Exclusive:
Glenn Beck's Golden Advertiser Under Investigation By MATTHEW MOSK,
JOSEPH RHEE and BRIAN ROSS | July 19, 2010
Authorities Probe Goldline,
Gold Firm Touted By Beck And Other Fox Talkers, For Alleged
'Rip Off'
Authorities in California said today they
have opened an investigation into Goldline International,
a company that pioneered the practice of weaving its sales
pitches into broadcasts by popular conservative political
personalities -- including two former presidential candidates
and Fox News host Glenn Beck -- to sell hundreds of millions
of dollars worth of gold every year.
"There are two main types of complaints
we're seeing," said Adam Radinsky of the Santa Monica
City Attorney's office, which has launched what it described
as a joint investigation with the Los Angeles County District
Attorney's office.
"One is that customers say that they
were lied to and misled in entering into their purchases
of gold coins," he said. "And the other group
is saying that they received something different from what
they had ordered."
In an interview to be broadcast on ABC
News Nightline Monday night and Good Morning America Tuesday
morning, Radinsky said the probe is in its early stages
and involves more than 100 consumer complaints about Goldline
and one other Santa Monica, California-based company, Superior
Gold Group.
A lawyer for Superior said the company does
not comment on investigations. Goldline officials said customer
complaints are infrequent and it responds immediately to
address them. The proof of its commitment to customer satisfaction,
they said, is Goldline's top rating from the Better Business
Bureau. "When we learn that customers have not received
the experience they deserve, we investigate and take action,"
said Scott Carter, Goldline's executive vice president,
in a letter to ABC News.
In launching the probe into gold sales,
investigators in L.A. and Santa Monica are opening a new
front in a long-running and very public dispute over the
way Goldline has turned the sale of gold into a massive
retail operation that capitalizes on popular conservative
figures – most notably Glenn Beck.
The marriage of conservative talk and gold
sales appears to make sense – both have traditionally
targeted an audience that is skeptical of the government,
concerned about the nation's economic future, and uneasy
about inflation and the stability of American currency.
The promotional strategy appears to have
been beneficial both to Goldline, which boasts $500 million
in sales, and to such conservative figures as Beck and former
presidential hopefuls Fred Thompson and Mike Huckabee, all
of whose broadcasts are peppered with Goldline advertisements.
The symbiotic relationship is on full display
during broadcasts of Beck's daily television show, and on
a promotional video Beck shot for Goldline where he said,
"The people that I trust are the people at Goldline.
And you can talk to the people on the phone. They're not
going to pressure you. If it's the right thing for you and
your family and you want some insurance, trust the people
at Goldline." And on Goldline's website, where visitors
can hear Beck's testimonials. And in the direct pitch from
Goldline sales associates over the phone, where one recently
told a caller, "Now just so you know, Glenn Beck is
a client here. He's been with us several years."
But the potent blend of conservative talk
and gold sales has brought scrutiny, initially from the
political left. U.S. Rep. Anthony Weiner, a New York Democrat,
called the relationship between Goldline and the conservative
talk shows an "unholy alliance."
"There is an unholy alliance, I call
it, between the commentators on Fox News and Fox News' advertising
policies to sell ads to these guys," Weiner said. "If
you're going to advocate for buying gold, it's certainly
your right to do that. But you should tell your viewers
there's a dumb way and a smart way to buy gold And very
often those advertisements are for a very dumb way to buy
gold."
Weiner's congressional office conducted
its own investigation into the firm's sales practices and
said his complaints about Goldline are not just a matter
of politics. Weiner told ABC News that neither the sale
of gold nor the promotion on conservative broadcasts is
the real problem. The rip off, as he called it, was in Goldline's
push to get consumers to buy gold coins instead of pure
gold.
"Once they get people on the phone,
they basically steer them into these so-called collectible
coins and that's where the rip off becomes really profound,"
Weiner told ABC News Chief Investigative Correspondent Brian
Ross.
"So there's no other value that these
coins have because they're unusual or because there's a
mistake in them?" Ross asked.
"There's no doubt about it, that there's
a whole universe of rare collectible coins and I know nothing
about that field," Weiner replied. "Except to
say this: Goldline doesn't sell those coins."
Goldline disputes this, saying the company
sells "a variety of products ranging from the most
common bullion coins to exceptionally rare certified coins."
ABC News interviewed a number of Goldline
customers who said they were concerned they had been persuaded
to buy gold coins that did not hold the same financial promise
of buying pure gold.
One of the customers was 63-year old Joe
Kismartin of suburban Detroit. He says what he heard from
Beck and elsewhere on TV about gold and the Goldline company
made a lot of sense.
