Coin Broker Sentenced to 54 Months for Defrauding Elderly Clients
MADISON, WIS. - Scott C. Blader, United States Attorney for the Western District of Wisconsin, announced that Jamie Smith, 42, Baldwin, Wisconsin, was sentenced yesterday by U.S. District Judge William Conley to 54 months in federal prison for mail fraud. Smith pleaded guilty to this charge on September 17, 2019.
Smith owned and operated two precious metals brokerages houses in Hudson, Wisconsin from 2014 to 2017, called American Platinum Gold & Silver, Inc., and American Independent Gold & Silver, Inc. These entities were engaged in the business of evaluating, buying, selling and trading coins and precious metals. Through his work at these brokerage houses, Smith contacted individuals concerning their coins and precious metals, and offered to appraise the coins, buy them, trade them, or sell them for the client.
Smith defrauded his clients by misappropriating their money and property. He did this by not honoring his coin transaction agreements with his clients, and failing to tell them he was using their money and property for his own uses and personal expenses.
As part of the fraud scheme, Smith liquidated his clients’ coins and used the funds for purposes other than what he promised. When clients demanded their money or return of their coins, Smith lied and told them that their coins and/or money were in the mail, when in fact, they were not. Smith also took in money from other clients for the purchase of coins, but never shipped the coins. Finally, Smith took in coins from additional clients for purposes of providing an appraisal of the coins, but never returned the coins to them, or paid them for the coins.
When clients began complaining and threatening to sue Smith, he falsely told his clients that he needed two years to pay everybody what he owed them because he suffered a financial loss due to, among other things, an “employee embezzlement of company funds.” In exchange for the time extension, Smith promised he would pay interest, penalties, and any taxes caused by the extension.
FBI agents traced the client funds that went into Smith’s main business bank accounts, which showed that Smith used client monies to pay for charges at fast food restaurants, grocery stores, liquor stores, bars, hotels, ATM cash withdrawals, and his home monthly mortgage and utilities. FBI agents identified 46 victims in this case, and the loss amount was $1,240,299. Many of Smith’s victims were elderly and the stolen coins represented their retirement nest eggs.
Smith previously ran his brokerage houses in Minnesota from 2010 to 2012 with Robert Gundy and Jay Flynn. Gundy and Flynn pleaded guilty to mail fraud in 2014 in Minnesota. Both were sentenced in 2015, with Flynn receiving a prison sentence of 52 months and Gundy receiving a 41-month prison sentence. While Smith was not charged in the Minnesota mail fraud case, he did enter into a civil settlement agreement with the Minnesota Attorney General’s Office and agreed that he and his company would be permanently enjoined in Minnesota from engaging in misleading and deceptive business practices pertaining to the purchase, sale, or appraisal of coins and precious metals for clients.
The charges against Smith were the result of an investigation conducted by the Federal Bureau of Investigation, St. Croix County Sheriff’s Office, River Falls Police Department, and the Minnesota Department of Commerce. The prosecution of the case has been handled by Assistant U.S. Attorney Daniel J. Graber.