[Summary: Many complaints of shipping delays beyond 28 days; Bullion Direct shut down in June, bankruptcy in July.]
[Also see: forums for discussing Bullion Direct issues, mailing list (below), anonymous tips (below)]
[Contact: about.ag [at] gmail.com]
Old Bullion Direct NewsThis page is for old Bullion Direct news, before they filed for Chapter 11 bankruptcy.
What To DoJuly 16, 2015 8:50PM EST
My understanding is that IDS (the depository holding metal for Bullion Direct, which may include stored metal, catalog inventory, and/or metal shipped to Bullion Direct in the past month or so) will only act on instruction from Bullion Direct.
It appears that they have shipped out at least one package to a customer that had sent metal to IDS/BD, and not received payment for it.
Customers are reporting that IDS is saying that inquiries should be sent to Bullion Direct's counsel, and is giving out that information.
Although you can contact their counsel, it may be best to wait a day or so to see if their counsel will make a general statement (e.g. what might be returned). That way, their counsel will not be unnecssarily overwhelmed. I am waiting to hear back from their attorney.
New Statement on Bullion Direct WebsiteJuly 16, 2015 8:20PM EST
The website says:
Bullion Direct's management continues to work with its consultants and attorneys, as well as with legal authorities, on a plan to address the complex issues which have resulted in the cessation of BD's ordinary course business activities. Other important considerations involve the preservation of BD's Intellectual property, which include a multi-industry Patent and proprietary software platform. The cessation of BD's ordinary course operations will continue while we finalize our plan to resolve all issues affecting our customers. We expect to have a more detailed update, posted on our website, by the end of next week.
It's the same as what had leaked a few hours ago, but is now official.
Report of Intent to File Chapter 11 BankruptcyJuly 16, 2015 3:00PM EST
A customer has reported that he has heard (from a third party) that Bullion Direct intends to file for Chapter 11 bankruptcy next week.
I have not yet confirmed this, but like the alleged E-mail from Chares McAllister in the previous post, it seems legitimate.
UPDATE 8:20PM: Since Bullion Direct confirmed the E-mail leak, this is almost certainly true.
July 16, 2015 1:10PM EST
|Texas Attorney General||One customer reported that the Attorney General had opened a consumer fraud watch.|
|IC3||IC3 (Internet Crime Complaint Center), run by the FBI and NW3C.|
|FBI||One customer suggested contacting the FBI.|
|FTC||Federal Trade Commission. Reference case #63700304. Also you can call 877-382-4357.|
|Travis County DA||Travis County District Attorney's office. In the Tulving case, police referred people to the local DA's office.|
|CFTC||The Dodd-Frank Act authorizes the CFTC to investigate matters that involve bullion purchased not delivered within 28 days.|
|USPS||The U.S. Postal Inspection Service investigates any crime in which the U.S. Mail is used to further a scheme.|
|Austin Police||Austin, TX Police Department.|
Useful information to have on hand may include:
Company: Bulliondirect, Inc. Principal: Charles Hadley McAllister (President/CEO) Address: 700 LAVACA ST STE 1400 AUSTIN TX 78701-3102 Phone: 512-462-2646 (goes to voice mail) Website: www.bulliondirect.com E-Mail: firstname.lastname@example.org County: Travis County
This makes it clear that this is an allocated account. You are buying individual products, not a share of a large bar. And with a traditional allocated account, you have title to the metal, and they cannot replace it with something else. The 'not segregated' wording might leave them some 'wiggle room' (I.E. if you have stored 2 1996 1oz gold eagles, they could have 20 1996 1oz gold eagles in a tube (rather than in a separate cage, box, etc.), 2 of which belong to you, and 18 which belong to other people -- but they cannot then sell any of those 1996 eagles and let it go down to 18 1996 gold eagles; selling them would be selling your metal (or that of another customer), which is not allowed in an allocated account).
That is what they advertise(d).
Now, what is the deal with metal stored at Bullion Direct? It may vary as terms likely changed over the years, but the Terms of Service current states BD "shall have the right to deliver the same Product in another form, provided that it is of at least equal value." (for stored metal). But if they decide what to send you when you request possession, that by definition is unallocated. So how does one interpret that?
