Gold Rush: Soaring Prices, Unscrupulous Precious-Metals Dealers, Right-Wing Paranoia -- We've Been Down This Yellow-Brick Road Before

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But when the price of silver rose suddenly, too many customers called them to sell their non-existent treasures, and Clark ran out of money to pay them. The company only had $1.2 million in assets (including just $340,000 in gold and silver) when it filed for bankruptcy, which was nearly $6 million less than it owed, court records state.

As noted, the court ordered Clark to pay $1.5 million in restitution for the Sheffield scam — and that was on top of the $3.5 million he was ordered to pay after 100,000 ounces of silver owned by Margaret Viall of California went missing in the North American Coin scandal a decade earlier.

Clark maintains he was the fall guy for the boiler-room bankers who helped bring in customers. Miller, the former Republic Monetary employee, says Clark mentioned the fate of his former victims from time to time.

"I had asked him specifically if he was paying these people back, and he didn't intend to," says Miller, who now helps run a gold-selling company owned by family members in Scottsdale, Desert Gold Exchange. "His attitude was, eff 'em."

Clark felt that after serving seven months in prison and being banned from the business for 10 years, he'd paid his debt to society, Miller says.

He and Desert Gold Exchange (started by his stepson and son-in-law) are now being sued by Republic Monetary Exchange for stealing company secrets, client lists, and about 10 ounces in gold.

But Miller, who denies the allegations, has a new code of ethics since getting busted himself in 2004 for mail fraud.

In the late 1990s, Miller ran a local business called Southwest International Trading Company, which dealt in collectible coins. Miller sold gold and silver coins with a guarantee to buy them back within one year at their original sales price. It was an effective come-on, but one that Miller couldn't sustain after another decline in the price of gold in 2000. To stay afloat, he lent money to some customers who sent him their purchased coins as collateral. But once he received them, Miller and his wife, Grace, sold the coins to pay bills.

After serving 18 months in a federal prison, Miller was ordered to pay back $425,000. Unlike Clark, he says he's made a significant dent in the restitution amount by sacrificing 25 percent of his earnings every month. He claims to have paid back $80,000 of the total.

Ironically, Republic Monetary's strategy in its lawsuit against Desert Gold is to shut down the company, which would end the Millers' main source of income even as Clark refuses to pay back his own victims.

The other side of the gold business, so to speak, is perhaps the most publicly visible one. Anyone driving around town in the past year or two can't help noticing the proliferation of "We Buy Gold" signs on storefronts and street corners.

Some entrepreneurs have added a gold-buying component to existing businesses, resulting in quirky trademark names like "We Buy Gold and Shoe Repair" (in Glendale) and "R&R Barbershop and Jewelry," at 536 East Dunlap Road in Phoenix.

"I have a partner who's a barber," says R&R's owner, Roman Aaron. "It's very dangerous to sit in a room by yourself. With one shop, I kill two birds — I pay less rent, and I have security."

The city of Phoenix, like other Valley municipalities, regulates the industry by making gold buyers obtain secondhand dealer licenses, which can then be yanked if serious irregularities are discovered. Phoenix had 627 such licenses on file as of mid-June, an increase from 2008, when there were 563.

Buyers must hold on to purchased items for 10 days and document all transactions of $100 or more within 24 hours, a less-stringent requirement than for pawnshops, which have to report everything. Any items with serial numbers also must be reported by gold buyers.

Despite the precautions, stolen items frequently end up sold to the buyers, says Phoenix police Sergeant Jeffrey Dick. Four detectives work in the "pawnshop detail" under Dick, going into pawnshops and gold-buying stores daily to make sure they're following the rules.

If a store takes in stolen jewelry, it could be difficult to recover before it's melted down, he says.

Although 48 secondhand dealers were written up for violations in the past 12 months (compared to 43 pawnshops), only two cases resulted in prosecutions.

In one of the two, Chol Kim, owner of D Jewelers at 16456 North 32nd Street, was accused of failing to report four transactions last April that involved gold coins burglarized from a home in Sierra Vista. Kim paid $21,440 for the coins over a three-day period without filling out the required transaction forms, a police report states.

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Ray Stern has worked as a newspaper reporter in Arizona for more than two decades. He's won numerous awards for his reporting, including the Arizona Press Club's Don Bolles Award for Investigative Journalism.