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|Santa Monica Coin Dealer to Pay Back Customers|
By Jorge Casuso
May 30, 2012 -- In what marks the City of Santa Monica's second settlement with a national gold coin dealer this year, the owner of Superior Gold will be required to pay $2 million toward customer refunds.
The settlement comes three months after Goldline International, Inc., one of the nation's largest gold coin dealers, refunded a total of more than $4.25 million to former customers under a court injunction won by the City Attorney's Office ("Santa Monica-based Coin Company Refunds more than $4.25 million to Customers," April 19, 2012).
Under the judgement announced Tuesday, Superior's owner, Bruce Sands, will make an up-front payment of $200,000 and pay between 20 and 25 percent of his future net income every year to the more than 250 customers who filed complaints with the City. The payments will continue until the judgment is paid in full.
"With this settlement, we get what little money is available, directly to consumers, and far sooner than if we had gone to trial," said Adam Radinsky, who heads Santa Monica's Consumer Protection Unit.
Superior Gold Group -- a national precious metals dealer based in Santa Monica and Woodland Hills -- was placed more than a year ago under a court-ordered receivership and its accounts frozen.
The settlement stems from a consumer protection lawsuit filed in 2010 by the City and the LA District Attorneys Office that claimed "the company was taking customers' money for coins but providing nothing in return," City officials said.
Superior Gold's operations were stopped and the business was effectively shut down when prosecutors obtained a preliminary injunction that froze all of the company's assets and appointed a receiver to take control of the business and of Sands's finances. But investigators were unable to locate any substantial assets.
"This result makes the most sense for consumers, and for law enforcement purposes," Radinsky said. "We suspected going in that Sands had few remaining assets.
"Our main goal was to stop the wrongful practices in their tracks," he added. "We achieved that with the business being shut down and placed under court receivership."
Under the court judgment, Superior Gold's customers could be eligible to write off their losses under a new tax exemption for fraud victims created in the wake of the Bernie Madoff scandal, City officials said.
The court judgment also includes an injunction that prohibits Sands from owning a precious metals business, or from using any false or misleading advertising.
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