The Federal Trade Commission has filed a civil complaint charging a Costa Mesa-based coin dealer with misrepresenting the value and investment potential of its coins, leading to possibly millions of dollars of customer losses.
In a complaint filed Monday in U.S. District Court in Los Angeles, the FTC claimed that Numis Group Inc. and three executives associated with it violated federal law by falsely claiming that their collectors' coins were a low-risk investment and that customers could reasonably expect to resell the coins at a substantial profit.
The FTC said the coins, in fact, were typically worth only 5% to 10% of the value that Numis claimed. Typical collectors' coins marketed by Numis included the ancient Roman double denarii coin and the Chinese 10-yuan Marco Polo coin, FTC staff counsel Robert D. Friedman said.
"This is one of the largest such schemes that we've dealt with," said Diane Coleman, senior counsel for the state Department of Corporations. That agency, along with several other federal and local agencies, seized on Tuesday morning documents and coins from Numis Group and three other companies alleged to be involved in the scheme.
Meanwhile on Tuesday, the district court appointed a temporary receiver to take control of the assets of Numis and Costa Mesa-based Schoolhouse Coins Inc., which the FTC alleged to be a predecessor firm to Numis Group.
The action by the FTC and other agencies represents a continuing crackdown by federal, state and local authorities on what they claim to be a growing number of "boiler room" operations in Southern California selling dubious investments by telephone to unsophisticated investors.
Named as defendants in the case were Crofton M. Cooper, alleged to be president and sole shareholder of Numis Group; Wayne Pedersen, alleged to be a Numis senior account executive, and John Pace, alleged to be sole shareholder and director of Schoolhouse, which was also named as a defendant.
Numis officials could not be reached for comment late Tuesday at their offices in Costa Mesa. A security officer there said the firm will be closed for 10 days.