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Two Ex-Cons Fight for Stakes in a Gold-for-Cash Business

James D. Clark is delivering his father to the enemy.

It's the afternoon of April 19, the betrayal occurring around a conference table at the Tempe law office of Mark Sahl.

Clark's the son of prominent Arizona gold dealer Jim Clark, owner and CEO of Republic Monetary Exchange in Phoenix. He's getting deposed in a lawsuit against his father's precious-metals company, for which he'd been vice president of sales from July 2009 until January 2012.

His mom, Kathleen Clark, is in the room, but his dad isn't.

Leading up to this day, the lawsuit had been very personal for Republic's CEO.

It was filed in Maricopa County Superior Court in May 2011 for the benefit of Sherman Unkefer, a 30 percent owner in Republic since he and Jim Clark formed the company four years ago. If Unkefer wins, he'll have access to the company's treasured client lists and control over its management decisions by way of a court-appointed receiver.

Unkefer and Jim Clark had been good friends for years — back to the days when they were accused of defrauding clients at a major gold-selling firm in the mid-1980s. Both are convicted white-collar criminals who have done hard time for their deeds.

Now, after destroying a longtime friendship, the lawsuit has made a turncoat of Clark's son.

Rather than the series of "I don't recalls" that might be expected when a son is called to answer questions about his father's business, the statements under oath by Clark's boy are merciless.

"Would you go into business with Jim Clark, in any business?" attorney Sahl asks the younger Clark at one point.

"No."

"Do you trust him?"

"No."

Clark prefaces his testimony by explaining how his father had called him two days before the deposition to mention "specific concerns" about the testimony he knew his son was about to give — namely, about "the cash transactions" and how his son could have so much knowledge about them.

"What else did he say about the cash transactions?" Sahl presses.

"That it could — it could be problematic."

Republic's main business is selling coins and ingots, typically for investment purposes. It also buys precious metals. As with similar businesses, customers usually deal with independent salespeople who work on commissions in a high-pressure environment. Most of the business is done over the telephone, but there are plenty of walk-in customers. Often, they'd be handled by Clark's father personally in what Clark calls "Jim Deals."

Republic salespeople knew their boss had dibs on cash buyers, the younger Clark says in his deposition testimony. Dipping into Republic's inventory or his private stash of coins from two safes in his office, Clark sometimes gave customers the product and took cash. The CEO later replenished the company's inventory with products at wholesale prices, allegedly keeping the profit for himself and the transaction off the books. Jim Clark says his father made such deals nearly every other day, causing Republic to lose hundreds of thousands of dollars yearly.

An even more common "Jim Deal": The customer offers to sell a few gold or silver coins, and the CEO pays him out of his own pocket and keeps the profit for himself, James Clark testifies. That happened once or twice a day — and also resulted in several hundred thousand dollars a year in profit diverted from Republic, he says.

If cash deals did find their way into accounting records, Clark says, sometimes they'd be deleted. Clark says he told his father dozens of times to manage the financial records better. He names six current and former brokers for the firm who complained about the handling of such deals, but he says his dad ignored him. Jim Clark isn't "necessarily" malicious, but he gets "distracted" and "rubs people the wrong way, causing high turnover among brokers," the younger Clark tells the court.

Near the end of his testimony, Clark mentions that while he worked as VP of sales, he fretted that the way Republic handled its gold Individual Retirement Account deals for clients could be "frowned upon" by the IRS.

It's unclear why James Clark turned on his dad. He stood up for his father in July 2010 following a New Times article ("Gold Rush") that exposed the business' ties to the ex-cons, saying for a blog post that the company was well-managed and reputable ("Republic Monetary Exchange Manager Defends Company," Valley Fever blog, July 8, 2010). The relationship certainly has gone south since.

Assuming it's true, Clark's testimony backs up the argument behind the lawsuit, which alleged that his father wasn't sharing financial records — or profits — with his partners.

Not to mention that it doesn't look good for the business.

Yet if Jim Clark started the war by trying to cheat his old pal out of rightful earnings, that wouldn't bother Unkefer's enemies — the sons of his deceased wife.

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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.
Contact: Ray Stern