The terms also say "Title to the Products purchased by Customer shall pass to Customer upon delivery to Customer or Customer's appointed agent or designee." So title gets passed to the customer when it gets to storage, like a typical allocated account. But it then goes to say "Products that have been delivered to BullionDirect®?s storage facility for Customer will be held in safekeeping on a fungible basis and Customer will receive title to an undivided share of the Products so held." How can one reconcile that with an unallocated account? When you buy 4 1996 gold eagles, they put them in a pile in the vault, and their records show they belong to you. Another customer buys 6, so they have a pile of 10. Since they have not allocated specific coins to you (as they should in an allocated account), they say you own 40% of the pile (without specifying which). So that *could* work.
But, they further state "BullionDirect® may use such Products, in fungible form", adding to the confusion. If they have 10 1996 gold eagles, 4 titled to you and 6 titled to someone else, how can they "use" the products? If they sell some without replacing them (or replacing them with something else), they have sold the metal that it titled to you. Had it been segregated or not fungible, that would be a serious problem. Calling an allocated account unsegregated and fungible doesn't give thenm a right to sell your metal. The only way I see that working is if Bullion Direct believes you gave them permission to sell your metal and replace it -- but that goes against they very idea of unallocated storage.
The good news? If they really did have allocated storage, and treated it as such, they should have 100% of the stored metal in a vault somewhere. Recent events suggest that they not have all that metal, but they should and could.
Bullion Direct used to show their address as "700 Lavaca St. Suite LL-1." Their contact page now shows the address as "700 Lavaca St. 14th Floor." The 14th floor is owned by Austin Suites, which offers executive suites ranging from about 77SF to 347SF (with shared kitchen, shared conference rooms, shared reception, etc).
One customer reported going to the 14th floor and being told by the receptionist that they "weren't currently in the office."
So it appears that around the time that Bullion Direct shipped all their inventory and stored metal to Delaware, they also downsized their office by over 90%. And it appears that they have also laid off nearly all their employees. With the bullion wholesaler in Delaware offering fulfillment service, and no need for someone to answer the phones, it could save a lot of money and be a viable business metal. If metal got shipped.
Of that $3.8M, $3.0M is in mint sealed boxes of 1oz gold buffalo coins. The rest is in a variety of other products, including $270K of gold maples.
There appears to have been no change in the inventory from June 26 (when operations officially were suspended) until now, which is to be expected (e.g. the inventory should only be of metal that has not been sold yet, so it should not change if nobody is buying). Any metal received by Bullion Direct after June 26 does not appear to have been added to their online inventory.
For inventory I can find before June 26, I see minimal changes since around the beginning of April (that is as far back as I checked). No major increases, some minor decreases. However, I am not able to check all inventory from before June 26, so this anlysis could be off.
This doesn't really help answer questions (e.g. whether this is the 'fungible metal' backing up stored metal, whether the fungible metal is kept separate from inventory, and so forth). But it is metal that likely does exist.
It is also important to note that the $2.0M figure might be close to as high as it could get, or just the tip of the iceburg (that may be lots of people who have metal stored with Bullion Direct that are unaware of the problems, as unlike customers, they are not anxiously waiting for an order). We also have no idea of the amount of metal that Bullion Direct may have, or the value of their other assets. With Tulving, I made estimates of how much was owed, but that is just not possible here.
BBB encourages consumers to also reach out to the Texas Attorney General's office and/or their local AG's office regarding any disputes.
However, the information from the Travis County Tax Office is confusing, to say the least. They do show that the original tax bill was for $21,878.26, but the current statement is for $16,780.07 (which includes $2,559.67 for penalty and interest due). The numbers do not add up, which brings up the possibility that the amount due was changed (e.g. due to a contested valuation). Either way, the Travis County Tax Office records do not show any payments since the 2013 tax year (paid January 9, 2014), and do show a penalty and interest due.
My belief is that Bullion Direct shut down on June 15, 2015. I contacted the CEO on June 14, 2015, and he responded a few hours later. He posted to the forums mid-day June 15, with no sign of life until the June 26, 2015 note change on the website.
