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Mike Getlin: Google Killed Merit Gold

By Charles Morgan and Hubert Walker for CoinWeek….

Last night I got an email from Mike Getlin, former Chief Executive Officer and Executive Vice President of Merit Gold and Silver. In the email, he apologized for not responding to CoinWeek’s previous inquiries concerning the firm’s legal troubles and asked if I would like to talk.

Getlin said that he was instructed–along with the owner of Merit Gold, Peter M. Epstein–by their legal team not to speak to the media. But now that the two Merit principals have hired a new firm, he has the go-ahead to answer any questions I might have.

The following is the conversation I had with Mr. Getlin. It touches upon Merit’s closing and the current status of the Santa Monica City Attorney’s Office prosecution. Getlin also offers his defense of Merit and the precious metals industry.

As you will see, Mr. Getlin has strong opinions about the actions taken against his company by the Santa Monica City Attorney’s Office. For Deputy Attorney Adam Radinsky’s take, please see our previous articles on the Merit case here, here and here.

Charles Morgan: Why did Merit Gold go out of business?

meritgoldfeature3Mike Getlin: It’s a complex story. In short, I received notification out of the blue in July that Google was shutting down our online ad campaign. Google’s decision to do this was based on [Santa Monica’s] allegations about our marketing and sales program, and those were allegations that we had not had a chance to protest because we had not been to court.

That and the tough market was enough to drive the business into the ground. We made a difficult call to make an assignment for the benefit of creditors and liquidate the company, certain that all of our vendors, employees and creditors would be made whole.

CM: So what you’re saying is that Merit was sentenced–given the “death penalty”, essentially–without having the claims against the company adjudicated in court?

MG: Exactly.

CM: How dependent was Merit on its advertising relationship with Google?

MG: Very. We had a complex setup with Google. We had the standard PPC and AdWords campaigns going as well as some experimental stuff focused on remarketing.

CM: You used to have a nationally-televised ad campaign as well.

MG: With Google, we built a diversified ad campaign, one that was not wholly dependent on TV.

CM: So when Google pulled the plug, how long did it take for you to realize that Merit was in trouble?

MG: It was blindingly fast how that got us into trouble. Upwards of half of our ad budget was going to Google. We got notification a month before we made the assignment. We had already experienced a decrease in sales because we had been fighting this public relations nightmare for months due to the Santa Monica court filing. All because the city had put a lot of their unfounded and false allegations online.

So, we were already under a tremendous amount of pressure.

CM: In August, Los Angeles Superior Court Judge Craig D. Karlan issued a temporary restraining order, freezing your and Mr. Epstein’s assets. Why did that happen and has that issue been cleared up?

MG: Large portions of the temporary restraining order have been cleared up. As to why? It was [due to] hyper-aggressive, overreaching tactics.

CM: At the core of Santa Monica’s argument is their claim that Merit engaged in a massive bait-and-switch scheme. The last time we talked, you defended Merit against that claim. But let me ask you a question. Say a customer calls in and wants to buy $100,000 in 1%-over-dealer-cost bullion products. What level of commission-based compensation would the sales representative expect to get?

MG: It depends. I’d say they’d get paid between $500 and $1,500 for that kind of transaction.

CM: And at one percent over your cost, minus overhead and the $500 to $1,500 commission, there isn’t a lot of money left for Merit to operate as a business, is there?

MG: We never said that bullion sales were the cornerstone of Merit’s profitability. That is why we offered a wide range of products.

14b7f4b (1)CM: Well, then suppose that, instead of selling bullion products at 1% over dealer cost, the sales representative was able to convert that $100,000 transaction into products more profitable for Merit, like, let’s say, $20 Saint-Gaudens double eagle gold coins. What would the hypothetical level of compensation be for that transaction?

MG: Again, it would be dependent on the particulars of the transaction. But a ballpark might be $4,000.

CM: Doesn’t this get at the core of the problem, then? The sales representatives have a real and significant vested interest in the outcome of the transaction. They are incentivized to sell higher cost items in order to funnel thousands of customer dollars to themselves.

