Fallout from Monex $290,000,000 Fraud Charges on ANA, PNG

Updated 9/13/17 by Larry Shepherd

 

*Crum donates $50,000 to ANA
 | ANA Official Post | 
Adam Crum, owner [sic] of Monaco Rare Coins, donated $50,000 to the American Numismatic Association….. Accepting on behalf of the ANA was Executive Director Kim Kiick. Photo source: Google

Potential Black Eye for ANA, PNG*

“Allowing organizations such as Monex/Monaco to enhance their reputation and familiarity through association with the ANA puts the ANA in a position of implied endorsement, even if unintentional.”

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CFTC Files Complaint Against Monex Alleging $290 Million Fraud

One of the largest cases of fraud the CFTC has ever dealt  with, according to new lawsuit filed against three Monex companies

 

By CoinWeek News Staff ….

On Wednesday, September 6, the Commodity Futures Trading Commission (CFTC) filed a civil injunction against three associated precious metals trading companies and the father and son partners who run them. The three companies, based out of Newport Beach, California, are Monex Deposit Company, Monex Credit Company, and Newport Services Corporation. Michael Carabini and his father, Louis Carabini, are also charged. The CFTC filed the injunction in the U.S. District Court for the Northern District of Illinois.

The suit alleges that Monex and its affiliated companies and agents defrauded customers of “hundreds of millions of dollars”. According to Enforcement Director James McDonald, the case against Monex represents “one of the largest precious metals fraud cases in the history of the Commission.” ( Highlights are my emphasis)

Go here to read the full Coin Week story:  http://www.simcocoins.com/beware-slick-cable-tv-advertisements-promoting-investment-gold/

The Principals of Monex also own and operate Monaco Rare Coins

Also from Coin Week: “According to the Better Business Bureau website, Michael Carabini is also listed as President of Monaco Rare Coins*. As part of our initial investigation, we reached out to Adam Crum, Vice P, with questions relating to the lawsuit and its potential effect on the company. General Counsel of Monex Greg Walker replied on Crum’s behalf that he did not anticipate that Monex’s legal issues will impact Monaco.”

By: Larry Shepherd, SIMCO, 9/7/17

I would advise “buyer beware” regarding that last comment. Both companies share the same ownership and physical address in Newport Beach, Ca.  There would have to be a huge 180 difference between the two commonly owned companies in operating and sales practices to support such a statement.

Pictured: Monaco Rare Coins President Michael Carabini (left) with Jim Hughes and Monaco Vice President Adam Crum (right). Photo source: Google

Monaco Rare Coins is a major sponsor of American Numismatic Association (ANA) coin shows and events (see photo above, right). Adam Crum, Monaco Rare Coins Vice President,  and PNG member #620, finished first runner-up in the most recent ANA Board of Governors election, and is first in line to fill any vacancy on the ANA Board, should one occur during the current two year term.

Issues for ANA and PNG

I have often contended that one of the most severe weaknesses of the numismatic industry and the associations that are supposed to oversee and protect the public and the industry is that far too often they all look the other way on issues of ethics and fraudulent behavior. In many cases this blindness seems to correlate closely with the size of the donation checks received by those associations from the offending parties, or how much money the offenders spend within the industry.

Unless a rock solid case can be made that Monaco Rare Coins operates with total independance from Monex, and has far more ethical policies and practices than its sister Carabini company, this bombshell black eye could raise serious questions about how much industry watchdogs the American Numismatic Association (ANA) and the Professional Numismatists Guild actually pay attention to their own Policies and required Member’s Codes of Ethics.

It is no secret within the hobby and the dealer community that many questions and concerns  have been raised about these two companies practices, as well as others that operate like them. Anyone who wanted to look could easily have found an abundance of critical articles on the internet that would have raised red flags about both Monex and Monaco. Even so the ANA and the PNG have stayed conveniently blind in regards to Monaco and the Carabinis.

The ANA and the PNG, can argue, and most assuredly will, that Monex is a separate company from Monaco, but unless they have faith that one Carabini owned and operated company is a sow’s ear, while down the hall the other Carabini owned and operated company  is a lily white silk purse, they simply have to disengage themselves from anything connected to the Carabinis. Anything less would be disingenuous and a dereliction of their duties to their members and the general public.

