SAN DIEGO — Authorities are investigating a 4-month-old precious metals trading firm in Del Mar that is having trouble paying back its investors.
Pacific Currencies Inc., also known as Pacific Enterprises, and its owner, Eugene Cobb, are under investigation by the San Diego Boiler Room/Investment Fraud Task Force, according to Deputy Dist. Atty. Robert J. Sullivan.
The scope of that investigation is unknown, however, and Sullivan would not discuss the case.
Cobb and his firm were sued earlier this week by two disgruntled investors who claimed that they were unable to withdraw $22,110 owed them. Investors have had trouble withdrawing their funds since September, according to a former employee.
Cobb in a telephone interview Thursday said that the "lawsuit was settled" and insisted that the investors' action "wasn't a legitimate claim."
Cobb, 23, said he "took care of" the lawsuit but would not say how much he paid the two investors.
Attorney Maureen A. Summers, who represents the investors, Mason and Jacqueline Clink of Northern California, would not comment on the lawsuit.
Court records show no disposition of the litigation.
Investors began asking for their funds back in September, and at least 10 clients--out of a total of about 60--have been unable to retrieve their monies, according to a former employee. In addition, the Clinks' lawsuit alleged that Cobb used his firm's assets for "personal uses."
Cobb on Thursday denied that investors have been unable to withdraw their funds and insisted that his company is legitimate.
He said that his firm has purchased "thousands of dollars of physical metal" and said that he has "verification" of the purchases. He added that investor funds were deposited in hedge accounts.
Cobb acknowledged, however, that he "didn't know all the legal parameters of the business," and said that he is in the process of "converting to an 'introducing broker,' " who will be registered to trade options and futures.
He declined to explain what his firm actually traded.
Cobb said the boiler room task force was investigating his firm "because of the contract that Pacific Currencies sells."
The contract, according to a former employee, was a one-year agreement. "At the end, (investors) could either renew or take physical delivery" of the commodity, the former worker said.
At least eight Pacific Currencies employees were either fired or quit last week, according to several sources familiar with the firm.
Cobb on Thursday blamed the worker departures on "fraudulent rumors."
"Everybody does not do business the wrong way," Cobb said. "I'm well respected and I go to church. People will judge me on what they know personally."
Cobb filed a fictitious name for his firm on June 5, 1986. At the time, he and partner Mike Christopher were headquartered in downtown San Diego, according to public records.
Two Men Parted Company
The two men parted company in August, and Christopher formed his own firm, Rothschild International in Encinitas.
Cobb moved his company--with its name changed to Pacific Currencies--to Del Mar at the end of July. Soon after, he installed 22 telephones for his sales representatives.
Cobb's interests go beyond selling precious metals.
He has recently been negotiating to purchase Plaza Sports in Rancho Bernardo, the sporting goods store owned by Antje Dominelli, wife of jailed swindler J. David (Jerry) Dominelli. Dominelli's J. David & Co. attracted $200 million from 1,500 investors in a far-flung Ponzi scheme.
Cobb on Thursday confirmed he had "looked at the opportunity" to purchase the store but said that "as of today I'm not going to buy it."
A store employee, however, said Thursday that Cobb is "in the process of buying" the business.