A Costa Mesa rare-coin dealership that is being investigated by police for allegedly defrauding customers has filed for bankruptcy in federal court here, listing more than $5 million in debts and more than 800 unsecured creditors across the country.
Americavest, formerly known as International Rare Coin and Bullion Co., filed a Chapter 7 petition Monday in U.S. Bankruptcy Court. Under Chapter 7, a company’s operations cease and its assets are liquidated.
Benjamin P. Valenty, the company’s owner and president, listed company assets of $1.8 million and debts of nearly $5.1 million. The company had no secured creditors, according to the petition, but had 837 unsecured creditors, most of them customers for rare gold and silver coins and bullion.
The petition states that the accounting firm of Arthur Anderson & Co., which compiled the company’s asset and debt figures, found Americavest’s records in “poor condition.”
Valenty, who previously spelled his name Valenti, could not be reached for comment. He put three other companies in bankruptcy five years ago. His lawyer, Ralph G. Pagter of Santa Ana, refused to comment, declining even to say when the company changed its name.
During its four-year existence, International Rare Coin advertised in investment and trade magazines as well as on television, most prominently on the Financial News Network cable station.
But the publications and FNN received numerous complaints from purchasers that the coins were overvalued and overpriced, that coins sometimes weren’t delivered and that the company reneged on a guarantee to buy back coins at 85% of their value, law-enforcement authorities said.
The Costa Mesa Police Department is investigating the company for possible fraud, said Detective Steve Labbitt. Complaints filed with him include the company’s alleged failure to return coins that customers had sent in for appraisals.
“They’ve got more than 800 creditors. That’s how many victims I’ve got,” Labbitt said.
Kacy McClelland, a U.S. Postal Service inspector, said he continues to receive several complaints a month from International Rare Coin customers. He refers them to Labbitt and the Federal Trade Commission, which has authority over the grading of rare coins.
Customers reached Tuesday said they were not surprised by the bankruptcy filing. Several said they had been calling the company in the last month but were unable to reach anyone. In recent weeks, a telephone message told callers the company planned to file for bankruptcy and that the court would be in touch with creditors.
“I sent them $2,290 for two coins and never got anything,” said Herbert Adams of Odessa, Tex. “I never bought any gold coins before, but this was a very high-pressure sales job. I don’t know what to do. I figured I might learn a good lesson.”
Coin collector Chester D. Smith of Larned, Kan., said he bought a Vietnam War commemorative medallion from the company. He said he bought it for sentimental reasons and didn’t care that it probably was worth less than what he had paid for it.
The company apparently played on such sympathies. It issued the Vietnam War commemorative coins with much hoopla 17 months ago, giving royalties to the Vietnam Veterans Memorial Fund. The company also minted commemorative American Red Cross coins.
The company, once one of the nation’s largest rare coin dealers, upset many customers with its high grading of coins and failure to buy back coins as promised, authorities and customers said.
Hal Burnett of Marietta, Ga., said he paid $1,471 for an 1885 $10 Liberty gold coin two months ago, only to learn later from other dealers that the coin was worth $400 to $600. He said he never received the coin, either.
Lupe Chown of Laguna Beach said she paid $2,500 for two Indian-head gold coins but only received one. When she tried to sell it back under the company’s guaranteed buyback program, she said, the company said it was worth only half the original price and would pay only 85% of that. She decided to keep the coin, she said.
Times staff writer John O’Dell contributed to this report.