A doctor from suburban New York told Congress Thursday that a salesman for the precious metals firm Goldline convinced him to convert his entire $140,000 IRA into gold coins, and that he lost almost $60,000 overnight by making the switch.
Dr. Julius Bazan's claim before a House committee echoed what a former salesman for Goldline told ABC News in an exclusive interview about the precious metal firm's alleged drive to convert retirement accounts into gold coins.
The hearing, which began Thursday afternoon, is meant to explore the reportedly controversial sales practices of Goldline, the precious metals dealer that pioneered the practice of weaving its sales pitches into broadcasts by popular conservative political personalities such as Glenn Beck, Mike Huckabee and Fred Thompson. Company salesmen have allegedly nudged callers away from buying gold bullion and into purchasing collectable coins, which are unregulated and subject to sizeable mark-ups.
"This industry is an orchestrated effort to scare people, to lie to them, and then to rip them off," said Rep. Anthony Weiner, the New York Democrat who called for the hearings, after Bazan had testified. The company has said Weiner's attacks are motivated by "a political agenda."
Bazan, a Czech-born neurologist from Lynbrook, New York, said in a prepared statement that in the fall of 2009, having seen Goldline's advertising, he decided he should "look into the purchase of gold" with the funds from a $140,000 IRA account.
Bazan said that he had wanted to buy bullion, but when he talked to a Goldline sales representative, the man steered him toward coins. "The representative steered me toward the purchase of gold coins because he said the price of bullion could be fixed by the government, but the price of coins cannot." Bazan said the sales rep told him gold would likely reach a value of $3,000 per ounce within the year.
"Thinking that I was doing something wise and safe for my retirement," testified Bazan, "I purchased approximately $140,000 worth of gold coins." Many of them were "eagle proofs," said Bazan, that cost more than $3,000 apiece.
Becoming concerned six months later when the price of gold did not move significantly upward, Bazan said he tried to sell the coins back to the company, only to find that they were valued at less than $85,000.
"Overnight, I lost almost 40 percent of the value of my retirement account," said Bazan, who said he believed he was "deceived" and "manipulated."
"I felt robbed," Bazan told the committee. "It felt like legalized robbery. I didn't expect to lose $60,000 the minute I purchased the gold."
Dr. Bazan's attorney, John White, told ABC News that the Goldline sales rep recommended to Bazan that he "go all in," and put all of the money in his IRA account into Goldline coins. White says the Goldline rep never mentioned that he should keep his investment to the five to 20 percent of his portfolio that the company claims is Goldline policy.
However, Goldine executive vice president Scott Carter, who also testified Thursday, said that Dr. Bazan had been fully informed of the risks of selling the coins before the company's recommended hold time, and that Bazan decided to sell anyway, knowing that he would lose money from the sale.