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Gold dealer Superior Gold is seized, assets frozen

Judge turns the company's operations over to a receiver after L.A. County and Santa Monica sue the company and owner Bruce Sands, alleging fraudulent business practices.

December 09, 2010|By Abby Sewell, Los Angeles Times

After numerous consumer complaints, a Santa Monica gold dealer's assets were frozen and its operations turned over to a court-appointed receiver, officials said Tuesday.

A judge froze the assets of Superior Gold Group on Monday after it was accused of fraudulent business practices in a civil lawsuit against the company and owner Bruce Sands filed by the Los Angeles County district attorney and the Santa Monica city attorney.

The company, which sold gold coins and bullion and other precious metals, took payments from customers and never provided the gold ordered, charged prices much higher than fair market value and misled customers into buying expensive specialty coins, the agencies contended in their lawsuit, filed Friday.

Neither Superior Gold nor Sands could be reached for comment. Phone calls to numbers on the company's website went unanswered Wednesday. The company had not filed a response to the complaint and no company representative has appeared in court, officials said.

In their lawsuit, the agencies said Superior Gold took advantage of investors who flocked to gold as the price of the precious metal rose and the value of many other investments fell in recent years.

"By fostering fear and confusion among its customers, Superior has induced them to pay far above market prices for various gold products," the complaint said.

Steven Siry, 61, of Los Angeles is one customer who believes he was ripped off. Siry said he invested $20,000 in a "gold IRA" through Superior Gold. But company representatives sold him collector's coins at an inflated rate rather than offering him bullion, and it took more than a year and numerous phone calls before the coins were delivered to the trust company that was to hold them, he said.

Siry estimates the actual value of the gold, when it finally arrived, as a little more than half of what he paid for it.

"It was a big mess, it was uncomfortable, and I felt kind of stupid, quite frankly, because I didn't do enough shopping before I used them," he said.

Adam Radinsky, head of the Consumer Protection Unit of the Santa Monica city attorney's office, said his office began receiving consumer complaints about the company around May and launched an investigation in conjunction with the L.A. County district attorney's office.

The court order issued by Superior Court Judge Gerald Rosenberg on Monday appointed Dean Pucci of law firm Jones & Mayer to take over operation of the gold company until a Dec. 17 hearing. On that date, the court is expected to decide whether the receivership and asset freeze will remain in place until the case goes to trial. In an e-mailed statement, Pucci declined to comment.

The judge froze the assets of Superior Gold, Sands' personal assets and those of an affiliated company, Superior Equity Group. Among the assets listed as frozen were Sands' home in Valencia, a 2003 Lamborghini Coupe and a 2004 BMW.

Superior Gold was incorporated in Nevada but conducts its operations in Los Angeles County, including in Santa Monica and Woodland Hills, according to court documents. Most of the company's business was done by phone, with customers from around the nation placing orders on a toll-free line.

The Better Business Bureau, which gave Superior Gold an F rating, reported having received 70 complaints about the company in the last three years, of which 48 went unanswered.

Kim Burge, director of trade practices with the bureau, said consumers should be cautious and do their research before investing in gold.

"A lot of businesses are selling gold and buying gold right now because the market is good," she said. "These types of investments are considered high risk."

abby.sewell@latimes.com

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