MG: But this is how sales commissions work. The same principle applies in other industries as well.

CM: Sure, but based on comments that I’ve read online from people claiming to be Merit customers, Merit’s sales approach was geared primarily to the upsell and not to bullion.

MG: That’s not the case. Never. There was not one time before the lawsuit that we had even one complaint, out of tens of thousands of transactions. Now based on the allegations of the city attorney, a small number of our customers are complaining. [Note: The Santa Monica City Attorney’s Office filed a consumer protection lawsuit against Seacoast Coin, Inc. (d/b/a Merit Gold and Silver) on February 13, 2014. According to the Better Business Bureau (direct link here), customers filed complaints alleging bait-and-switch as early as May 13, 2013–though the authors of the 2013 complaints acknowledged that their issues had been resolved after they involved the BBB.–Hubert]

[Santa Monica Deputy City Attorney] Adam Radinsky would have you believe that everyone who purchased a non-bullion coin from us was an idiot, but that’s not true. People collect these things. These coins have value to people and a vast majority of our customers did research–they did shop around–before calling us. They know what other companies were selling products for.

Every transaction that we processed followed the same uniform confirmation process, had the same disclosures about the risks associated with investing in precious metals. We told customers to see all of our policies.

So, the idea that the only reason that people would buy a non-bullion product from us is because they were duped into it, is wrong.

CM: In your email to me, you said that Mr. Epstein and you fired your attorneys. Why did you let them go?

MG: Our former attorneys completely failed to get the volumes of evidence to support the true facts of this case in front of the judge in a timely manner. It was that failure that led to the asset freeze. That failure has been damaging to the industry, and, quite frankly, I have had my hands tied. I was not allowed to speak about what happened.

CM: Who represents the two of you now?

MG: Greenberg Glusker out of Los Angeles.

CM: So when this issue goes to trial, what are people going to learn about Merit?

MG: People are going to find out that we were a company with over 100 employees that serviced tens of thousands of customer accounts per year. That we weren’t perfect, but that if and when mistakes were made, they were the exception and not the rule. If we don’t prevail, the city will be successful in their clear aim to destroy this industry.

CM: You feel that the Santa Monica attorney’s office wants to systematically destroy the precious metals industry?

MG: Yes. I think Adam Radinsky sincerely thinks that all operations that offer to sell gold coins are somehow fraudulent and his office has gone on the warpath, targeting precious metals dealers. The sad part, to be honest, and what keeps me up, is that we have been painted with the same brush as Goldline and Superior. [For more on Goldline and Superior, see here and here, respectively.–Hubert]

When we launched our 1% campaign, we did that to target the 55% markup on Swiss Francs that Goldline charged. We drove down the price of European Crown Series coins across the [United States].

And Superior… they failed to ship products. They literally stole money from hard-working people.

CM: Now that Merit’s gone, obviously you and Mr. Epstein still face a very serious legal issue. But what happens if–or, as you hope, when–the court finds in your favor?

MG: The sad part is even if we do prevail the damage is done. We laid off everybody. The city sank a 28-year-old company. Our names have been raked all over the internet with smears. We can’t undo any of that. The city has prosecutorial immunity, so we can’t touch them.

CM: It sounds like you believe that Merit’s due process rights were violated.

MG: I do. And you know, what really hurt us is that when a government agency makes public allegations against a company, the assumption is that these accusations are well-founded, thoroughly vetted, and accurate. The reality here is different. The city investigated us for two years, not for the purpose of determining the truth, but to gather ammunition in order to destroy the company.

This is evidenced by the fact that they made one phone call to a customer service representative, who messed up.

This representative flagrantly violated our sales policies. It was this phone call that forms the basis of their complaint. And now this former sales representative is their top witness. The entire case against us relies on witness testimony from disgruntled former employees.

CM: When did you find out that this sales representative was “flagrantly” violating your sales policies?

