Twisted Titan
14th May 2010, 03:31 PM
By JON BURSTEIN
South Florida Sun Sentinel
The South Florida company had a grand name - Global Bullion Exchange - and boasted it was a leader in the precious metals industry.
Hundreds of customers from North Pole, Alaska to Miami - many seeking a safe investment harbor in uncertain economic times - sent it money so an advertised "team of experts" could guide them through the gold and silver markets.
But when the Lake Worth-based company closed overnight, its books showed at least 1,400 clients were out about $29.5 million. Some people saw their retirement nest eggs wiped out.
"It was 40 years of investment I lost," said social worker David Gruber, 72, who lost about $400,000 he put into precious metals. "It was 40 years of scrimping and saving…. Nothing has been the same since."
Amid the company's rubble, attorneys are scrambling to figure out what happened to customers' money and if there may literally be a pile of gold somewhere. A former company accountant has said in a sworn statement that the company's owner, Jamie Campany, once had more than $1 million in gold bars stashed in the trunk of his Mercedes.
Campany, of Delray Beach, has not been charged and his attorney Christopher Bruno told the Sun Sentinel he "fully intends to cooperate with all inquiries." He declined further comment.
Global Bullion Exchange, which had offices spanning South Florida, operated in a niche largely devoid of government regulation: the spot market of precious metals. That's when people buy actual gold or silver rather than just trade them on paper. In the case of Global Bullion Exchange, many customers asked the company to store their precious metals at a secure location until they decided to sell them.
The company's collapse last December provides yet another cautionary tale for novice investors who think a salesman's phone call out of the blue could lead to riches.
In the past three decades, South Florida has been home to a series of precious metals companies that have emptied customers' wallets - ranging from fly-by-night operations with a few telephones to the spectacular collapse in 1983 of the International Gold Bullion Exchange in Fort Lauderdale, which declared bankruptcy owing $75 million to about 23,000 customers.
Court rulings since 2004 have placed companies operating like Global Bullion Exchange outside the reach of the Commodity Futures Trading Commission, the government agency that oversees the commodity and financial futures markets. Because Global Bullion Exchange clients were signing contracts for the purchase of actual gold, the commission had no jurisdiction.
"It basically puts the least sophisticated customers in a completely unregulated environment," said Daniel Roth, president of the National Futures Association, a self-regulatory futures organization.
In the case of Global Bullion Exchange, the Sun Sentinel found:
Tax returns for the company's first two years - 2007 and 2008 - show most of the money brought in by the company went to brokers' commissions. In 2007, 77 percent of the company's gross receipts went to the brokers.
Of the 20 clients listed in company documents as losing more than $225,000, 10 are over 60 years old and three have died since 2007. Those three clients died at the ages of 83, 87 and 92.
Campany was suspended for six months by the National Futures Association in 2000 after reaching a settlement agreement on allegations he was involved with deceptive and misleading sales solicitations related to futures and options trading.
Authorities in California banned Global Bullion Exchange from soliciting that state's residents last year after finding the company was not licensed or registered to sell commodities there. California officials also concluded Campany had failed to disclose his past suspension by the National Futures Association and a 2001 personal bankruptcy.
Global Bullion Exchange shuttered its headquarters Dec. 14. Employees who came to work that day found a note taped on the door and a private security guard barring access. At its height, the company listed offices in Hollywood, Miami Beach, Jupiter, North Palm Beach, Tampa, Baltimore and Green Brook, N.J.
A month after closing the Lake Worth office, the company filed the state court equivalent of a Chapter 7 bankruptcy - putting itself under the control of a lawyer, Daniel Stermer.
Stermer said he has contacted the Florida Attorney General's Office and the state Office of Financial Regulation about Global Bullion Exchange's collapse. Officials with both agencies declined to comment.
Miami-Dade court records show that Campany reported Global Bullion Exchange had only $637,500 in assets when it went out of business, including $61,300 in silver bars. Clients are listed as being out about $29.5 million, according to those records.
Stermer said he doesn't know yet if the documents provided by Global Bullion Exchange are accurate and how many customers had active accounts at the end. He's already recovered a 34-foot Sea Ray boat and a 2009 Mercedes that Campany bought with Global Bullion Exchange funds but were not reported as company assets, he said.
Global Bullion Exchange did buy some precious metals, but it's unclear how much or what happened to them, Stermer said.
The company's former tax accountant said he once saw some of those glittering assets. Accountant John Boyer said that last summer Campany pulled up to his house, popped the trunk of his Mercedes and showed off what appeared to be between $1 million and $2 million in gold bars.
"I looked at them and I was kind of, 'Wow,' " Boyer said in a March 26 deposition. "I didn't ask where he was going with them or where he bought them."
