HomeBullion & Precious Metals“Hotel Buyer” Scams Bring Federal, State, and Local Criminal Charges

“Hotel Buyer” Scams Bring Federal, State, and Local Criminal Charges

By Patrick A. Heller
Commentary on Precious Metals Prepared for CoinWeek.com

On Tuesday morning, CBS News reported on the cessation of operations by THR Associates, which ran perhaps the largest “hotel buyer” operation in the US over the past few years.  To view the story, Click Here.

In an earlier report in May about this company, CBS investigators in six cities experienced multiple occasions where their secret shoppers were lied to about the quality of coins and jewelry that they offered for sale.  Even in the instances where the buyers correctly identified the merchandise, there were multiple instances where the buyers then offered less than 25% of the price at which the items could be liquidated on the wholesale markets.

Since then, THR Associates has suspended operations.  So many of the checks written to sellers have bounced that the total exceeds a million dollars.  There are federal, state, and local investigations and prosecutions in process, mostly to do with lying to customers about the quality of the merchandise they brought in for an offer to purchase.

At the ANA show in Philadelphia last week, I learned that another major “hotel buyer” company had discontinued operations over the past two months.  The reason given was that the volume of merchandise being bought was not sufficiently profitable, even at the low rates the company generally paid, to cover the advertising and travel costs to set up hotel buying events.

The appearance of this story once again brings to the forefront the question of what potential sellers should do to seek the maximum prices for their coins, paper money, and jewelry they are considering selling.  I wrote about this subject at length a couple years ago at .  In this article, I offer sixteen tips on how to encourage buyers to offer their best prices and warn about possible scams to avoid.

The CBS story offered three tips on how sellers can protect themselves.  The first was for people to realize what they have.  Not all “gold” jewelry is solid gold.  Also, not all gold is solid pure 24 karat.  Some jewelry is gold-filled, which is an extremely low purity kind of gold, usually less than 5%, or gold-plated, which has almost no gold.  In the US, most jewelry sold is either 10 karat or 14 karat purity, indicating 10/24ths or 14/24ths of the weight is solid gold.  Jewelry marked 8 karat tends to come from Germany; if marked 9 karat it will tend to be from Great Britain.  Jewelry marked 18 karat is worth more than less pure pieces.  Much of the jewelry that comes from the Middle East or Far East is very high purity, between 21 karat to 24 karat.

The CBS story recommends first going to a jeweler who does not purchase jewelry to seek help identifying which jewelry pieces are solid precious metals and the relative purity of those that are.  In the current market, there are so many jewelers who purchase gold jewelry that it probably still makes sense to visit at least two companies just to find out what you have.  Once you have a rough idea of the purity of the items you own, then you should visit at least two places for purchase offers.  I recommend visiting at least three places.

When my company has commissioned secret shopper teams to compare prices offered by local competitors, we have found a wide range of prices offered by different buyers.  By seeking multiple offers, you are likely to find a strong buyer and realize a higher price for your goods.

In my experience, coin dealers frequently offer stronger buying prices than jewelers or pawnbrokers.  I think the reason this happens is that coin dealers normally work on tighter profit margins than businesses in other industries.  Therefore, coin dealers consider purchasing gold jewelry to be a high-profit margin niche, even if they offer higher prices than competitors.  On the other hand, jewelers and pawnbrokers would have to work on tighter than normal profit margins to be competitive buyers and not all of them are willing to do so.

In November 2009, Consumer Reports wrote an article on selling jewelry where it suggested that a fair offer was one that represented at least 50% of the intrinsic scrap metal value.  When Sears and Kay Jewelers were purchasing jewelry from the public, they tended to offer 61-62% of gold value.  In my mind, a seller should seek to realize at least 70-80% of the value of the gold content.

When selling coins, it is possible to find a lot of information about metal value of gold or silver pieces.  For instance, you can go to http://www.coininfo.com/calculators/ to get an idea of the current “melt” value of coins or gold jewelry that you might have.  There are other sources that provide similar information.

If readers have other consumer protection suggestions other than those described in the CBS News report or in my CoinUpdate.com column, please add them.

pat heller Why Believe Politicians When They Keep Changing Their Story?Patrick A. Heller was honored with the American Numismatic Association 2012 Harry J. Forman Numismatic Dealer of the Year Award.  He owns Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects.  Past newsletter issues can be viewed at http://www.libertycoinservice.com.  Other commentaries are available at Numismaster (under “News & Articles) .  His award-winning radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com

Patrick A Heller
Patrick A Heller
Patrick A. Heller was honored with the American Numismatic Association’s 2012 Harry J. Forman Numismatic Dealer of the Year Award. He owns Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. His award-winning radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com). He is also the financier and executive producer of the movie “Alongside Night”.

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  1. My best advice for people who want to get a fair price for metals is to STAY AWAY FROM HOTELS! Go to the biggest coin show you can find within a reasonable distance, and get at least three to five offers (and tell each place you’re getting 3-5) before committing.

