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JG

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Reply with quote  #16 
Quote:
Originally Posted by ChevyRacer
Quote:
Originally Posted by JG
If Bullion Direct had advertised the storage as unallocated, and the terms were clear about that, I would have a hard time seeing how he could end up going to jail over it -- it would simply be a failed business.


What difference does it make whether the bullion is allocated or not?


Sorry, I meant to include what allocated/unallocated means.

With big bullion dealers and banks, an allocated account was traditionally where you would have large gold or silver bars in your name. You bought them, they were legally yours. They had a serial number, you had a list of which serial numbers were yours. If the dealer/bank went bankrupt, you showed them your serial numbers and got your bars (at least in theory -- I haven't heard of any dealers/banks that actually went bankrupt and had customers need to go through this process).

With unallocated accounts, you traditionally buy a number of ounces of gold or silver, and what the company does is up to them -- until you ask for your money back, and they give you your money. They may hedge, they may have inventory of their own that is backing it, you don't know. Your account is backed by the "general stock" of the business. If they go bankrupt, you become an unsecured creditor -- and accept that risk.


Quote:
Originally Posted by ChevyRacer
If his records (and the records that he knowingly posted in his customers' online accounts) show (for the sake of simplicity) that he is supposed to be holding a total of 10,000 unallocated ounces of gold for his customers, then he had better have a) 10,000 ounces of gold bullion on hand or b) at the very least, enough cash to immediately buy 10,000 ounces of gold on the open market. Otherwise, it's FRAUD. What do you think Bernie Madoff and scores of other convicted Ponzi scheme artists go to jail for? Bernie Madoff's customers all had account statements showing that they had x amount of dollars in their accounts, when in fact they did NOT have x amount of dollars in their accounts (fraud), and Bernie Madoff did NOT have any money to make those accounts whole (fraud).


The difference here is what is being represented. Unallocated account, by definition, do not need to be backed up by assets. With Madoff, customers were told they had investments that they did not.

Quote:
Originally Posted by ChevyRacer
This wasn't an investment fund that states up front that there's a risk you can lose your original investment--if BD actually said that somewhere, please point it out--it was a GOLD AND SILVER STORE. Period.


I agree with you, and that's why Charles is in a lot of hot water. Banks don't use the word "storage" in connection with unallocated accounts. Banks say you have "10 ounces of gold" in an unallocated account, not "5 2006 1oz gold eagles and 10 2012 1/2 oz gold eagles". And banks do not use the word "allocated" for an unallocated account.

However, if he had clearly stated that they were unallocated accounts (I.E. informed customers of the huge risk, and they all knew about it), it might have been perfectly legal. But that is where the words "allocated", "not pool" and "not assets of Bullion Direct" and going to really, really haunt him and/or others that may have been involved.

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bull123

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Posts: 217
Reply with quote  #17 
JG ... I didn't realize they prepped a defamation suit against you

that would scare the crap out of me as well ... it's not like you are making a fortune off the site.

my apologies ...

[comp]
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JG

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Reply with quote  #18 
Quote:
Originally Posted by bull123
JG ... I didn't realize they prepped a defamation suit against you

that would scare the crap out of me as well ... it's not like you are making a fortune off the site.

my apologies ...


No problem. [smile]  It wasn't Bullion Direct, it was a company that was affiliated with Tulving. I don't think they had any desire to actually sue me, I believe they just wanted to prevent me from publishing the truth about them.

I'm not too worried here, given what I say and the circumstances. However, defamation law does treat accusations of someone being involved in criminal activity differently than other types of statements (e.g. assuming that damage was done to the person).

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johnnyeagleeye

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Posts: 23
Reply with quote  #19 
I haven't posted for awhile. Does anyone know if CM is being investigated  actively by the Texas AG's office, the FBI, or the FTC? I mean to the point of looking into his personal finances and the finances of BD and its subsidiaries? Criminal prosecution and conviction of CM are the only way I can put this to rest from a personal perspective.
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JG

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Reply with quote  #20 
Quote:
Originally Posted by johnnyeagleeye
I haven't posted for awhile. Does anyone know if CM is being investigated  actively by the Texas AG's office, the FBI, or the FTC? I mean to the point of looking into his personal finances and the finances of BD and its subsidiaries? Criminal prosecution and conviction of CM are the only way I can put this to rest from a personal perspective.


The Texas AG's office and Travis County DA's office had a meeting with the FBI, who took the lead on the criminal investigation. It has also come out that the U.S. Attorney's office is investigating.

For comparison, the U.S. Attorney's office charged Mr. Tulving with one count of wire fraud. The CFTC, after leading a poor (IMO) investigation, sued Mr. Tulving as well. The Tulving situation is different, of course (he shut down owing customers $17M, but also had assets that may have a value around that).

The CFTC is aware of Bullion Direct. I doubt the FTC would get involved. It is possible that there may be other organizations investigating (perhaps the SEC, which I believe gets involved at times with IRAs).

Between the FBI and the U.S. Attorney's office, I think that customers are in good hands. I know some will disagree (they are welcome to suggest other agencies they think would do a better job).

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