Fraud Agents Seize Records in 5 Raids in Metals Case

An army of 60 state, federal and local law enforcement agents swooped down Thursday on two Orange County homes and three precious metals companies whose owners are believed to have bilked thousands of investors out of millions of dollars.

In five simultaneous raids, investigators seized books and records from the three related companies but made no arrests on fraud charges. They were unable to speak to the man they believe heads up all three companies, James Boone of Buena Park, who was vacationing in Las Vegas.

Raided were World Equity Mint in Anaheim, Associated Miners Group in Santa Ana and Mint Management in Tustin. At the Mint Management office, Tustin police arrested two men on outstanding warrants unrelated to the precious metals business.

Phone Salesmen

The companies rely on dozens of telephone salesmen to sell contracts for gold, silver and platinum to customers across the country. Investors buying such contracts agree to take delivery of the metal at a future date, with their profits or losses depending on the change in the price of the metal while they hold the contract. Investors rarely take delivery of the metal itself.

Authorities, who said the raids were prompted by investor complaints from across the country, believe that the companies not only failed to buy any metals for their customers but used the money collected from new customers to pay off old ones, according to an affidavit filed in Municipal Court.

Boone was described by officials and in court documents as a man who leads a lavish life style and is frequently accompanied by a bodyguard. Authorities forced open the door of his well-appointed Ridglea Avenue home in Buena Park Thursday morning and removed boxes of books and records.

“This is the biggest raid we’ve done so far,” said Patrick Geary, chief of the district attorney’s major fraud unit. “We hope to get a lot of information from the records seized.”

Authorities described the raid as part of an ongoing state, federal and local crackdown on Orange County’s precious metals telephone sales companies. They said one reason that so many officers participated in the raids was so that all the agencies involved could gather evidence. Orange County, home to about 50 such companies, is considered the precious metals fraud capital of the country, according to a federal investigator. Agencies participating in Thursday’s raid were members of the U.S. attorney’s office boiler room task force in Los Angeles. They acted with search warrants issued by Municipal Judge Jacquelyn D. Thomason.

At Mint Management in Tustin, investigators arrested Bernard Woolf, believed to be the second in command at the company, and Rodney Benjamin Jr., a salesman, on outstanding traffic warrants. Both men posted bail and were released.

Investigators also searched Woolf’s Dana Point home.

Boone’s lawyer denied any wrongdoing.

“The companies will be open on Monday,” said Allan H. Stokke, the attorney, noting that they were scheduled to be closed today, Good Friday. “As far as we are concerned, the business is still in operation.”

Stokke said all of the customers have been paid and “we are not aware of any people who have been hurt.”

He said all of Boone’s firms are properly licensed with the state attorney general’s office to sell precious metals by telephone. Stokke said that he spoke with Boone on Thursday and that Boone said he plans to return to Orange County on Monday.

But information in the affidavit paints a different picture of Boone’s operations. Several investors reported that they have been unable to recover the money they invested with Boone’s companies. One Gaithersburg, Md., man told authorities he bought $12,000 worth of contracts for platinum and has been unable to recover any of his money.

An informant known only as “George Washington” told one federal investigator that Boone takes 50% of the funds collected by all the companies. The investigator said it appeared that the companies are grossing $50,000 to $100,000 a week.

“The money that Boone takes in is split between operating expenses, supporting his lavish life style and funds that he hides in anticipation of police investigation,” the affidavit quotes “George Washington” as saying.

Eight salesmen were working in the smoke-filled sales room at Mint Management when investigators swarmed into the office. “As far as I’m concerned, I’ve done nothing wrong,” said a salesman as he later waited outside for his paycheck. Inside, a secretary was typing up the checks as investigators interviewed the employees.

The salesman, who declined to give his name, said he was earning about $2,500 a month on commissions.

An investigator from the California Department of Corporations said he planned to review Mint Management’s records because “these could be securities contracts” possibly in violation of state law.

Operating out of Mint Management’s office as a related company, Liberty Mint Inc. registered as a telephone sales company with the state attorney general’s office on Jan. 1. Although Liberty Mint’s registration form said it purchases metals from Bullion Services Inc. in Las Vegas, the president of that company denied any business relationship with Liberty Mint, the affidavit said.

Other firms believed to be operated by Boone and currently under investigation are World Equity Mint, Pacific Exchange Mint, Ashley Financial Corp. and Midwest Royalty Reserves, investigators said. All are in Orange County.

“We have networked them (Mint Mangement) to about 12 other boiler rooms, most of which have shut down,” said Larry Lambert, a fraud investigator for the district attorney’s office. He said that even after records are seized, companies frequently reopen under a new name with new phone numbers.

Fraud investigators from the Orange County district attorney’s office, U.S. Postal Inspection Service, state attorney general’s office, California Department of Corporations and the Orange County Sheriff’s Department participated in the raid. Anaheim, Newport Beach and Tustin police officers assisted.