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saxster

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https://www.statesman.com/news/20191004/austin-entrepreneur-who-lost-customers-gold-convicted-in-federal-court

A failed Austin entrepreneur on trial this week for the disappearance of millions of dollars’ worth of precious metals belonging to thousands of customers was convicted Friday on all three counts he faced and, by the end of the year, could be sentenced to prison.

The jury’s verdict, reached after it deliberated for only about 90 minutes, sided with federal prosecutors who characterized Bullion Direct founder Charles McAllister as a con man who felt entitled to money belonging to customers who put trust in the online company he launched in 1999 to revolutionize the selling of gold, silver and platinum.

Sentencing in U.S. District Judge Lee Yeakel’s courtroom is set for Dec. 19. McAllister faces up to 20 years in prison on two of the counts that involve fraud, and 10 years for a third count for engaging in monetary transactions in criminally derived property.

In closing arguments Friday, prosecutors called McAllister a fraudster who purchased a home for $925,000 with stolen money. But McAllister’s attorney characterized his client as a well-meaning businessman who was undone by a series of poor decisions and ineffective employees.

Indisputable is how customers who placed their faith in McAllister’s Bullion Direct took huge hits, losing a combined amount that the government said was between $16 million and $25 million. Retirement plans crumbled, and, by the time the company closed in 2015, people who were placing orders were not receiving shipments.

To illustrate the scheme the government said McAllister conducted alone, prosecutor Daniel Guess pulled coins from a clear glass jar and dropped them in a black coffee mug and a red Solo cup. McAllister, he said, commingled funds, taking existing metals Bullion Direct stored for customers at the company’s 14th-floor office, and selling them to other customers to fulfill sale requests.

 
 

McAllister’s attorney, James Ardoin III, argued that the practice was lawful, citing the terms of service agreement that stated, “Bullion Direct may use or act as if it were the owner of the commodity held for customers.” Prosecutor Keith Henneke said that section of the agreement was nullified by other language in the agreement.

Throughout the trial, which began Monday and ended several days earlier than expected, the jury heard from four customers who the government said represented 5,000 to 6,000 people who lost money with McAllister’s company.

A man testified that he never received the 80 Canadian maple platinum coins he purchased through a $97,000 wire transfer in April 2015. Two months later, another man paid $12,000 for silver coins that he never got. Those instances alone represent the two fraud counts that McAllister faced, Guess told the jury.

Ardoin, McAllister’s lawyer, said his client was not a fraudster but got himself into a mess with bad decisions. Notably, he said, McAllister launched the company with insufficient capital and then overspent on a software program. To clean up a messy financial situation, McAllister took the direction of others and hired three high-priced aides who Ardoin said didn’t help much.

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