Seven Global Bullion Exchange clients interviewed by the Sun Sentinel said they learned about the company when a broker they didn't know called them, promoting precious metals as a great investment. Most of the customers were novices in precious metals dealing. They said they either lost all of their money or most of it.
Company records list its two largest creditors as Bruce Gray, a retiree from Portland, Maine, and Gruber, of Ellensburg, Wash.
Gray, who died April 13 at age 87, lost almost $686,000, said John Graham, a Miami-based attorney who had been hired by him. Gray appears to have even mailed his own gold coins to Global Bullion Exchange for the company to store, Graham said.
"They sold him a bill of goods, and he gave his life savings," Graham said.
Gruber, the father of five and a foster parent of two, said he is out more than $400,000, but not to Global Bullion Exchange. He lost the money in 2006 to Barclay Trading Group, another precious metals company once run by Campany. Gruber said he doesn't know how he ended up listed as a Global Bullion Exchange customer.
He said he invested with Barclay because he thought he was dealing with the international bank. Gruber only realized when it was too late that the company had no connection to the bank and that brokers' commissions had consumed 55 percent of the money he handed over, according to a lawsuit filed in Miami-Dade Circuit Court by Gruber and his wife.
The Grubers' pending case against Campany and Barclay Trading Group alleges they took advantage of "vulnerable elderly investors." Barclay Trading Group dissolved in January 2008, according to state corporation records.
One group that may have profited handsomely from Global Bullion Exchange was its sales force. In 2007, the business had gross receipts of $1.55 million and of that, $1.21 million was paid out as sales commissions. Only $149,000 went for the purchase of precious metals, tax returns show.
For 2008, about 53 percent of the $14.1 million of the gross receipts - $7.5 million - went to pay brokers. Only 37 percent of the money - $5.2 million - went to buy precious metals, tax records show.
Stermer said he is determining whether he will try to recover some of those commissions from brokers.
Some clients thought they were getting financing to buy more gold, but Stermer said he has yet to hear from any companies that backed such transactions.
Roth, the National Futures Association's president, said that without federal oversight, it's generally up to the states to investigate companies dealing in the spot market for precious metals.
"States have limited resources and some of them may be stretched pretty thin," Roth said.
Stermer said he has been "brutally honest" with Global Bullion Exchange clients that it is unclear how much money will be recovered.
"These consumers, in many cases, gave their life's savings and they know we are doing what we can to try to recover money," he said.
South Florida Sun Sentinel
The South Florida company had a grand name - Global Bullion Exchange - and boasted it was a leader in the precious metals industry.
Hundreds of customers from North Pole, Alaska to Miami - many seeking a safe investment harbor in uncertain economic times - sent it money so an advertised "team of experts" could guide them through the gold and silver markets.
But when the Lake Worth-based company closed overnight, its books showed at least 1,400 clients were out about $29.5 million. Some people saw their retirement nest eggs wiped out.
"It was 40 years of investment I lost," said social worker David Gruber, 72, who lost about $400,000 he put into precious metals. "It was 40 years of scrimping and saving…. Nothing has been the same since."
Amid the company's rubble, attorneys are scrambling to figure out what happened to customers' money and if there may literally be a pile of gold somewhere. A former company accountant has said in a sworn statement that the company's owner, Jamie Campany, once had more than $1 million in gold bars stashed in the trunk of his Mercedes.
Campany, of Delray Beach, has not been charged and his attorney Christopher Bruno told the Sun Sentinel he "fully intends to cooperate with all inquiries." He declined further comment.
Global Bullion Exchange, which had offices spanning South Florida, operated in a niche largely devoid of government regulation: the spot market of precious metals. That's when people buy actual gold or silver rather than just trade them on paper. In the case of Global Bullion Exchange, many customers asked the company to store their precious metals at a secure location until they decided to sell them.
The company's collapse last December provides yet another cautionary tale for novice investors who think a salesman's phone call out of the blue could lead to riches.
In the past three decades, South Florida has been home to a series of precious metals companies that have emptied customers' wallets - ranging from fly-by-night operations with a few telephones to the spectacular collapse in 1983 of the International Gold Bullion Exchange in Fort Lauderdale, which declared bankruptcy owing $75 million to about 23,000 customers.
Court rulings since 2004 have placed companies operating like Global Bullion Exchange outside the reach of the Commodity Futures Trading Commission, the government agency that oversees the commodity and financial futures markets. Because Global Bullion Exchange clients were signing contracts for the purchase of actual gold, the commission had no jurisdiction.
"It basically puts the least sophisticated customers in a completely unregulated environment," said Daniel Roth, president of the National Futures Association, a self-regulatory futures organization.
