Bullion Buyers investors could lose millions
Wednesday 15 Feb 2012 6:18 p.m.
By Simon Shepherd
Investors who bought gold from an Auckland bullion trading company could stand to lose millions of dollars as the company is liquidated.
Its website boasts of being the most trusted name in bullion trading, but Grace Holdings, trading as Bullion Buyer, is being investigated by the Serious Fraud Office (SFO).
Adam Feeley of the SFO says the first priority was to “secure evidence and make sure the position of investors was protected as best as possible”.
He says the SFO has now made a public statement in the hopes that the remaining investors will come forward.
A statement on the Bullion Buyers website places the blame on American Elijah Gus Geldman, who used to be the company’s gold trader and is now facing fraud charges in the US.
The SFO says they want to speak to everyone involved in the company, including Geldman.
The liquidator, Grant Reynolds, says it's too early to say exactly how much money is involved as fraud investigators still have the books, but an initial estimate shows there are up to 70 investors who stand to lose between $2 and $3 million.
Gold is often touted as a safe haven for investors, so the collapse of Bullion Buyers doesn’t look good – but bullion trader Mike Kane says there is a difference between owning a bar of gold, and what Bullion Buyers were offering.
“They were offering… a piece of paper that said they held X amount of gold in your name,” he says.
“As with anything a piece of paper is only as good as the person writing the piece of paper.”
It isn’t New Zealand’s first gold scandal – in the 80s Goldcorp collapsed when it was revealed it didn't hold enough gold for its investors. Founder Ray Smith faced fraud charges but was acquitted.