FTC Accuses Big Coin Dealer, Appraiser : Investment: In two separate Orange County cases, the agency says the dealer ran a Ponzi scheme and the appraiser favored good customers.

The Federal Trade Commission filed complaints Thursday against one of the nation’s biggest coin dealers and the industry’s largest appraiser, claiming both Orange County firms misled investors.

The two civil cases are separate and unrelated.

The FTC charged Newport Beach-based Hannes Tulving Rare Coin Investment with running a Ponzi scheme that defrauded investors out of more than $40 million. The complaint, filed in U.S. District Court in Los Angeles, said the firm had 4,600 customers last year.

In a separate case filed in U.S. District Court in Washington, the FTC charged Irvine-based Professional Coin Grading Service with failing to live up to advertising claims that it graded coins on an objective basis. The company--whose grading service has become an industry standard--has certified $2.5 billion worth of coins since it was founded four years ago.

Both companies denied the accusations.

“We charged a fair value for our product and we have the documentation to prove it,” said Tulving’s owner, Hannes Tulving Jr.

He has consented to a court-appointed receivership of his 14-year-old firm, which will allow regulators to run the firm while trying to figure what it has left in the way of assets.

The FTC maintained in its complaint against Tulving that the company had created an artificial market, getting customers to buy coins at inflated prices so it could then turn around and honor a longstanding buyback policy for investors wanting to cash in their collections.

“By 1989, defendants were selling many of their coins for three to five times what the coins were worth,” according to the FTC complaint.

This was done, the FTC says, to try to keep alive what it says was a three-year Ponzi scheme.

Tulving “relied on sales of coins to new purchasers at increasingly high prices in order to have money on hand to permit earlier purchasers to liquidate their coins at a profit,” the complaint said.

The company charged a 24% commission, based on the prices it charged.

And it published a magazine--under the name Cameo Enterprises--that purported to show prevailing market prices. But Tulving owned Cameo and the prices listed were prices he set, the FTC complaint said.

The FTC has asked the court to compensate investors, whom the FTC estimates are out more than $40 million once they decide to cash in the coins at legitimate dealers.

PCGS, meanwhile, was accused of failing to live up to its promises to certify coins on an objective basis.

“PCGS has not provided objective or consistent grading,” said the FTC complaint against it. “PCGS does not in all cases observe its strict anti-self-interest policy.”

FTC sources indicate the company was grading coins more favorably for preferred customers, something executives there strongly deny.

PCGS sent a letter to dealers earlier this week calling the FTC allegations “obviously untrue” but signed a consent decree in which it agreed to publish additional disclosures about its service and submit its advertisements to the FTC before they are made public.