"They got the commercials on TV and
the way the economy's going I was figuring well, maybe I'll
just do it for a little bit, save it for inflation, you
know, in case something happens to the economy, it bottoms
out and I've got something to fall back on, gold, rather
than money," he said.
But Kismartin says he ended up losing almost
half of the $5,000 he spent, because, he says, the Goldline
salesman pressured him to buy overpriced gold coins, not
the gold bullion he had seen in the commercials.
"I wanted to go bullion, I didn't want
coins," he said. "I told the gentleman I don't
want coins. He said I got the deal here, the special deal,
I got Swiss coins. He more or less talked me into buying
the coins."
When Kismartin took the coins to a local
coin shop, he was told the $5,000 worth of gold coins he
bought from Goldline five months earlier was worth just
over $2,900, a loss of $2,100. "You know, I'm living
month to month, that's a big loss."
Zoanne Martz of Sacramento says the same
thing happened to her with Goldline when she was persuaded
to buy $13,000 of overpriced Swiss gold coins. Each one
priced at $250 dollars.
"I was recently laid off so I was looking
for getting back some of my money and I found that the most
I could get back for one of those was $207 now," she
said.
And that's despite the fact the price of
gold has almost doubled since she bought the coins three
years ago. "I just really felt like, I kind of, that
I was suckered. I really was. And I really felt that this
was a reputable company that I could feel pretty safe with."
Goldline said it looked into each case Monday,
and found that while both customers had initially complained,
the company believed they wound up satisfied. And one of
them – Goldline did not identify which one –
was provided "a number of written disclosures at the
time of purchase that went even further than Goldline's
ordinary written disclosures," and yet went ahead with
the purchase anyway.
Some angry customers say Goldline invokes
Glenn Beck as a way to steer them to their collectable gold
coins, citing his frequent warnings that only gold coins
are safe from government seizure." You see, back in
1933, FDR said, 'Okay, we're going to take all your gold
and gee, it's worth $8 an ounce.' But some people got smart
and they said, 'Well, wait a minute. I've got antique coins,
you can't melt these down.'"
That's what Martz says she was told by Goldline
– "that would make your investment more secure
because the government couldn't come in and take your gold
basically," she said.
And that's what a Goldline salesman told
a researcher for a liberal media watchdog group, Media Matters,
who set out to buy gold from Goldline to see what would
happen. Media Matters provided ABC News with a copy of the
sales call it recorded.
"When it comes to holding physical
gold, there's a couple concerns our clients have. Are you
concerned with what happened in 1933? Glenn Beck talks about
this very often," the Goldline sales associate says.
"Yeah, I wanted to ask you about that,"
the Media Matters researcher says on the recording, which
was conducted with the permission of the salesman.
Beck and Fox News declined to be interviewed
by ABC News, but a spokesman for Beck noted that Goldline
has an A plus rating from the Better Business Bureau and
the consumer fraud investigation in California is more about
politics than anything else.
"We expect our advertisers to treat
our audience well. With its A+ rating from the Better Business
Bureau, Goldline has met that standard before and we expect
any issues that our listeners have to be addressed swiftly
and appropriately, even if complaints only represent a small
percentage of overall orders," said Josh Raffel, a
spokesman for Beck.
A Fox News spokeswoman said the network
has not received a single complaint from a viewer about
Goldline. ABC News was unsuccessful in obtaining responses
from Huckabee and Thompson.
Goldline officials said its customers decide
to buy coins only after they have all the information about
the purchase in front of them. In his letter to ABC News,
Goldline's Scott Carter said the company's "pricing
is transparent" and "fees and commissions are
disclosed in writing."
"Further, for many of its products,
Goldline offers a price guarantee program, payment by credit
card, and a seven day (or longer) refund period. Within
our very competitive market, we believe these benefits are
among the reasons customers choose Goldline," Carter
said.
In interviews with two former Goldline employees,
ABC News was told the company pays close attention to legal
requirements – training its sales force to avoid offering
investment advice or triggering any legal tripwires during
sales calls. But that does not mean they do not try to persuade
customers to buy coins. In fact, one former sales associate,
who spoke only on the condition he not be identified, said
the entire sales approach is built around coins.
That effort was at the root of Kismartin's
complaint – and not politics. He said he remains one
of Glenn Beck's loyal viewers.
Radinsky, of the Santa Monica City Attorney's
office, said the same is true of the investigation into
the two gold firms.
"Glenn Beck has nothing to do with
our investigation. Our investigation is about transactions
with individual customers and the complaints that they've
raised. And politics really has nothing to do with it. It's
all about consumer protection for us," he said.
Radinsky said his office is continuing to
gather complaints. Customers of Goldline and Superior who
have complaints can contact his office.