Agents Raid Investment Firm Accused of Bilking Customers Out of $10 Million

An El Toro precious metals investment company suspected of bilking investors out of an estimated $10 million has been raided by local and federal investigators.

Raids by the Newport Beach Police Department’s Economic Crime Unit, the Orange County district attorney’s office and U.S. postal inspectors were prompted by numerous customer complaints, the agencies said. Thursday’s raids took place at the El Toro and Newport Beach offices of Capital Coin and Bullion.

Capital Coin, which relied on telephone salespeople to reach customers across the country, offered investors a chance to own silver, gold and platinum by making a 15% down payment, investigators said. However, when investors tried to liquidate their accounts, their money allegedly was not returned and they eventually complained to state and federal officials.

Armed with a search warrant issued by Orange County Municipal Judge Selim S. Franklin, investigators seized about 10,000 documents from a sales office located on San Miguel Drive in Newport Beach. The manager and bookkeeper at that office later led investigators to North American Industries, Capital Coin’s parent company. North American’s office is on El Toro Road in El Toro.

James Harvey of Laguna Niguel is listed as president of Capital Coin and North American, according to Newport Beach Police Detective Mark Fisher. Fisher said Harvey arrived at his office during the search but was not arrested.

Richard O. Kelly, who is believed to be in Birmingham, Ala., apparently founded the company. Fisher said he is not sure about Kelly’s current status with the firm.

“Newport Beach police and the district attorney’s office are going to work the case until it can be turned over to the Postal Service to be indicted federally,” Fisher said in an interview Monday. The first step will be to review all the records seized last week, Fisher said.

He said the Internal Revenue Service, which sent an agent on the raid, wants to audit the records. Investigators from the Commodity Futures Trading Commission and the California Department of Corporations also are involved, Fisher said.

Capital Coin opened an Irvine office in 1984 under the name of Capital Trust. In late 1985, the company opened a Newport Beach office, but that office closed about two months ago, Fisher said.

In November, 1986, Capital Coin filed for bankruptcy protection in a Dallas federal court. No details about the company’s financial condition will be available until copies of the bankruptcy court records are obtained, Fisher said.

Kacy McClelland, head of the Postal Inspection Service’s Santa Ana fraud team, said it appeared that about 1,000 customers had sent money to Capital Coin. One investor alone apparently lost $140,000, McClelland said.

Company officials could not be reached for comment Monday.