Assets of Newport Precious-Metals Firm Frozen in Inquiry on Missing $1 Million

An Orange County Superior Court judge has frozen the assets of a Newport Beach precious-metals firm, an action that the state says will put the firm out of business, but that the defense attorney contends will allow the company to continue business as usual.

Judge William F. Rylaarsdam Wednesday enjoined William D. King and his company, Precious Metals Accumulation Corp., from misappropriating investors’ funds. Rylaarsdam also appointed a receiver to determine where at least $1 million paid to King has gone.

According to a complaint filed in August by the state attorney general’s office, King operated a failed scheme in which old investors were paid with money raised from new investors.

The August complaint also claimed that King failed to deliver metals bought by investors, misappropriated investors’ money, failed to buy or sell metals when told to do so by clients and issued bad checks to settle customers’ accounts.

King founded Precious Metals Accumulation Corp., also known as Premaco, in 1983. The company sold contracts for gold, platinum and silver and came under investigation in 1986 when the Newport Beach Police Department received the first of 24 complaints from investors.

Premaco was closed in May, when King and eight employees were arrested on suspicion of working for an unregistered telemarketing company. No criminal complaints have been filed, and the company has since been registered to operate.

“He (King) has been operating on a very limited scale, trying to revive the business and keep it going,” said Jerry Smilowitz, assistant state attorney general.

“What will happen now is up to the receiver. . . . The preliminary injunction against the company says you can’t take money out of your account. That will effectively close the business down.”

Alan A. Plaia, King’s attorney, declined to comment extensively on his client’s case. However, he called the preliminary injunction “more or less a friendly one” and said it would not keep King from operating Premaco.

“What it basically does is it primarily just requires him to do business in a normal fashion,” Plaia said. “We will be working with the receiver as closely as possible.”