Precious Metals Firm Shut Down : Newport Beach Operation Allegedly Lacked a License

A Newport Beach precious metals firm that has been the subject of investor complaints for the past two years was closed down Thursday for allegedly operating without proper registration since 1986.

William D. King, the founder and president of Precious Metals Accumulation Corp., or Premaco, was arrested on charges of operating without a telemarketing license. Eight telemarketing brokers were arrested on charges of working for an unlicensed telemarketing company.

Premaco, founded in 1983, sells contracts for gold, platinum and silver. Newport Beach Police Detective Mark Fisher said the firm came under investigation in 1986 when police received the first of two dozen complaints from investors.

Investors claimed that they have not been able to liquidate their precious metals futures contracts with Premaco. When they attempted to cash out their contracts, they either got no response from the company or received bad checks.

Fisher said the bank that had financed the transactions and stored the precious metals for Premaco had ceased doing business with the company in January. “Apparently, Premaco has been taking money from customers and not forwarding it to the bank,” Fisher alleged.

Authorities said it would take about one year to sift through the computer records of the transactions, as well as 135 boxes and 24 filing cabinets full of documents. They said they had no indication at this point as to the amount of money people invested with Premaco.

Twenty-two law enforcement officials from six separate agencies descended on Premaco’s two ground floor suites, located in Newport Center. In addition to 10 members of the Newport Beach Police Department, investigators were present from the Orange County’s district attorney’s office, the California attorney general’s office, the California Department of Corporations, the U.S. Postal Inspectors Office and the Internal Revenue Service’s criminal investigation division.

King faces felony charges that carry a maximum penalty of three years in prison and a $10,000 fine. The phone sales staff, most of whom were hired only last week, face a possible six months in prison and fines of up to $2,500 or both. All were released Thursday on their own recognizance.