you can’t touch it you don’t own it.  Here is another prime example of the importance of  actually possessing physical assets like gold and silver, or you could end up like many of these unfortunate customers who have lost everything.

A recent article by the Austin American Statesman reports: Barbala bought more than $100,000 worth of precious metals through a little-known downtown Austin company. Started in 1999, Bullion Direct began as an online virtual trading floor where thousands of customers could buy and sell precious metals to each other, with the company taking a cut of each sale.

Later, it began selling the metals to customers directly. It also stored the commodities for those who requested it — such as Barbala — with the glittering coins and bars kept safely in individual piles for each investor in an old bank vault in its Lavaca Street offices.

At least that’s what everyone thought.

By the time auditors and lawyers got access to Bullion Direct’s 14th-floor offices six weeks ago, there were only a handful of gold and silver coins in an office safe. A second vault it had recently rented held only slightly more.

An estimated $30 million in cash, metal bullion and valuable coins, meanwhile, had vanished.

And the story gets worse.  It’s estimated that the scammed investors will only recover 2-3% of their total investments.Imagine having $100,000 in precious metals locked away in some vault and then when its time to collect only receiving $3000. This will be a heartbreaking lesson to the people involved and most likely destroy any chance of prosperity these families had.

What is clear is that the news has devastated those who believed the company was safekeeping the futures they’d bet on the rounds and bricks of gold and silver. Some lost hundreds of thousands of dollars’ worth of the precious metal with little apparent prospect of regaining it. Jesse Moore, an attorney representing several creditors, predicted that investors can hope to recover 2 or 3 percent of their money, at best.

Bullion Direct filed for bankruptcy protection on July 20, several days after the company abruptly shuttered its operations and let go its dozen or so employees. The company’s new lawyer, Joe Martinec, has hired a local turn-around specialist to try to squeeze whatever value remains out of it.

Bullion Direct only filed one tax return in 16 years…

Beneath the surface, however, financial documents from Bullion Direct’s bankruptcy depict a startlingly different picture. James Hoeffner, an Austin attorney representing a Florida customer missing an estimated $250,000 in cash and metal from the company’s vault, said Bullion Direct filed only a single income tax return, in 2010, covering the previous decade.

It showed the company lost money for all but two of those years. By 2009, the documents show, the company was carrying $17 million in losses — not counting the tens of millions of dollars’ worth in eventually missing money and metal. Records also show McAllister had hired a bankruptcy attorney in 2012, but never filed.

Bullion Direct filed for bankruptcy protection on July 20, several days after the company abruptly shuttered its operations and let go its dozen or so employees. The company’s new lawyer, Joe Martinec, has hired a local turn-around specialist to try to squeeze whatever value remains out of it.

Several weeks into the job, he has described the company’s finances as a mess. Bullion Direct hadn’t filed a tax return since 2010. What little has been unearthed suggests it was losing money almost from the day it opened its doors. Records also indicate McAllister paid himself hundreds of thousands of dollars in annual compensation.

If anyone reading this does not physically own their gold or silver, I’m sorry but you don’t own it. Don’t end up like Gerald Celente who almost lost his six figure gold investment,  but due to his stature and Gods grace was able to recover most of  his assets.

Quote:
Originally Posted by JG
... and a follow-up article about the asset purchase by Charles McAllister's mother.
Quote:
With millions in precious metals missing in Austin, a mother steps up
By Eric Dexheimer - American-Statesman Staff
Posted: 4:22 p.m. Friday, June 10, 2016

When tens of millions of dollars’ worth of gold and silver bullion were discovered to be missing from a downtown Austin vault last summer, suspicion quickly fell on the owner of Bullion Direct, the company investors thought was keeping their precious metals safe. It appeared that Charles McAllister had either absconded with or misused their treasure for his own financial gain.

Now, as his company seeks to emerge from bankruptcy court a year later, an unusual last-ditch plan to repay the creditors is underway. McAllister’s mother has offered to purchase her son’s old company and turn over most of any future profits to creditors.

Attorneys involved in the case acknowledge the arrangement is peculiar. After all, McAllister apparently remains under federal investigation in connection with the missing metal and cash, now estimated at $25 million, at least.

But, the lawyers say, the deal is the best — and perhaps only — hope for creditors to recover any of their lost money. And the parents “are trying to do something right,” said Duane Brescia, the Austin attorney representing Cheryl Huseman and her husband, Jack Murph.

