{"id":90193,"date":"2016-05-23T17:43:43","date_gmt":"2016-05-23T21:43:43","guid":{"rendered":"http:\/\/countingpips.com\/?p=90193"},"modified":"2016-05-23T17:43:43","modified_gmt":"2016-05-23T21:43:43","slug":"northwest-territorial-mint-scandal-investors-had-fair-warning-on-this-blowup-as-well","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/05\/northwest-territorial-mint-scandal-investors-had-fair-warning-on-this-blowup-as-well\/","title":{"rendered":"Northwest Territorial Mint Scandal: Investors Had Fair Warning on This Blowup As Well"},"content":{"rendered":"
May 23, 2016<\/div>
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By Money Metals News Service<\/b><\/p>\n

The news unfortunately just keeps getting worse for customers and creditors of Northwest Territorial Mint. The prominent bullion dealer located near Seattle, Washington filed for bankruptcy court protection at the end of March. The losses of customers who never received delivery of orders plus the losses of other creditors could be as high as $50 million, according to news reports.<\/p>\n

The U.S. Trustee in charge, Mark Calvert, recently estimated<\/a> the firm has $56 million in liabilities and only $6.4 million in assets. He figures the recovery for unsecured creditors will be less than 10%.<\/p>\n

Northwest Territorial\u2019s former owner, Ross Hansen, seems to be blaming the bankruptcy on a defamation lawsuit that he and his firm recently lost.<\/p>\n

\"Scam\"<\/p>\n

The judgment was $38.3 million in total and the court ordered Hansen to pay $12.5 million promptly. He filed for bankruptcy protection instead.<\/p>\n

The libel damages stem from a website Hansen created using which he apparently waged a campaign to compare a former landlord, with whom he had disagreements, to infamous Ponzi scheme operator Bernie Madoff.<\/p>

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Ironically, it appears Hansen is the one who may have something in common with Madoff. At a creditor\u2019s meeting last week<\/a>, trustee Calvert said, \u201cBased on our analysis to date, the bullion sale of operations have attributes of a Ponzi scheme.”<\/p>\n

The libel judgment may have been the final straw, but it wasn\u2019t the only problem. Customers who ordered from this mint often experienced extraordinarily long delivery delays \u2013 8 to 10 weeks, and even as long as 6 months<\/a>.<\/p>\n

Calvert believes the funds received for new orders were used to buy metal needed to deliver orders placed long before. If that’s the case, the mint was effectively borrowing money from its hapless customers to finance its business. And this practice may have been going on for as long as a decade. Yet, remarkably, customers continued to do business with the mint even as most other precious metals dealers across America make immediate delivery.<\/p>\n

The bankruptcy, the potential fraud now under investigation, and the millions in likely losses represent another black eye for the industry. It comes on the heels of other high profile failures including a \u201clow-price\u201d dealer known as Tulving Company<\/a> and Bullion Direct.<\/p>\n

Regulation Won\u2019t Help: There Is NO SUBSTITUTE for Doing YOUR OWN Due Diligence<\/h2>\n

No one should be surprised if bureaucrats in state and federal government take up the issue and \u201cride to the rescue\u201d with new regulations claiming to protect customers.<\/p>\n

The problem is that do-gooder politicians have a miserable track record when it comes to defending consumers generally \u2013 and metals investors in particular. In the Northwest Territorial Mint case, the Washington State Attorney General\u2019s Office had received hundreds of complaints<\/a>, but didn\u2019t take any actions which prevented the blowup. History shows that regulations will definitely increase costs to customers and probably not have any positive effect on reducing corruption.<\/p>\n

The Northwest Territorial Mint debacle may cost people $50 million. The only thing worse would be to bring in the regulators to inflict further harm on all dealers and all customers nationwide.<\/p>\n

\"Regulation\"<\/p>\n

The CFTC spent 5 years investigating<\/a> the bullion banks for price rigging the silver futures market. Ultimately they declared there was \u201cno viable basis to bring an enforcement action.\u201d That\u2019s embarrassing, given that Deutsche Bank just admitted<\/a> to price rigging in the gold markets during the period when the CFTC was investigating. In mid April, they agreed to pay a settlement and provide evidence to assist plaintiffs in their suit against the remaining banks.<\/p>\n

But the CFTC isn\u2019t the only bureaucracy to fail in protecting investors. The Federal Reserve, which has been charged with regulating banks despite being privately owned by the largest among them, and the SEC complete a triumvirate of incompetence.<\/p>\n

Banks have paid more the $200 billion in fines and penalties associated with fraud, rigging markets, and cheating customers since the 2007 financial crisis. Not a single high-ranking executive at any major bank has been prosecuted or sent to prison. It looks like these fines are simply a cost of doing business. The ill-gotten profits and bonuses run far in excess of what was paid.<\/p>\n

SEC staffers may have been too busy watching porn<\/a> to prosecute anyone. Or maybe regulators are worried about damaging their prospects for a great paying job on Wall Street. The most competent people responsible for regulating the banks wind up working for them<\/a> instead. And many of those who remain would like to do so as well.<\/p>\n

While they are substantial to the 3,500 poor souls who are impacted, the losses at Northwest Territorial don\u2019t amount to much in comparison to these larger swindles. Investors should pray politicians and government bureaucrats don\u2019t try to \u201chelp.\u201d<\/p>\n

Getting Actual, Prompt Delivery of Your Metals Is More Important Than Getting the Lowest Price<\/h2>\n

Bullion buyers are going to have to help themselves. Customers following a couple simple steps<\/a> could have avoided most of the losses in recent dealer bankruptcies.<\/p>\n

\"Prompt<\/p>\n

Do an internet search for Better Business Bureau reviews on the company and look for a pattern of problems, particularly slow deliveries. There must be a reasonable explanation for delivery delays, and they should not be persistent and across all products. WARNING: a company that constantly struggles with making prompt delivery may be undercapitalized or outright insolvent.<\/p>\n

Mounting issues were apparent at both Tulving and Northwest Territorial Mint going back months or even years. So when purchasing precious metals from any dealer, get a commitment upfront regarding when your order will be delivered \u2013 and pay close attention to whether that commitment is kept.<\/p>\n

Businesses can and do fail, but it rarely happens suddenly and without warning. They generally start missing commitments first.<\/p>\n

Remember that getting a good deal is nice, but getting delivery of what you paid for is far nicer. Choose your bullion dealer carefully, and you\u2019re unlikely to get a raw deal.<\/p>\n

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The Money Metals News Service provides market news and crisp commentary for investors following the precious metals markets.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Money Metals News Service The news unfortunately just keeps getting worse for customers and creditors of Northwest Territorial Mint. The prominent bullion dealer located near Seattle, Washington filed for bankruptcy court protection at the end of March. The losses of customers who never received delivery of orders plus the losses of other creditors could […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-90193","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/90193","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=90193"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/90193\/revisions"}],"predecessor-version":[{"id":90209,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/90193\/revisions\/90209"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=90193"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=90193"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=90193"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}