Santa Ana Firm Is Target of Fraud Probe : Inquiry: California Gold International Trust’s president denies that the company was running a Ponzi scheme.

A Santa Ana company that promised to double investors’ money with the purchase of gold coins was running a Ponzi scheme, state investigators allege in court documents.

The company, California Gold International Trust, operated out of an office at the Hutton Centre in Santa Ana and collected as much as $2 million from 800 investors, court documents and sources state. But in a slew of lawsuits filed within the past month, investors allege that the company has not delivered on its promises and say they want their money back.

Those lawsuits also show that, in sealed court documents filed earlier this year, investigators say they are looking into the possibility of fraud by the company.

Company President Elizabeth Margaret Broderick on Wednesday denied the allegations.

“I was operating a coin shop with no overheads,” Broderick told The Times. “What they’ve seized from me is pure and outright theft. (The state) is trying to pad its general fund to pay their bills. They put me out of business without a trial, without a conviction and (with no criminal) charges being filed.”

Broderick said she has instructed her attorney, Gregory Sullivan of Newport Beach, to sue state and county officials for civil damages incurred as a result of her being forced by their actions to close her business.

In May, investigators with the state raided the offices and homes of company officials, seizing computers, documents and other company property.

“If they’ve conducted their search since May, why haven’t charges been filed after this many months?” Sullivan asked. “It seems like it’s just going to fizzle out, and a lot of investors have been let down in the process.”

Officials with the state and the Orange County district attorney’s office would not comment, saying that their investigation into “possible fraud” is continuing.

But in a search warrant request filed in Orange County Superior Court in May, Tom Dutcher, a special agent with the state Bureau of Investigation, cited interviews with investors and former company employees who said that Broderick was running a Ponzi scheme. A Ponzi scheme uses money from new investors to pay off earlier investors.

Court documents state that Broderick placed advertisements in local newspapers and in USA Today that read in part: “Would you invest $150 one time if you could double your money in 30 days? Cash paid weekly.”

Company documents filed in May as part of the state’s warrant request explain how the operation worked: “Your golden opportunity is secured by a trust that buys American Eagle gold coins at volume discount prices, sells them to participants at full price, then purchases more gold coins with the net profits, compounding the returns.”

Dutcher states in court documents that he interviewed company employees who said the company was operating a Ponzi scheme.

One employee, Douglas Bart Smith, said Broderick told him how money used to pay people their profits “does not come from buying or selling gold coins, but rather from new money that comes in the door,” Dutcher stated.

“Bart, I do not want people to know how we do this,” Broderick is quoted in court documents as having told Smith.

Sullivan, California Gold International Trust’s attorney, acknowledged that the company owes money to investors but said that it cannot repay them because state investigators seized $30,000 from a company bank account.

Sullivan blamed the company’s problems on disgruntled employees whom Broderick sued when they tried to start a similar business.

“Elizabeth has stated that she is willing to give everybody their money back,” Sullivan said. “She told the D.A. that she will officially wind down the business and give everybody their money back, but now some people are claiming speculative profits.”