Still, the close family connection has raised suspicions. Many of those whose glittering savings vanished continue to believe McAllister has their metal stashed somewhere.

“I think a lot of people walked off with a lot of bullion,” said Ron Barbala, a Phoenix investor whose 437 ounces of gold, silver, palladium and platinum seem to have evaporated from Bullion Direct’s safe.

If McAllister’s mother “succeeds and does as well as she hopes, creditors will get millions of dollars,” said Joshua Gibbons, whose website, about.ag, has closely tracked the case. (Ag is the chemical designation for silver.) “But,” he noted, “so will she.”

Joe Martinec, hired to shepherd Bullion Direct through the bankruptcy, said some of the 550 creditors have questioned whether it might even be possible that McAllister’s parents were buying the company with the money he is alleged to have taken.

Both he and Brescia dispute that, however, saying the parents mortgaged their house to raise $200,000. Half of that is to go into a trust account for creditors. The other half will be used to purchase software McAllister developed to use on his website as a trading platform for precious metals. It allows buyers and sellers to connect online to trade their gold and silver.

According to the terms of the arrangement, the new company, Platform Universe LLC, will earn money from transaction fees, similar to eBay. At first, 80 percent of the proceeds would go to repaying the creditors. Later, that percentage would drop to 50 percent.

Over the years, Bullion Direct boasted an estimated 60,000 customers, and the company’s trustee, Dan Bensimon, has described the trading platform as a viable business. Brescia and Martinec both say McAllister’s parents won’t manage the new company at all. Charles McAllister’s lawyer, Randy Leavitt, said his client will have no involvement in the new business, either. Creditors are scheduled to vote on the plan next month.

News of Bullion Direct’s missing metal arrived suddenly last July. Investors from across the country who’d purchased precious metal, primarily gold and silver, and thought it was being stored in a safe on the 14th floor of an Austin office tower logged onto Bullion Direct’s website only to see an announcement that the company had declared bankruptcy.

When they scrambled to recover their treasure, it was gone. By the time auditors and lawyers got access to the company’s offices, there were only a handful of gold and silver coins in an office safe.

In court filings, McAllister has claimed he told investors that their precious metals might not actually exist in his safe, although their value was kept on his books. He said he had permission to use money from the metal sales to invest in his company and to pay for business expenses.

(One expense rankling those who lost money with Bullion Direct: McAllister’s salary. Court documents show he paid himself more than $300,000 a year — not including a $36,000 severance package he awarded himself only weeks before filing for bankruptcy protection.)

Martinec said permission to use investors’ money might have appeared in the small print of a disclaimer posted somewhere. Yet it also seems unlikely that those keeping their wealth in metals would have willingly agreed to such an arrangement. That clashes with the philosophy of many gold and silver bugs, who depend on the precious metals’ physicality to protect them against an economy they believe stands on an unsteady scaffolding of paper and hope.

“I certainly understand how defrauded they feel,” he said. “If you went to your account, you would have reasonably believed the gold listed there was in a vault some place.”

Just archiving these articles here in case they ever get locked or deleted...

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"In God We Trust"

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Posts: 23
Reply with quote  #33 
Just been watching the TV show American Greed and was wondering if the producers of that show have been contacted to do a show on Bullion Direct and Charles McAllister. 
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JG

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Reply with quote  #34 
Quote:
Originally Posted by "In God We Trust"
Just been watching the TV show American Greed and was wondering if the producers of that show have been contacted to do a show on Bullion Direct and Charles McAllister. 


There was talk of it at http://forums.bulliondealerdata.com/post/american-greed-7552832 but I do not think it got anywhere.

The TV show "Gold Rush" used to feature Jason Otteson, who "formerly the leader of one of the largest online precious metals companies" (Bullion Direct) and now has his own bullion dealership where he caters to people placing $50K+ orders, and does is involved in the mining industry. He was privy to the $15M investment that Bullion Direct was looking to make in a gold mining company in 2010. He was also Chief Investment Officer of NBFog (the company started by another BD management-level employee, that BD invested $400K in, that ended up worthless). But I doubt that show would be interested...

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Dcscott

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Reply with quote  #35 

I tried to get the show  Crime watch daily to do a piece, back in Jan 2016, but nothing came of it.  I would definitely be available to be on American Greed, if they did a show.


  

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