You can see examples of easy to find complaints about the Carabinis, Monex, and Monaco Rare Coins at the bottom of this article, and a lot more by Googling any of those names.**

In a story published in Coin World on September 13, 2017, Coin World Senior Editor Paul Gilkes wrote:

“The CFTC seeks forfeiture of proceeds from the alleged fraudulent sales, restitution for the benefit of defrauded pool participants, civil monetary penalties, permanent registration and trading bans, and a permanent injunction from future violations of federal commodities laws.

“The complaint identifies a number of specific cases involving Atlas” (Monex) “account holders:

➤ ”A 61-year-old Charlotte, North Carolina, woman invested $173,500 from the $400,000 she received from her son’s government-issued insurance policy after he was killed while serving with the U.S. military in Iraq. Almost her entire investment was lost.

➤ ”A 77-year-old Texas man invested his and his wife’s entire life savings of $400,000. In April 2013, the client received back only $8,900 from his investment.

➤ ”A 54-year-old Newport Beach, California, woman invested her entire $1 million in retirement savings in August 2013. Within 18 months, the Atlas account lost $760,000 from the initial investment.”

You can read Paul Gilkes’ entire Coin World article here: www.coinworld.com/news/precious-metals/2017/09/monex-targeted-in-290-million-dollar-fraud-complaint.html

Yet the ANA, run by Kim Kiick and a nine person Board of Governors, has continuously accepted large donations, advertisements and sponsorship checks from Carabini owned Monaco Rare Coins without apparently raising any questions; counter to ANA policies.

Allowing organizations such as Monex/Monaco to enhance their reputation and familiarity through association with the ANA puts the ANA in a position of implied endorsement, even if unintentional. The ANA Board must take immediate action to disaccociate the ANA from Monaco and they should seriously consider refunding all monies received to date from companies owned by the Carabinis.

 

Excerpted from the official ANA Policy and Proceedures Manual:

“All advertisers and the designated “principal officer” must agree to comply with the ANA Codes of Ethics, as amended from time to time and posted at www.money.org; to comply with all advertising requirements as outlined in published advertising rules and procedures; and to include the affiliated ANA Member’s name and ANA number on all advertisements in The Numismatist.”  The operative relevance here is the requirement to comply with the ANA Code of Ethics, which can be viewed on the ANA website, www.money.org.

Further from the ANA Policy Manual:

“The Executive Director will promptly notify the President of any proposed donation of $10,000 or more, whether in cash, materials or kind.

“In addition, the Executive Director will promptly notify the Board of Governors of any proposed donation of $20,000 or more, whether in cash, materials or kind for board approval.

“On amounts under $20,000 the Association reserves the right to decline any donation in part or in its entirety at the sole discretion of the Executive Director. ” (italics added)  The current ANA Executive Director is Kim Kiick, pictured above accepting a $50,000 check from Monaco’s Adam Crum, just one of many Monaco contributions to the ANA.

The ANA Policy Manual goes on to state, “On amounts of $20,000 or more, the board will evaluate them on a case by case basis and reserves the right to decline any donation in part or in its entirety.”

For sponsorships the ANA Policy manual states:

“The Executive Director will notify the Board of Governors of all sponsorships of $10,000 or more.

“The Association reserves the right to decline any particular sponsorship in its entirety at the sole discretion of the Executive Director.” (Kiick again)

These policies were established for the purpose of avoiding embarrassment to the ANA from questionable associations.

It is hard to not conclude that Kiick either did not do her homework, failed to notify the  ANA Board of potential policy violations, or that she and the Board decided the dollar amount of donations and sponsorships were sufficient to override the Policy Manual. Unless it’s the latter, the Board should hold Kiick’s feet to the fire for this omission.

For the Professional numismatists Guild (PNG), run by Executive Director Robert Brueggeman, and who’s motto is Knowledge, Integrity, Responsibility, the issue could be just as sticky. The PNG prides itself in telling the public they should look exclusively to PNG Dealers with confidence and trust, and supposedly screens dealers for those attributes.

Crum is PNG membership #620, and the PNG’s implied endorsement of him, and by association the company and principals he works for, could turn out to be an embarrassment for Brueggeman, the PNG Board, and the entire PNG Membership.

If  the ANA and the PNG are to have any credibility on the subject of consumer protection, they simply have to do a far better job of enforcing their own policies, and not just paying lip service to them while purposely keeping their heads in the sand. 