In the case of Global Bullion Exchange, the Sun Sentinel found:
Tax returns for the company's first two years - 2007 and 2008 - show most of the money brought in by the company went to brokers' commissions. In 2007, 77 percent of the company's gross receipts went to the brokers.
Of the 20 clients listed in company documents as losing more than $225,000, 10 are over 60 years old and three have died since 2007. Those three clients died at the ages of 83, 87 and 92.
Campany was suspended for six months by the National Futures Association in 2000 after reaching a settlement agreement on allegations he was involved with deceptive and misleading sales solicitations related to futures and options trading.
Authorities in California banned Global Bullion Exchange from soliciting that state's residents last year after finding the company was not licensed or registered to sell commodities there. California officials also concluded Campany had failed to disclose his past suspension by the National Futures Association and a 2001 personal bankruptcy.
Global Bullion Exchange shuttered its headquarters Dec. 14. Employees who came to work that day found a note taped on the door and a private security guard barring access. At its height, the company listed offices in Hollywood, Miami Beach, Jupiter, North Palm Beach, Tampa, Baltimore and Green Brook, N.J.
A month after closing the Lake Worth office, the company filed the state court equivalent of a Chapter 7 bankruptcy - putting itself under the control of a lawyer, Daniel Stermer.
Stermer said he has contacted the Florida Attorney General's Office and the state Office of Financial Regulation about Global Bullion Exchange's collapse. Officials with both agencies declined to comment.
Miami-Dade court records show that Campany reported Global Bullion Exchange had only $637,500 in assets when it went out of business, including $61,300 in silver bars. Clients are listed as being out about $29.5 million, according to those records.
Stermer said he doesn't know yet if the documents provided by Global Bullion Exchange are accurate and how many customers had active accounts at the end. He's already recovered a 34-foot Sea Ray boat and a 2009 Mercedes that Campany bought with Global Bullion Exchange funds but were not reported as company assets, he said.
Global Bullion Exchange did buy some precious metals, but it's unclear how much or what happened to them, Stermer said.
The company's former tax accountant said he once saw some of those glittering assets. Accountant John Boyer said that last summer Campany pulled up to his house, popped the trunk of his Mercedes and showed off what appeared to be between $1 million and $2 million in gold bars.
"I looked at them and I was kind of, 'Wow,' " Boyer said in a March 26 deposition. "I didn't ask where he was going with them or where he bought them."
Seven Global Bullion Exchange clients interviewed by the Sun Sentinel said they learned about the company when a broker they didn't know called them, promoting precious metals as a great investment. Most of the customers were novices in precious metals dealing. They said they either lost all of their money or most of it.
Company records list its two largest creditors as Bruce Gray, a retiree from Portland, Maine, and Gruber, of Ellensburg, Wash.
Gray, who died April 13 at age 87, lost almost $686,000, said John Graham, a Miami-based attorney who had been hired by him. Gray appears to have even mailed his own gold coins to Global Bullion Exchange for the company to store, Graham said.
"They sold him a bill of goods, and he gave his life savings," Graham said.
Gruber, the father of five and a foster parent of two, said he is out more than $400,000, but not to Global Bullion Exchange. He lost the money in 2006 to Barclay Trading Group, another precious metals company once run by Campany. Gruber said he doesn't know how he ended up listed as a Global Bullion Exchange customer.
He said he invested with Barclay because he thought he was dealing with the international bank. Gruber only realized when it was too late that the company had no connection to the bank and that brokers' commissions had consumed 55 percent of the money he handed over, according to a lawsuit filed in Miami-Dade Circuit Court by Gruber and his wife.
The Grubers' pending case against Campany and Barclay Trading Group alleges they took advantage of "vulnerable elderly investors." Barclay Trading Group dissolved in January 2008, according to state corporation records.
One group that may have profited handsomely from Global Bullion Exchange was its sales force. In 2007, the business had gross receipts of $1.55 million and of that, $1.21 million was paid out as sales commissions. Only $149,000 went for the purchase of precious metals, tax returns show.
For 2008, about 53 percent of the $14.1 million of the gross receipts - $7.5 million - went to pay brokers. Only 37 percent of the money - $5.2 million - went to buy precious metals, tax records show.
Stermer said he is determining whether he will try to recover some of those commissions from brokers.
Some clients thought they were getting financing to buy more gold, but Stermer said he has yet to hear from any companies that backed such transactions.
Roth, the National Futures Association's president, said that without federal oversight, it's generally up to the states to investigate companies dealing in the spot market for precious metals.
"States have limited resources and some of them may be stretched pretty thin," Roth said.
Stermer said he has been "brutally honest" with Global Bullion Exchange clients that it is unclear how much money will be recovered.
"These consumers, in many cases, gave their life's savings and they know we are doing what we can to try to recover money," he said.