So I would appreciate hearing about any sign that the company was functioning (except by computer, such as the website and auto-replies) after June 12. You can E-mail me at about.ag [at] gmail.com or by using the anonymous 'tip form'.
UPDATE: I did receive one report of someone having contact from Bullion Direct on about June 17.
The problem is, if nobody takes a role like mine because they are scared of the law, I believe it causes greater harm to customers than if someone like me comes to the plate and makes a mistake. With Tulving, many people complained about being fed up with the courts, bankruptcy trustee, and others. It mostly boiled down to getting no information. That is something I am providing, and Bullion Direct customers need.
My litmus test is simple: Do I feel that I am doing significantly more good than harm? If so, I believe overall what I am doing is good. If not, or it is not clear, I should stop. I do not take this lightly: my actions can affect the life savings of individuals. But if not acting could do more harm, I must act.
Yes, I could be sued for calling Bullion Direct insolvent. But, ask their customers who are not getting their money, and I believe they will agree that Bullion Direct is insolvent. Sensational journalism is designed to attract as many readers as possible, to make as much money as possible. I am not making money off of this, nor do I have any desire to, nor do I care about getting readers beyond those affected by Bullion Direct. There could potentially be thousands of people out there with metal stored at Bullion Direct who have no clue what is going on, because they are not waiting on a product draw. They need to know.
I also want to remind everyone that if you see any errors in what I write, or see any legal advice, please let me know (anonymously is fine) so that I can correct it. If you know that I made an error, however, please do not just send an anonymous note hinting that there may be an error but without specifying what it is -- it seems to me that doing so directly harms Bullion Direct customers.
I also posted an update to the "Title of Stored Goods" to clarify that the intent of the article was to show that Bullion Direct's terms were written in a way that I believe allows them (per the terms) to use the metal (regardless of whether the law allows it, or closer inspection of the language might not allow it).
I have to walk a very fine line here. It would be irresponsible for me to push to have perhaps hundreds of people each pay an attorney, when some of them will be perfectly content with legal information that I can supply. On the other hand, You need to remember that I am not a lawyer, and have no legal training.
I have found the answer: according to the Bullion Direct Terms of Service, customers with metal stored at Bullion Direct have an 'undivided share' of the 'fungible' metal, which Bullion Direct may use. Fungible essentially means that if you buy a 1 ounce gold coin, they could put a 1 ounce gold bar in their vault. Undivided share means that all customers own whatever is in the vault (but no specific pieces of metal belong to any one customer). And Bullion Direct can use the metal, with no restrictions listed.
In other words, per their terms, Bullion Direct might have $10M of metal stored for customers and have sold $9M of it to pay for expenses. In that case, customers would own their share of the $1M of metal left, and be owed the other $9M. If Bullion Direct filed for bankruptcy, that should mean that the $1M of metal would be sold and split among customers who had stored metal (each getting 10% of what they were owed), and the customers would then be an unsecured creditor for the remaining 90% (while those who had placed orders would get none of the money from selling that metal).
This could potentially be very, very bad news -- it means that Bullion Direct may have "dipped" into the customer metal to pay expenses for many years, and may not have any of the stored metal left (which would explain why product draws were being delayed along with catalog orders).
Update: The intent of this post was to show that, at least the way I read the Bullion Direct terms, they are allowed (by their choice, which could conflict with the law) to use metal stored with them. In other words, had I stored metal there and read the terms, I would have realized that they might use the metal. Whether or not they have a legal right to do so is beyond my expertise (and even if it were not, I would not, as I believe that would be legal advice, which I cannot and will not intentionally provide).
The 'Bullion Direct and Nucleo' forum is designed to replace the forums at Bullion Direct, as they could easily disappear at any time.
Bullion Direct, therefore, is insolvent and (at least for the time being) out of business.
The amount owed customers is impossible to accurately estimate, as little is known about Bullion Direct's sales volume, as well as the amount of metal they have stored on behalf of customers, and the amount of customers' money they have. It could be as little as perhaps $1M, or could conceivably be as high as $10M or more.