MG: We didn’t know for a year. The city withheld information concerning the actions of this sales agent for more than a year. We didn’t find out until just before we closed the company.

CM: If you knew, would you have terminated the sales rep? Did you terminate others for breaking Merit’s sales policies?

MG: Yes, we would have terminated him. We did terminate others for the same behavior–but these were infrequent breaches of policy. But in the event that someone did violate the policies we had a protocol.

CM: You said earlier that Santa Monica’s City Attorney’s Office wants to put the precious metals industry out of business. Have you or Mr. Epstein received support from other figures inside the industry? Or has Merit become sort of a pariah state now that these allegations have surfaced?

MG: I think that the hyper-aggressive and overreaching tactics [of the Santa Monica City Attorney’s Office] have spooked a lot of people. A lot of people are very scared of them, but maybe once the dust settles and we are able to make a clear statement, the simple fact will emerge that just because you sell gold coins, that does not make you a fraudster.

Were we perfect? No. Were we anything close to violating the law or conducting tortious transactions? Not in the least bit.

CM: And you feel that Radinsky thinks all bullion dealers are fraudsters duping people?

MG: My main complaint about Radinsky’s point of view is that, I feel, he thinks that the only people who buy bullion products are idiots. But coins have performed well in some market circumstances, and just because now gold and silver has gone to hell in a handbag doesn’t mean that all coins are sucker’s bets.

But frankly, Radinsky’s office thinks that the only way people buy coins is because they’ve been fooled into buying them. Merit’s clients were educated, sophisticated investors, many exceptionally wealthy, and they chose our products because they felt they were getting value.

CM: Some are suing you now.

MG: Yes, but even with a 40% market correction in the price of metals, it’s only a minuscule percentage of our customers who are coming forward. The overwhelming majority of our customers aren’t.

The problem with this is that we are being prosecuted for absolutely standard techniques–advertising good prices on competitive products–and in addition to selling these products, we were also selling more expensive and more profitable products for the company.

But the fact is that we never denied a bullion order.

* * *

Correction: In an earlier version of this story, we incorrectly stated that Mr. Getlin was the CFO of Merit. He was actually the CEO. Also, Merit was a 28-year old company, not a 20-year old company.

* * *

Charles Morgan and Hubert Walker
Charles Morgan and Hubert Walker
Charles Morgan and Hubert Walker have been contributing authors on CoinWeek since 2012. They also wrote the monthly "Market Whimsy" column and various feature articles for The Numismatist and the book 100 Greatest Modern World Coins (2020) for Whitman Publishing.

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  1. It’s perfectly appropriate for Coinweek to publish this – it’s relevant to the coin industry. Just be sure to get a thorough shower to properly wash off all that horse manure Mike Getlin just shoveled your way.

  2. How many times have you walked into the store to buy the advertised sale item, and walked out with other purchases? Were you defrauded? Today we have less competition in the metals marketplace, fewer jobs and less tax revenue in Santa Monica, while local taxpayers paid the City Attorney to “protect” a hand full of wealthy out-of-state investors who have buyer’s remorse.

    • Mr. Getlin claims it was Google’s reaction to Santa Monica’s moves that killed the business.

      Google is a publicly-traded company. Is it or is it not free to decide with whom to do business?

      Are not Mr. Epstein and Mr. Getlin free to file suit against Google if they believe they have a case?

      As for the City Attorney’s Office, is it not their fiduciary duty to enforce state and local law? Please refer to the California Business and Professions Code §§ 17200, et seq. (especially § 17500), and California’s Consumers Legal Remedies Act.

  3. One important and ext relevant question was not posed by the interviewer: the gold coins – ie St Gaudens $20’s- were they slabbed and graded by a reputable company or were they raw or slabbed by an obscure slabber with little credibility? Thus perhaps allowing Merit to misrepresent the actual grade and value of the gold coins.