The entire numismatic community would be far better today, and far ahead,  if we had all worked together over the preceding years to weed out the unethical practices and scummy dealers that undermine public confidence and unfairly tarnish our hobby, our business, and all our reputations.

We, as an industry,  simply should not tolerate the behavior of dealers and companies whose business models are to abuse, exploit and rip-off the public. No one in our hobby/industry should take a blind eye to the unscrupulous practices that defraud retirees and the elderly from their savings. These are unconscionable  acts that hurt all of us and we have to stop tolerating it!

 

My (Larry Shepherd) Advice on Buying Gold Coins for Savings or Investment

Beware of slick, glitzy advertisers on cable TV shows like CNN promoting investment in gold or silver and putting gold into your IRA. Many of these advertisers use low price gold as a lure to get your contact information so they can aggressively telemarket you into other related, and more risky, investments at grossly inflated prices.

High pressure salespeople will aggressively and persistently call people who contact them initially to purchase gold. They use gold as a loss leader, while their real objective is to gain access to the caller’s contact information so they can arm twist and defraud them out of their savings. They especially target retirees and the elderly, which in my opinion makes them about as low of a life form as possible.

If you want to purchase gold or silver, make sure you are dealing with a legitimate dealer who does not try to talk you into buying something else that you don’t want. And always be sure to take delivery of the product.

 

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**Examples of articles easily found on the internet that are critical of Carabini, Monex, and Monaco:

From: Whoscammedyou.com:

Louis E Carabini

Inclined to Thievery

Newport Beach, California

Louis Carabini is a real life super-villain. Louis Carabini is the owner and founder of Monex. He originally founded Monex as Pacific Coast Coin Exchange in 1967 for the purpose of selling precious metals to the public, both on leverage and for delivery. Carabini and his “Monex Enterprise” have been sued by hundreds of Monex customers and various U.S. and Canada regulatory agencies numerous times in federal court, various state courts, Canada courts, and CFTC court on a variety of allegations including securities fraud, commodities fraud, common law fraud, breach of contract, racketeering, federal tax avoidance, fraudulent conveyance, unfair competition, false advertising, bucketing, breach of fiduciary duty, and wrongful termination. Claimants repeatedly allege that the Monex business model relies heavily on marketing the Monex investments to un-savvy investors, especially the elderly, and making promises of massive profits through fraudulent advice and false advertising. When the vast majority of these investors discover that they have lost most or all of their investment capital and wish to seek a recovery, they face an opponent with a highly experienced legal team and unlimited financial resources. Louis Carabini is believed to carry a liquid net worth of approximately $2 billion as a result of profits from Monex. Louis Carabini has bankrupted THOUSANDS of people, pushed elderly people out into the streets and even caused people to commit suicide after having their life savings wiped out.”

From: www.ripoffrerort.com:

Monaco Financial is a rare coin business out of Long Beach California that also go by the name of Monex. The company is located at 4900 Birch Street, Long Beach,  California. They are a high pressure sales company with only one thing in mind is to take your money no matter by what means.   This is a rare coin company and the sales person that is your representive is always calling you with this deal or that deal. The most important thing is to get you to sign a finance agreement if you can not pay for a coin but just put a down payment on a coin is to charge you interest and they matain complete control of your coin that you bought till it is payed off.   That’s like buying a car by getting it financed and never taking it home till you pay the car off. You are charged interest even though you never see the rare coin you bought till paid in full. You buy a coin for $30,000 may put down $20,000 dollars and owe $10,000 but if you decide to cash in your coin you get a penalty stuck for 15% on the $30,000 dollars you bought it for even though you have paid $20,000 on your loan, all you get back is $15,500 dollars of you money that you have invested, even though you have been paying %5.99 interest on your loan.  I bought several coins through Monaco and was promised that what I invested I would recive back when I got ready to sell what I had bought from them.  Wrong when you try to question them they will never return your call or you email or even a written letter. I was scammed for over $20,000 dollars thinking and being promised to get my money back that I invested with Monaco. Beware before sighing a contract for financial aid to buy a coin because your down payment will be less of the over all price and you don’t even get a kiss.  Stay away from them and their smooth advertisements and keep you money in your pocket not theirs.”

Note: These two articles were cut and pasted from the internet. Neither SIMCO Numismatics, nor Larry Shepherd make any assertions to their accuracy, truthfulness or validity.