I E-mailed Charles McAllister (Bullion Direct CEO) about 24 hours ago, asking directly if Bullion Direct was out of business (and saying that I was planning to post that), and he chose not to respond (I did receive a response from him before from this E-mail address, and he is aware of who I am and my role here).
I strongly encourage people to spread the word. In the past 2 weeks, I am not aware of anyone who has heard from the CEO, been on the phone or chat with someone at Bullion Direct, received an E-mail (not automated) from Bullion Direct, received a shipment, or received a check or wire transfer. The only "sign of life" I have seen at Bullion Direct over the past two weeks is that last Friday they posted that they were suspending operations. That's it.
I encourage people to link to this page, to make it easier for customers to find out what is going on at Bullion Direct.
Information can be sent to me at about.ag [at] gmail.com, or using the anonymous 'tip form' (although I cannot respond there).
Also, anyone with any information about what happened at Bullion Direct is welcome to use the anonymous 'tip form.
I bring this up because this may have added stress to Bullion Direct (e.g. likely having to comply with subpoena requests, and anything involved in freezing the assets).
I believe that what occurred was a switch from having product stored in Texas to having the product stored at IDS of Delaware. I believe that Bullion Direct has an account with a bullion wholesaler that uses IDS Delaware. Presumably, such a setup would allow Bullion Direct to be "hands off" -- catalog orders could be sold directly by the bullion wholesaler. People selling metal through Nucleo would send it to the wholesaler via IDS Delaware, and then the wholesaler would send out the product. Bullion Direct keeps a headquarters in Texas, but only for 'paperwork.' I have seen no sign that Bullion Direct has any employees in Delaware.
This could also account for some of the issues. It appears that Bullion Direct is operating on a skeleton crew -- if nobody was needed to ship orders, that would explain why the staff would be so small (especially since there is nobody needed to man the phone lines).
Of course, this does not account for why orders and cash are not going out. If Bullion Direct has the cash for all the orders (which it should), they could just wire the money to the wholesaler, who normally ships within 48 hours.
This also brings up the question: If they are using a bullion wholesaler to ship orders, why would they think that hiring extra people this summer would help get orders out?
It looks like all BBB complaints dated (closed) through May 18, 2015 have received their order/money. There are no BBB complaints dated May 19, 2015 through June 8, 2015. There are 19 BBB complaints dated after June 8, 2015, of which it appears 4 have received their order.
The BBB has only added one complaint in the past week, suggesting that they are waiting to hear from Bullion Direct on other complaints that have been filed (BD will be given 30-35 days to respond before the complaint is listed online as "failed to respond"). Since only one BBB complaint has been added in the past week, it suggests (but does not confirm) that Bullion Direct may not be shipping orders at this time.
Bullion Direct CEO Charles McAllister wrote on June 15 "We believe we will be able to recover from these delays over the coming 3-6 weeks." It has been just over 2 weeks now, with no indication that they have made any progress (let alone recovered). They also posted on Friday afternoon that "... Bullion Direct is suspending its operations as it attempts to resolve those issues. We intend to keep you informed at this website. ...", yet nothing more has been posted.
Bullion Direct has experienced significant transactional delays. To avoid further inconvenience or other adverse consequences to our customers, Bullion Direct is suspending its operations as it attempts to resolve those issues. We intend to keep you informed at this website. Thank you for your patience.
I find this encouraging, as it sounds like a company that is trying to deal with issues appropriately (as opposed to The Tulving Company, that kept taking orders for months after things were out of control).
There is also a customer coordinating legal action with an attorney. You can E-mail the customer at BDComplaints AT gmail DOT com for details (he says "Please include the date you placed your order and the dollar amount of the order").
With Tulving, I recommended contacting a number of other agencies. That was primarily to get the company shut down, which didn't work as intended (they allowed Tulving to run for months; he shut down voluntarily, only to be raided a week later, ruining plans to sell off assets in a more cost-effective Chapter 11 bankruptcy). At this point, it is too early to get a good grasp on what is happening with Bullion Direct (e.g. although there is strong evidence suggesting contractual obligations being broken, unlike Tulving I am not aware of any laws being broken). If they are short-staffed due to the relocation, a reduction in order volume may be all that is needed to fix the situation -- in which case a Secret Service raid could easily destroy a company that has had an excellent reputation for many years.
