Del Mar Metals Trader Tied to Firm Where $6 Million Is Believed Missing
Eugene Cobb, owner of a Del Mar precious metals trading firm now under investigation, earlier this year was associated with an Orange County commodities firm that authorities believe had more than $6 million in unaccounted-for investor funds when its successor company abruptly closed six weeks ago.
The San Diego Boiler Room/Investment Fraud Task Force recently opened an investigation into Cobb and his Pacific Currencies in Del Mar after complaints by investors that they were unable to withdraw their money.
Cobb was associated with B.N. Goldberg & Associates in Laguna Hills earlier this year. B.N. Goldberg was later known as M.S. Sawyer in Irvine. That firm abruptly closed its doors Sept. 26 when an irate out-of-state customer brought his lawyer and a private investigator into the firm’s office and started taking photographs of about 20 salespeople as they solicited customers by telephone.
Authorities in Orange County are now looking for the two firms’ principals, Barry N. Goldberg and Mark Ott. The firms reportedly took in $6 million in the past year.
Last summer, Cobb persuaded many of his clients at B.N. Goldberg to withdraw their funds and invest in Cobb’s newly opened Pacific Currencies, according to interviews with those investors.
Cobb later called those investors and asked for additional funds, his former clients said.
“He wanted more money,” said one investor from the Midwest who asked to remain unidentified. “Eugene sounds like he knew what he was talking about--he was always on an ‘up’ whenever I talked to him on the phone.”
Another investor in B.N. Goldberg said Monday that Cobb “tried to get me” to invest in Pacific Currencies. Cobb, said the former investor, “told me something was going on (at Sawyer, Goldberg’s successor firm) . . . he wanted me to cash out and invest” in Pacific Currencies.
Cobb, 23, said in an interview last week that he operates a legitimate business and that he had bought “thousands of dollars of physical metal.” He said he could verify the purchases and added that he had established hedge accounts that contained his clients’ funds.
On Monday, Cobb denied that he was an employee of B.N. Goldberg and that his association with the firm was only on a “consulting basis . . . for a minute period of time.”
He also insisted that “to the best of my knowledge,” his investors have “been taken care of.”
Cobb’s firm has about 60 clients who invested an undetermined amount of money, according to former employees and law enforcement officials. His Del Mar office boasted a bank of 22 telephones used by sales staff to solicit investors.
Neither Pacific Currencies nor its predecessor, Pacific Enterprises, is registered with the Commodities Future Trading Commission (CFTC), according to Art Salzberg, CFTC counsel in Los Angeles.
Any company selling futures contracts, or accounts that promise to deliver commodities in the future, must be registered with the CFTC.
Former Pacific Currencies employees said that the Del Mar firm indeed sold one-year contracts. “At the end,” said one former worker, investors “could either renew or take physical delivery” of the commodity.
Pacific Currencies registered with state authorities as a telephone solicitation firm on Oct. 2, about three months after it opened for business, according to the state attorney general’s office. State law requires telephone solicitation companies to submit their sales scripts and a list of their sales staff to authorities.
Cobb said Monday he submitted the registration information with state officials “on time. If they’re that backed up, I can’t be responsible for that.”
At least eight employees either quit or were fired two weeks ago after they voiced their suspicions about Cobb and Pacific Currencies, according to several former employees. Cobb on Monday reiterated his position that he dismissed the workers because they were spreading “fraudulent rumors.”
“I knew something fishy was going on, and I didn’t want to be involved when and if the FBI came in,” one former employee said. “I knew the funds weren’t being used properly.”
Another former worker said that Cobb was “constantly taking the client files out” of the trading room and transferring them “to a different office. He was very secretive; he didn’t want anyone to know what was going on.”
Investors trying to withdraw their funds ran into resistence beginning in September, according to several former workers. Two investors have sued Cobb, claiming they were unable to withdraw $22,110 owed to them. They alleged that Cobb used company funds for his personal use.
Cobb would make “excuse after excuse” to the anxious investors, one former employee said.
The employees left after concluding that “this wasn’t the way a business should be run,” recalled one former worker. “We were lied to about what the company was going to do.”
Several of the former employees once worked for First International Metals Exchange, a La Jolla precious metals trading firm shut down by authorities in June. Among them were Andrew Borthwick, FIME’s principal who worked at Pacific Currencies under the name Andrew Kline, Kathy Collins, Simon Lau, Al Irwin, Dick Hubbard and Bill Slaughter.
One former employee said that the former FIME staffers left Pacific Currencies en masse after they realized that “the company wasn’t being run correctly.”
The FIME contingent, cognizant of the Boiler Room Task Force’s investigation of their former company, wanted to work for a “strictly legal” firm, said one former Pacific Currencies employee.
Cobb has registered two other firms in his name. In August, 1985, he registered Genius International in San Clemente with the Orange County Clerk’s office, according to records on file in that office.
And, in September, he registered the fictitious name NiGene Enterprises in San Diego. NiGene Enterprises, according to former Pacific Currencies workers, was going to be Cobb’s clothing business.
