Coin Dealer Pays FTC Fine to Avoid Being Sued in Scam

A nationwide coin dealer based in Costa Mesa has paid $10,000 to the Federal Trade Commission to avoid being sued in connection with an investment scam, the FTC said.

In making the payment, Richard Melamed and his company, Melamed Rare Coins, are released from any lawsuits arising from the FTC’s belief that they conspired with the convicted mastermind of a multimillion-dollar fraud scheme.

Melamed was unavailable for comment.

He and two other dealers--Fred Lucas of San Diego and Wilbur Montgomery Sims of Richmond, Va.--were allegedly involved with Minneapolis coin dealer William J. Ulrich. The FTC said Wednesday that the dealers deny any wrongdoing.

Ulrich ran a coin investment scheme in the mid-1980s through his Security Rare Coin outfit that grossly overrepresented the worth of coins he was selling to investors. The FTC alleged in a 1986 lawsuit that Ulrich touted the coins as high-profit, low-risk investments that were being sold at or near their market value. Hundreds of investors lost about $50 million in the scam, the FTC said.

Ulrich was later prosecuted on federal racketeering charges and is serving a six-year prison sentence, said Dave Frankel, a lawyer in the FTC’s Services Industry Practices Division in Washington. Settlements in the Ulrich case will be used for restitution to investors.