To settle allegations of false advertising and unfair business practices, an Anaheim commemorative coin manufacturer has agreed to pay $150,000 restitution to dissatisfied investors.
The state attorney general’s office filed a civil complaint Wednesday against Rarities Mint Inc. and its president, Ian Simpson, in Orange County Superior Court in Santa Ana. At the same time, Simpson, agreed to pay restitution and $60,000 in civil penalties without admitting any wrongdoing.
Named in the complaint were 15 plaintiffs who each had purchased between $200 and $61,500 worth of gold and silver commemorative coins.
Rarities contracts with government agencies and private organizations, such as the Hollywood Chamber of Commerce, to make commemorative coins that are sold to collectors and investors, Jerry Smilowitz, deputy attorney general, said.
According to the complaint, telephone salespeople falsely offered customers an unconditional buyback plan, quick deliveries and bank financing. The sales representatives allegedly claimed that the company was an authorized representative of the U.S. Mint, threatened to make damaging consumer credit reports against people who changed their minds about a purchase and failed to provide written contracts or cancellation policies as required by state law.
The state began its investigation in 1986 after receiving complaints from dissatisfied investors. Smilowitz said Rarities changed its business practices in 1987 after being contacted by investigators and stopped direct sales to the public. It continues to operate as a wholesale business making coins and selling them to dealers and retailers.
Customers, many of whom bought coins with the intention of selling them later at a profit, complained that they were told by sales people that coins could be sold back to Raritiesanytime at the purchase or market price, Smilowitz said.
But later, buyers were informed that they had to wait 6 months for the buyback, Smilowitz said. “Then they would charge a processing fee. Or they would say ‘I can’t confirm the buyback, I’ll get back to you.’ Of course they wouldn’t call back.”
Smilowitz said the company sometimes bought back coins, but often at a lower market price.
Buyers also complained that delivery of coins was promised within 2 or 3 weeks, but were sometimes 6 months late.
Rarities attorney Douglas Smith said the firm admitted no wrongdoing in settling the case.
“We basically made a business decision, that rather than litigate those claims, we decided to work out an agreement with the attorney general’s office,” Smith said.
The complaints stemmed from sales that occurred before 1987, “when Rarities was a much younger organization,” Smith said. The company incorporated in 1984.
Smith said that at least three sales employees were dismissed because of the allegations.