Glenn Beck's Golden Fleece
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Glenn Beck's Gold Gurus Charged With Fraud

In 2010, we revealed how Beck and other TV talkers hawked for Goldline. Now the company's execs are charged with fraud.

| Wed May 19, 2010 3:00 AM EDT

GOLDLINE'S ASSERTIVE TACTICS also extend to its efforts to protect its image. In response to the disgruntled consumers who have congregated on Ripoff Report, it has joined the site's "Corporate Advocacy Business Remediation and Customer Satisfaction Program," which has allowed it to bury the negative comments. Its own customer review site, goldlinereviews.com, features only positive feedback. "I am writing to you about my account manager," writes Y.L.C. from California. "He is the very definition of a caring and polite professional, he is in fact the main reason I chose Goldline (and Glenn Beck)."

Goldline has also tried to keep unhappy customers from making their stories public. Take John Quirindongo, a 77-year-old former New York City postal supervisor. Quirindongo has spent nearly four years trying to get compensation for the money he believes he lost trying to buy platinum bullion from Goldline. When I visited him in Fort Lauderdale, Florida, he was reclining on a sofa, laptop open. A box with two rolls of gold coins sat on a table. His much younger Russian wife flitted around, pouring syrup on a blintz for me before darting off to her job at a children's clothes store. Quirindongo's vision is mostly gone. He relies on a walker to get around and a nebulizer to breathe. His hearing is going, he's missing a couple of bottom teeth, and he gets a little confused sometimes. But when it comes to Goldline, he's lucid—and very angry.

Quirindongo's saga started in 2006, when a mortgage broker talked him into taking out a $100,000 subprime loan on his condo, which he owned outright. After paying off his car and some bills, Quirindongo decided to invest $70,000 in platinum. He called Goldline and ordered 54 one-ounce platinum American Eagle bullion coins. After the company received his wire transfer but before the sale was confirmed, a salesman called, telling him he needed to "diversify" his portfolio and pushing him to transfer $34,000 into Swiss 20-franc gold coins.

Even though Goldline's disclosure materials do mention that its sales reps may call to "discuss other products which carry a higher spread such as the European gold francs" before an order is finalized, Quirindongo was caught off guard. He says he argued that platinum was a better investment, but eventually caved and bought the francs.

Looking on eBay, Quirindongo found similar looking coins selling for far less. He says he called to complain every day for a week, but the Goldline rep insisted he should let his coins gain value for 18 months. Quirindongo missed the weeklong window for a refund and then spent the next year and a half letting his order appreciate. But he was still mad, and in May 2007, he sold the platinum part of his order back to Goldline, making about $219, all of which was eaten up in commissions and storage fees. The real shock came a few months later, when he tried to sell back his gold coins and discovered the buy-back price would leave him more than $10,000 in the hole.

After Quirindongo complained to the American Numismatic Association, of which Goldline is a member, the company offered a partial refund, so long as he signed an agreement promising not to speak publicly or contact any consumer or government agencies. Quirindongo refused. After he rejected a full refund, Goldline tried to close the matter by sending him his gold coins, which now sit partly unwrapped in his apartment.

Still bitter that he was talked out of his original platinum order, which would have appreciated significantly, Quirindongo has continued to bash Goldline. He has posted long online tirades and is currently pursuing a RICO case (an earlier federal suit he'd filed on his own was tossed out). Posting on Ripoff Report, a Goldline representative accused Quirindongo of trying to "extort" money from the company. Quirindongo says he is fighting mainly for his wife Irina's sake: His monthly postal-service pension will die with him, and her earnings won't cover his mortgage and metals misadventures. He worries she'll end up on the street. "I feel like a real chump now," he says. "The last few years have been absolute torture for me."

Quirindongo wasn't the only person I came across who'd been offered a deal in exchange for keeping quiet. California residents Peter Kim and Kyoung Park-Kim bought about $35,000 in 20-franc coins from Goldline in 2007 after listening to the company's radio show, The American Advisor, which airs on more than 100 stations. They complained about overpaying, and Goldline offered to refund most of their money if they'd sign an agreement like the one offered to Quirindongo. The couple refused and sold the coins on their own, losing between $1,000 and $2,000. "At least we're young, so we can recoup some time and make money," says Kim. "But senior citizens, they don't have that luxury of recouping their investment." (At press time, Goldline had not responded to a request for comment on Kim's and other individual consumers' complaints.)

Goldline's unhappy customers have few options. They can't take the company to court, due to a mandatory arbitration clause in its contracts. And even as it plays up fears of big government, Goldline neatly slips between the regulatory cracks. While it describes its coins as investments, it's not licensed as an investment company. Its salespeople are not licensed as securities brokers or investment advisors and therefore are beyond the reach of state or federal agencies charged with keeping brokers honest. When Quirindongo complained to the FTC, Florida securities regulators, and the Department of Justice, he says, he got the same response: "Everybody said, 'That's gold.' It's like stamp collecting. It's unregulated."

"Trading in coins has been an area that's very, very difficult for regulators to wrap their arms around," confirms Maine securities administrator Judith Shaw. As the economy turned sour in 2008, Shaw's office saw a large uptick in the aggressive telemarketing of gold, prompting her to issue a consumer advisory about "potential scams and pitfalls" being perpetrated by "numerous shady companies operating on the margins of this industry."

There has been one successful state action against Goldline. In 2006, the children of an octogenarian Missouri woman complained to the state securities commissioner that Goldline had persuaded their mother to invest about $230,000 in gold coins and antique paper currency worth half as much. The state determined that a Goldline salesperson had acted as an unlicensed investment advisor when he encouraged her to liquidate an annuity to buy coins. Goldline agreed to refund $217,000 to the woman.

Cosgrove, who represented Goldline in the Missouri case, cautioned me not to see it as representative of the company as a whole. He said the salesperson who prompted the complaints had already left the company by the time Goldline learned about the problem.

Beck has never acknowledged any of the complaints against Goldline, just as he's shrugged off concerns about his cozy relationship with the company. If anything, his endorsement of Goldline has taken on a new edge of defiance. Responding to Rep. Weiner's accusations in May, Beck accused him of McCarthyism and asked his fans to send in images of the congressman "with a wiener nose." As he railed against the "assault on my advertisers and me" on his radio program, he still managed to sneak in a plug, noting that he had 15 or 20 percent of his investments in gold—"From Goldline. Now, you tell me. If I'm such a scam artist, why would I be scamming myself?"

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