    One other matter. Merit claims that the entire Santa Monica case relies solely on the testimony of disgruntled employees (emphasis on employees plural). Not only is this a valid basis for prosecution but he also forgot the numerous clients who are suing independently and the clients who are involved in the SM prosecution.

  4. The headline is a lie. Google didn’t kill Merit. They pulled the advertising because of a questionable client. The business practices were the problem, not the advertiser. Merit is just looking for someone else to blame. This story stinks.

    • If Google pulled the plug on Merit’s online advertising and that had a direct correlation with their inability to continue business, then Getlin’s statement is more or less accurate.

      Whether Google’s decision to terminate their relationship with Merit was justified is another matter altogether.

      When I spoke to Mr. Getlin, he believed that the termination of the advertising plan killed the company. The headline clearly states that this is Mr. Getlin’s opinion and I’m comfortable with how we’ve chosen to present the story.

      Hubert Walker and I have covered this situation in depth since the beginning of the year. Our hope has been to strike a balance in our reporting. My goal in interviewing Mr. Getlin was to ask questions that I felt our readers might want answers to.

      As to your comment that the story stinks. There’s a lot about this story that does stink. Allowing a figure in the numismatic industry to answer questions regarding the demise of his scandal-ridden company is not one of those things.

  5. Oh please. Are you telling me that Merit was so cash poor that a month after losing their ability to advertise with Google the company was forced to fold? If they were that dependent on the Google platform alone then they clearly weren’t too bright in their marketing. Google isn’t the US government, they’re a company. They can refuse to do business with Merit because they don’t like their website. If Google killed Merit, the. Mike Getlin is still ultimately responsible for his company’s demise for being foolish enough to depend solely on one advertising platform for the company’s revenue stream.

      • Charles Morgan, you should be ashamed of yourself. Perpetuating this one-sided story and trying to convince readers that it was google’s fault for failure and not the company’s. Go back to journalism school and learn how to write a balanced story. Sheesh.

        • John:
          You attack the writer because you don’t like what the person being interviewed has to say, come on…..really?

          Charles’ article was NOT a story, it was an interview with one of the principles of Merit. CoinWeek broke the story about Merit going out of business, and provided reportage about the Santa Monica lawsuits, the private lawsuits, the unusual “bankruptcy” etc. Have you read anything else in the numismatic press about this? The interview with Getlin is nothing more than “his side of the story”, that is what Journalism is, and NOBODY at CoinWeek is trying to convince readers of anything.

  6. I call the interview excellent journalism and those few who criticize it as “one sided” – well, I just wonder if they somehow represent or are friends with Getlin or Merit.

    The only thing that was lacking in the interview was addressing whether Merit was selling raw gold coins or misgraded (obscurely slabbed) gold coins which would have allowed for litigable & prosecutible profit margins.

    • Alan, normally I highly respect your opinion, but the only “one-sided” is this article and you know it. Why don’t you go interview the people responsible for bringing the lawsuit for the other side of the real story?

      • John:
        The City lawyers don’t give interviews on active cases, you know that. We have had extensive discussions with ALL sides in this story, from the victims, their lawyers, the city, and the principles at Merit. CoinWeek broke this story and we have already reported on WHY the original lawsuit was filed, what the allegations are against Merit, the unusual “bankruptcy” maneuvers, etc. Why you continue to think that this story has been reported in a one-sided manner is beyond me, or you just haven’t read the other articles we posted.

        CoinWeek’s job is to find out and report on what is going on, from ALL the parties involved. Ultimately ALL the facts will come out in court and legal judgements will be made. We have been working this story for months and we still do not have all the facts, but we will continue to seek them out in a responsible manner. I’m sorry you seem unable or unwilling to accept that fact.

  7. I know your process to place orders are absurd , you put the order in as request and you get the price of metal when the agent calls? come on metal dealers all over will let you lock in orders all day. then you guys would give people like 2 days for there check to arrive and if it was late by 3pm the day you are told than you redue the order for metal prices the day it arrives, I assume all checks that arrived when silver fell were accepted for the order total?


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