As a reminder, I am not an attorney, and whatever I write is not intended to be legal advice.
I closely followed the demise of The Tulving Company, starting to alert people about 4 months before it shut down. I did so because I had recommended Tulving to many, many people over the years, and felt bad knowing that someone of the creditors likely heard about Tulving through me (directly or indirectly). After it shut down, I was asked more questions by people, and realized that there are no good resources for consumers who are owed money after a business shuts down. Many Tulving creditors have heard nothing from official channels; not even a response that their Proof of Claim form was received by the courts. So I continued following the situation, and helping as I could.
I then stared a webpage with a list of failed bullion companies, with around 100 listed. And I learned a lot about how the process works, from early warning signs to the bankruptcy process. I also started a website ("Bullion Dealer Data") that investigated bullion dealers (lawsuits, government actions, BBB ratings, etc.). I was contacted by a customer of Bullion Direct (which until that point I had regarded as a highly respected company), and started investigating. And I could see something wasn't right.
With Tulving, I acted as a central resource of information, interacted with lawyers and government officials, was given occasional confidential information as well as other information that could not be made public, uncovered new information, helped answer questions, let people know the status of the situation and what the next steps were, and so forth.
I continue to hope that the Bullion Direct issue will resolve itself, and everyone will get what they are owed, without having to resort to bankruptcies and/or lawsuits. But if not, I hope to be able to help out in a similar fashion.
What may be encouraging, though, is that one piece of advice I gave him was that in his situation I would "address customers concerns and the BBB as best I could". At that point, there had been no BBB complaints resolved to the satisifaction of the customer since May 18. There were then 4 BBB complaints "resolved to the satisfaction of the customer" in the next 2 days, with another 4 that the BBB has not heard back from the customer on yet. Given the BBB reporting, this could be a coincidence, however. He also took a couple minutes to post to the forums the next morning (although he did not address individual customer concerns).
In the BD forums, there is a customer who is working with an attorney, and the customer suggests pooling claims together to make legal action more cost effective and efficient; you can contact that person at BDComplaints AT gmail DOT com (he says "Please include the date you placed your order and the dollar amount of the order").
My sincere hope is that Bullion Direct can fix the issues, and continue operations. Unfortunately, from what I can see, there is little evidence that this company is still operating. They are not reachable by phone, and members report chat is not operational and they are not responding to most E-mail. It appears that around mid-March they stopped actively managing the forums (e.g. removing spam). And at some point, BD stopped responding to BBB complaints within the 30-day timeframe. From what I can see, at best, this company is operating on a skeleton staff.
One thing that I can safely say is that as far as I can tell, it should do no harm to the company to temporarily stop doing business with them until they are able to clear up these issues. Clearly, if they are backlogged with orders to the point where they cannot get them out in the timeframe their terms of service require, they will benefit from reduced orders until they can catch up. So at this point, I am going to urge people to start spreading the word to hold off on doing business with Bullion Direct until they are able to get nearly all orders shipped within 28 days (or some other positive resolution occurs).
As of today, there is no record of any lawsuits being filed against them (but often lesser courts do not include lawsuits in PACER). The Texas Attorney General apparently has at least 17 complaints. The BBB has suspended BD's accredidation, and will be reviewing the case with their Board of Directors in about a week. It looks like BD stopped responding to BBB complaints as of early May.
The most recent order I have reported as shipped was sent out around June 10, although that is the only one of two orders I have a record of being shipped after May 10 (there are almost certainly others; there could easily be hundreds of orders being delivered on time that I am not privy to).
I will continue to update as I get more information.
I have confirmed about a dozen cases where BullionDirect, Inc. has taken over 28 days to deliver product to customers after receiving cleared funds. Their terms of service state that they will ship within 28 days.
I expect to update this page frequently (as I get new information) until things get back to normal.