12 Arrested in Task Force Raid on 2 Precious Metal Brokerages

Twelve employees at two affiliated Carlsbad precious metals commodities brokerage houses were arrested Wednesday in a raid by federal, state and local law enforcement officials on misdemeanor charges of illegally selling precious metals contracts.

An arrest warrant also has been issued for Lincoln Anthony Berridge, the owner of Coastal Equity Inc. and Coastal Investment Services, on charges of grand theft and illegal telemarketing of precious metals contracts. San Diego County Deputy Dist. Atty. Robert Sullivan said Berridge, 23, had been informed of the warrant and on Wednesday afternoon was considered a fugitive.

Several Coastal investors have been unable to recover their funds, according to an affidavit filed in Superior Court by the San Diego district attorney’s office in support of a criminal search warrant. The affidavit accused Berridge of using investor funds for personal use.

The raid, conducted by 24 members of the San Diego Boiler Room Investment Fraud Task Force, could result in the brokerages closing down. Investigators, however, did not seek a court injunction forcing them to close, Sullivan said, as the task force has done in most of its six previous investment brokerage busts.

The 12 employees, who were led in handcuffs from Coastal offices Wednesday afternoon after several hours of questioning, were booked at the county jail in Vista and released on their own recognizance, Sullivan said. Those arrested did not have brokerage licenses as required by the state attorney general, Sullivan said.

The sudden appearance of armed law enforcement officers with windbreakers stenciled “FBI” and “Peace Officer” shocked nearby office workers. “I thought, God, look what’s going on. ‘Look at this, you guys,’ ” real estate broker Sandy Woolcott said to fellow workers who witnessed the arrests.

Investigators seized records at both Coastal locations and at a Carlsbad bank branch office where Coastal kept its accounts. Until the records are examined, the total dollars invested at Coastal will remain unknown, Sullivan said. Coastal has been open four months and during one day took in $350,000 in investor dollars, Sullivan said

Precious metals futures typically involve highly leveraged contracts to buy or sell metals at specific dates. The contracts are often sold in “telephonic boiler rooms,” by brokers calling nationwide to investors listed on “lead sheets.” The brokers often apply pressure tactics to make the sales, Sullivan said.

Formed in 1985, the boiler room task force consists of agents from the district attorney’s office, Internal Revenue Service, FBI, U.S. Postal Service and local police.