Excelsior Coin Dealer Indicted for Scheme to Defraud Customers of $2.7 Million
MINNEAPOLIS—Recently in federal court, a 52-year-old Excelsior coin dealer was indicted for devising and executing a scheme to defraud customers and investors of $2.7 million. David Laurence Marion was charged with one count of conspiracy to commit mail and wire fraud, one count of securities fraud, and one count of money laundering. The indictment, which was filed on November 14, 2012, was unsealed following Marion’s initial appearance in federal court. According to the indictment, Marion owned International Rarities Corporation (IRC), a business that bought, sold, and traded gold coins and precious metals, among other things.
Marion purportedly directed his sales staff to “cold call” people from “lead” sheets in an attempt to get these individuals to buy, sell, or trade coins and precious metals. The indictment alleges that between December 2010 and August 2011, IRC had received over $2 million in coins, precious metals, and money from customers who intended to purchase or exchange coins and precious metals. In August 2011, IRC purportedly had over $2 million in unfulfilled customer orders. According to the indictment, when customers inquired about the status of their orders, Marion and the IRC sales staff either ignored them, falsely indicated that their orders were being processed, or told them that their money, coins, and precious metals could not be returned because they were not available.
Meanwhile, Marion allegedly used customers’ money, coins, and precious metals for gambling; to pay for his lavish lifestyle; to pay commissions; to fulfill other customers’ orders; to pay salaries; and to support his family. According to the indictment, customers lost approximately $1.7 million in money, coins, and precious metals as a result of this scheme. The indictment also alleges that Marion was the president of International Rarities Holdings (IRH) and that he directed his sales staff to sell securities in the form of ownership shares of IRH. However, at the time of the offering, Marion was not registered with the Securities and Exchange Commission (SEC) as a broker or dealer, nor was he associated with a registered SEC broker or dealer.
In fact, in April 2009, the SEC rejected Marion’s attempt to register the IRH offering as a security. According to the indictment, from at least November 2008 through July 2009, Marion and his sales staff raised approximately $1 million from at least 26 investors who believe that they were purchasing ownership shares of IRH. Marion purportedly used approximately $200,000 of those investor funds for his own personal use. If convicted, Marion faces a potential maximum penalty of 20 years in federal prison for one count of securities fraud, 10 years in prison for one count of money laundering, and five years for one count of conspiracy to commit mail and wire fraud.
All sentences are ultimately determined by a federal district court judge. This case is the result of an investigation by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation Division, and the United States Postal Inspection Service. It is being prosecuted by Assistant United States Attorney Karen B Schommer. An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant.
A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.
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