El Toro Metals Company Raided; Fraud Suspected

Law enforcement agents from the Southern California “boiler-room” task force Tuesday raided an El Toro precious-metals firm, seeking evidence to substantiate allegations that the company has defrauded thousands of investors of $6 million to $9 million in an extensive mail and wire fraud operation.

Two dozen investigators from several law enforcement agencies, backed by a federal search warrant, stormed BROCK International at 10 a.m. and spent hours combing the firm’s files.

No criminal charges were filed Tuesday, but the company president and another executive were arrested for violation of bail in an unrelated federal mail fraud case.

Sources said Tuesday that BROCK--”Better Returns, Overseas Commerce Knowledge”--was accused of selling European strategic-metal options by attracting clients through newspaper and TV ads and seminars. Selling European commodity options in the United States is illegal under federal law.

BROCK officials could not be reached for comment Tuesday.

One BROCK salesman, Richard Foltz of Huntington Beach, said he was sitting at his desk Tuesday morning, talking by phone to a client in Connecticut, when “a federal agent came up and showed me his badge and said, ‘Follow me.’ ”

Foltz, who was questioned but not detained, said he was hired just 10 days ago.

In all, the names of the 25 company employees were run through law enforcement computers Tuesday to check for arrest warrants. One employee was held on two outstanding traffic warrants. Four were detained, task force officials said, to help supervise the collection of evidence.

In addition, Fred Terr, the company’s president, and Raymond Girard, the trading director, were arrested for violating terms of bail in a mail fraud case involving Crandall Financial, a defunct Orange County precious-gems investments firm, said Sharon McCaslin, a special assistant to the U.S. attorney.

Terr and Girard--who violated terms of their bail, officials said, when they attended a sales seminar in Reno last weekend--”are on their way to Terminal Island (prison),” said McCaslin, who is assigned to the Crandall case.

Foltz said many BROCK salesmen invested their own money in the company--”and it’s unfortunate,” he said, “because the company owes me money in commissions.”

The boiler-room task force, officially called the Southern California Investment Fraud Task Force, was formed as part of a bid to wipe out illegal telephone marketing activities. Tuesday’s raid was part of the sweeps against high-pressure sales operations and unlicensed commodities traders. Such boiler-room operations flourish predominately in California and Florida.

Investigators for the task force have said that the group is monitoring 150 telemarketing operations in Southern California and that most of them are in Orange County.

The group that raided BROCK included U.S. postal investigators, Newport Beach police, Orange County Sheriff’s Department deputies and lawyers from the Orange County district attorney’s office and the federal Commodities Futures Trading Commission.