    It will be amazing how the offers increase, almost like magic. I did this last year at Rosemont, and sold common date gold coin within $8 dollars of spot at the time, which was nearly $1900 an ounce.

  2. I forwarded this article’s link to my county D.A., and strongly suggested that the next time the gold buyers swoop in here, he does his OWN sting, and to not rely on the news media to do his job for him.

  3. I sat with their buyers two or three months ago in order to get a ballpark of how badly they were ripping people off.

    After looking over my PCGS graded material I brought, the sales person provided me a price that was about 30% of the PCGS price guide price. They tried to buy my Isabella quarter at melt at the outset because it wasn’t a United States coin. Once I assured them that it was and that it bore a UNITED STATES OF AMERICA inscription and was a commemorative release and desirable- he relented and looked it up. The price I was offered for a beautifully toned MS-64 example was $350- which I was told was 90% of the PCGS price guide price.

    The other coins received similarly low bids. When I didn’t take $1200 for 20 attractive classic commemoratives, the buyer seemed insulted that I had wasted his time.

    To think someone could be rooked by a low offer and then given a bad check is deeply disturbing.

    • Yah, $350 is about 90% of the value for a AU50 coin. Just for grins, I looked up an MS64 on the site that handles prices for the NumisMedia site: $890 “fair market value”. If these stories aren’t enough for people to start warning their respective county prosecutors, I can’t help you.

      We have to fight unethical behavior everywhere, or we are complicit! That applies to coin doctors, hotel buyers, ALL OF IT!

  4. I took 3 of the most highly recognised key date coins (1909-s VDB cent, 1916-d Mercury dime, 1937-d 3 leg Buffalo nickel) to a hotel show here in Corpus Christi (Holiday Inn) just to see what I could get. I was told the dime and nickel were Chinese forgeries, and was offered $110.00 for the 1909-S VDB (Dark Brown VG). The guy said he had a friend who collected forgeries, and offered me $50 for both the 1916-d and 3 leg. All three coins I had bought years ago and broke out of old ANACS holders, so I knew whithout a doubt they were all authentic. What was troubling was the amount of people standing in line to get screwed over.

    • I absolutely believe your story. And with diamonds it can become still more problematic, I’ve had gemologist tell me a stone was SI when it had an obvious black inclusion visible in the pavilion. I asked her if grade bumping was a condition of her employment! I’ve seen dealers rave about “buying by 20 power and selling by arms length,” telling people in distress to pay bills “they work all day in India for a bowl of rice” (cutting diamonds, in fact, many smalls were previously paid about 1 cent each for finishing) and “but friend I just can’t pay you more for a diamond than what I can call up to New York to get it for” etc. and upon dickering over a 1.264 D VS2 emerald cut I was low balled by the dealer when I said “how about for free” he said “I can BEAT that price!” We both roared laughing, I told him I was under no pressure to sell and left. I later sold to end user and made bundle. This is to advise people beware of diamonds unless you can navigate around the many traps and even then, you still have to sell to end users to make profits. Stick with fungible precious metals is the best advise for most.

  5. I wonder if some of these shysters have taken a gold item out of view then stamped it HGE in very small markings, taken it back to the hopeful seller, shown the HGE under 10x to the mark, and told him/her it’s an electroplated piece, but “I can still offer you a surprisingly large amount” for it, “considering how little gold it contains.” Hope I didn’t just give someone an idea. There’s a well known electronic venue for selling anything A to Z.

  6. On the matter of fake silver one ouncers, Prospectors or other made of copper, zinc and silver plated—if in doubt of a purchase, employ a basic resonance test. Place item in question in balance on a fingertip, lightly strike edge with other similar object. Silver will resonate better than fakes. “Silver coins are relatively heavy and they ring with a certain high-pitched timbre that is practically unique.”—Journal of Metals (American Institute of Mining, Metallurgical & Petroleum Engineers, New York) March 1966, page 303. “Silver Bells,” anyone? It’s an old popular song.

  7. Yes Charles.

    At the ANA show, Barry Stuppler showed a fake Prospector. It looked GREAT! By eye alone, and even by weight somehow, it was convincing. But it was mostly zinc apparently. It did NOT ring. I really don’t care much for “rounds”, though. When I do want silver (at levels lower than these) I prefer Eagles and Morgans and Peace dollars. 1 ounce private stuff never held much appeal for me.

  8. A tip from a notice at the Jewelers Security Alliance site—“The two suspects pictured at the left are wanted for selling fake gold to stores in MD in September 2010, and are believed to have committed other such frauds in PA and NJ. The suspects work in groups of two and three in order to distract employees, while one suspect switches out the gold acid tester bottles with bottles of water. They routinely sell heavy Figaro necklaces and bracelets that are stamped 14k on the clasp.”


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