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GWest

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Reply with quote  #1 

What if the allocated metals to be stored were actually purchased at the time of payment, then later sold off in an act of theft? Then, a much more sophisticated defense must be invented to overcome the demonstrated intent of customer-owned metals. CM would need a means to retroactively re-characterize those customer-owned assets. Hence, the nutty defensive assertion regarding his interpretation of the contract. This assertion goes beyond simply contriving a defense for failing to buy the metals. This assertion additionally permits him to explain both the purchase and subsequent disappearance of the metals.

BD is not saying that the metals were never purchased. They are saying that BD had no contractual duty to purchase metals FOR THE CUSTOMER. Hence, any metals actually purchased with the customer's money were not the customer's property. Brilliantly contrived flexibility - and retroactively deployable as well.

When BD purchases metals and puts them in a safe, you can't really tell if those metals were actually purchased for a customer or for BD as an asset or inventory. To know the facts and the intent, you must see the entry made in BD's books at that time. BD likely needed to preserve the flexibility to make or alter those books. But those doors close when a tax return is filed because the return must comport with the books. A commitment to any particular rendition of the books would substantially constrain the ability to edit those books afterwards. We know the IRS placed a lien specifically for non-filing. The reason for failing to file might have been motivated by the need to remain non-committal about classifying the sale of metals as sales of customer metals vs sales of BD metals.

It all fits. Although that doesn't make the theory true, I'll bet this is what unfolds.

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nobody

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Reply with quote  #2 
Many of us ordered serial#'d product.   Even in fungible form, any good dealer would keep records of serial numbers coming in and going out of lots corresponding with orders and draws.

A shiny nickle says they don't match up or even track in any correlative fashion.


-n
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GWest

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Reply with quote  #3 
Quote:
Originally Posted by nobody
Many of us ordered serial#'d product.   Even in fungible form, any good dealer would keep records of serial numbers coming in and going out of lots corresponding with orders and draws.

A shiny nickle says they don't match up or even track in any correlative fashion.


-n

I don't ever remember BD advertising or representing specific serial numbers with any product. You might buy products that have serial numbers, but no particular number would ever have been associated with your order. I doubt that BD or any other dealer ever looks at serial numbers when they exist. Even some 1oz silver bars (JM, Engelhard) have serial numbers. What an unnecessary headache to track those few fungible products by their numbers just because some products have them.

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nobody

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Reply with quote  #4 
Sure, but look at the other end of the business - when things go wrong.

Which bar is missing from inventory? Where did it come from? Where's its history?

A customer got a bar, and is reporting it failed an assay, who did it come from? What's its history? What else did they ship?

I can think a lot of bad things about BD, but not recording the serial numbers of inventory would seem unlikely unless it was intended to not be tracked.  I'm a small time trader, and I have the serial # of any bar I can't physically reach at any time on file - he traded with thousands of anonymous people - to not record serial #'s and track bar history would be begging to be defrauded himself - hardly likely for a "smart" criminal or even a dumb businessman.

BD ran for 15 years - either they were expert frauds, or extraordinarily negligent business officers.  Both are potential sources of recovery to claimants.

Even the fact that they've admitted to having quickbooks suggests CM wasn't negligent with the accounting part -- and squaring that with "I didn't know I had to buy things I told my customers they owned, while slowly removing references to actually doing so from my website over multiple years" is going to be threading a needle so fine that I wouldn't want to be the lawyer having to present that argument in good faith.

-n

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Khachir7

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Reply with quote  #5 
You know, it doesn't matter for me whether they bought the metal or not, as the price of the metal has dropped since I made an order to purchase it, and BD could have purchased it for me at a cheaper price today, and put the difference into their pocket. The problem is that they used my money on who knows what - i. e. stole it, while using a legitimate business as a front to do it. I would have been perfectly fine - and better off - had they returned to me the $ I sent to them over the years. If they could.
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JG

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Reply with quote  #6 
Quote:
Originally Posted by nobody
I can think a lot of bad things about BD, but not recording the serial numbers of inventory would seem unlikely unless it was intended to not be tracked.


FWIW, in the retail industry, I'm not aware of any bullion dealers that keep track of bar numbers. Given that the majority of their inventory is coins and bars without serial numbers, it doesn't make sense to keep track of them (have you ever seen the serial number of a bar on a receipt from a retail bullion dealer? Of a bar worth under $500?).

A $5 silver bar with a serial number (back in BD's early days) would generate $.10 of profit on Nucleo. That's not enough to record the bar number.

I do highly recommend people record the serial numbers of bars they have (and store them somewhere OTHER than where you metal is stored).

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nobody

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Reply with quote  #7 
For retail, I 95% agree (but I'd suggest that for large value bars, BD would still have inventoried - and they most certainly sold those).

For exchanges, I don't know of one that doesn't keep a full inventory lifecycle - that's just where the risk lives on an exchange / central counter party, so it's what you track.
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taratot

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Posts: 20
Reply with quote  #8 
Quote:
Originally Posted by nobody
Many of us ordered serial#'d product.   Even in fungible form, any good dealer would keep records of serial numbers coming in and going out of lots corresponding with orders and draws.

A shiny nickle says they don't match up or even track in any correlative fashion.


-n


I was a customer of BD for 5 years and can never recall them offering bullion with specific serial numbers. Those bars I received which do happen to have serial numbers (mainly Engelhard 10oz bars) did not come with the accompanying documentation of such on the invoice.

GWest's original speculation here is very intriguing, I have to say.
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ChevyRacer

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Posts: 96
Reply with quote  #9 
"BD is not saying that the metals were never purchased. They are saying that BD had no contractual duty to purchase metals FOR THE CUSTOMER. Hence, any metals actually purchased with the customer's money were not the customer's property. Brilliantly contrived flexibility - and retroactively deployable as well."

Well, they can SAY whatever they want. But if thousands of customers all say that they believed that Charles McAllister was using their money to buy bullion for them, and one person--Charles McAllister--says that no, actually, you were just sending me money to use as I wished, a grand jury can say that Charles McAllister is lying and should be indicted for fraud and grand larceny.

I understand that the point you're trying to make relates specifically to the bankruptcy proceedings (or at least I think that's what it relates to), but the fact of the matter is, the money and the metal are basically gone. The only matter that really needs to be resolved is the fate and future residence of Charles Hadley McAllister.

Everyone should be contacting Travis County District Attorney Rosemary Lehmberg about this matter.
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