Collectors lost $500K, warrant says.
A White Bear Lake man is being investigated by Roseville police for allegedly fraudulent transactions that cost gold coin collectors around the country more than $500,000, according to a search warrant filed in Ramsey County District Court.
The search warrant affidavit said Roseville police were contacted in November by the South Dakota Attorney General's office with a complaint that a South Dakota man had been called by a Roseville company, Reputable Rare Coins, owned by [the accused].
The company's representative offered the South Dakota man to trade several $10 and $5 gold coins for some $20 gold coins, according to the affidavit.
Reputable Rare Coins arranged with Federal Express to pick up and ship the South Dakota coins to the company's location in Roseville, the affidavit said, but the South Dakota man never received coins in return. The coins the South Dakota man sent were valued at $40,800, according to the affidavit.
In December, Roseville police got a similar complaint about Reputable Rare Coins from the FBI field office in San Antonio, the affidavit said. This complaint alleged that a Texas coin collector got a "cold call" from [the accused] offering to trade gold coins, according to the affidavit.
The Texas man agreed to the trade and shipped [the accused] $79,641 in gold coins but never received coins in return, the affidavit said.
The affidavit said Roseville police have received 14 complaints from coin collectors around the United States about Reputable Rare Coins, alleging losses of gold coins totaling more than $500,000.
The affidavit also said a former employee of Reputable Rare Coins told police [the accused] would arrange for his victims to ship their coins to the company through the U.S. mail or Federal Express with no intention of shipping back the agreed-upon coins.
The employee told police that [the accused] uses the proceeds from sales of coins sent to Reputable Rare Coins to buy narcotics and to gamble at Minnesota casinos, the affidavit said.
[The accused] could not be reached for comment Monday. He has not been charged, but the case has been referred to the U.S. attorney's office, according to Roseville police.
In February, Minnesota Attorney General Lori Swanson filed a consumer protection lawsuit against Hughes and Reputable Rare Coins in Hennepin County District Court alleging consumer fraud and deceptive trade practices, including making false promises regarding the sale and delivery of coins and misrepresenting the value of coins it offered to consumers.
Hughes has a prior criminal record that includes convictions for burglary, check forgery and receiving stolen property, according to state records.