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[Summary: In Chapter 11 bankruptcy (reorganization) after reports of 6+ month delays, $55.8M owed creditors]
[Upcoming Dates: n/a]
[Related Pages: court documents, mailing list, tips, Bullion Dealer Data, 341 Meeting]
[Contact:
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Info from Applications

September 16, 2017 12:00PM
Here is some information I got from the fee/expense applications:

  • The Creditors' Committee expects the reorgnization plan by the end of the year, while the attorneys say that the Trustee envisions filing it in the spring of 2018.
  • Trustee Mark Calvert has talked with quite a few potential buyers, including a major bullion wholesaler.
  • The Trustee (apparently at some unknown past point in time) felt that if the business could be preserved, $15-$17M could be returned to customers.
  • $12.9M of inventory was considered "missing." However, this includes $5M of metal leased from customers, which arguably could have been sold to finance operations (the leased bullion could be used "for any business purpose deemed necessary or convenient by Lessee...").
  • A good summary of the status appeared: "The Trustee anticipates that the sale of the Company as a going concern or reorganization of the Company on terms providing dividends to creditors post confirmation will eventually provide the resources for payment of administrative expenses and distributions to creditors. The Trustee is also in discussion with potential purchasers who have expressed interest in purchasing the company on a going concern basis, or otherwise investing in the business."
Some of the notable expenses include:
  • $490K to K&L Gates relating to the Medallic lawsuit
  • $163K to K&L Gates relating to the Diane Erdmann lawsuit
  • $139K to K&L Gates relating to the American Express fraudulent transfer action
  • $71K to K&L Gates for meetings and communications with Creditors (161.2 hours). That's $445/hour.
  • $52K to the Creditors' Committee for 109.3 hours communicating with non-committee members . Perhaps I should raise my fee from $0/hr to something closer to their $474/hour. Wow.

Compensation Applications Filed

September 16, 2017 11:50AM
The professionals have filed their most recent applications for compensation. This is the second time that they have filed them. Aside from expenses, they can provide a lot of insight into what is going on behind the scenes, and often a lot of information that would otherwise be confidential becomes public. They are requesting a total of $4,160,059.07.

The numbers below include fees and expenses (postage, lodging, airfare, etc.). Although some of the money has been previously paid, my understanding is that most of it will not get paid until NWTM has the ability to do so. If you want you can view the compensation applications: Creditor's Committee and its declaration, Cascade Capital Group and its declaration, Trustee and his declaration, K&L Gates declaration.

SourcePreviousNewTotal
Creditor's Committee$56,990.18$271,854.07$328,844.25
Cascade Capital Group$110,338.70$737,460.71$847,799.41
K&L Gates, LLP
(attorneys for Trustee)
$232,671.12$2,148,584.29$2,381,255.41
Mark Calvert, Trustee$26,052.18$576,107.82$602,160.00
TOTAL:$426,052.18$3,734,006.89$4,160,059.07

Chapter 7 Rumor

September 1, 2017
I recently heard that there was talk that Chapter 11 Trustee Mark Calvert might be considering converting the case to Chapter 7. I do not see any signs of this, aside from a request made for a status conference (which the judge denied).

Chapter 11 is "reorganization", where debts are paid to the extent possible while allowing the business to continue. In this case, the idea is to get the company running and growing with reliable accounting records and to sell the business, with the proceeds going to creditors (not Ross Hansen, the owner of the company).

A Chapter 7 bankruptcy is "liquidation" -- essentially a "fire sale." The idea is to shut down operations and pretty quickly sell whatever assets there are, with any proceeds going to creditors. Most bankruptcies are Chapter 7, but Chapter 11 typically provides the best results to creditors if it is possible to reorganize the business successfully. A Trustee would normally only consider converting to Chapter 7 if the business could not continue profitably, and a Chapter 7 liquidation would therefore provide more money.

In the June, 2017 monthly financial report (from just over a month ago) the idea of liquidation came up, but only if the business could not be successfully sold. The more recent July monthly financial report (from a couple weeks ago) does not mention the possibility of liquidation, although with the difficulties NWTM has faced, it certainly cannot be ruled out.

If I get further information, I will certainly report it here.

June, 2017 Monthly Financial Report

July 25, 2017 2:50PM EST
NWT Mint Chapter 11 Trustee Mark Calvert has released the June, 2017 Monthly Financial Report.

It points out that they are seeking a buyer for the business as an ongoing concern. The cash flow is tight, and they may use the factoring financing. They are considering pay cuts to help manage the down turn in sales (due to 'bankruptcy "headwinds" and seasonality'). The new CEO is focused on rebuilding the sales organization and driving growth in sales for the company. If sales growth does not materialize, then the company will need to be liquidated.

The report has further details on page 48 ("Significant Events and Case Progress").

No news...

July 21, 2017 2:10PM EST
This is really just a 'placeholder', as there is nothing to report.

I keep watching for any news on NWT Mint, reading any anonymous tips that may come in, and awaiting E-mails from those in the know. But there just hasn't been anything to report lately.

Judge Orders 2004 Examination

June 30, 2017 7:45AM EST
Yesterday, the judge entered an order that allows Mark Calvert to examine Ross Hansen and Diane Erdmann regarding the $500K of bullion they sold to fund their legal expenses.

The order differs significantly from the suggested order filed by Calvert (it is typical in a legal proceeding for someone to file a suggested order, which the judge will often sign as it is written, but that did not happen here).

While it does not allow everything the Trustee wants, it does allows the examinations to occur (which Diane Erdmann and Ross Hansen did not want to happen), which is good for creditors, as it may help speed up the bankruptcy process slightly.

The $500K Saga

June 23, 2017 10:15AM EST
On June 2, 2017, Chapter 11 Trustee Mark Calvert filed a motion for a 2004 Examination of Diane Erdmann (NWTM owner Ross Hansen's long-time girlfriend), to find out more about the $500K of precious metals she sold to fund her and Ross' legal expenses, starting a few weeks after she testified that she had very little assets ("destitute" is the word her lawyer used).

Diane responded, basically saying that she shouldn't have to testify again because she never claimed she had no assets, and that it would be more appropriate to testify in the adversary proceeding against her (alleging that $1M or so of expenses charged to Diane's American Express card, that NWTM paid for, were personal).

What I haven't yet covered is that earlier this week, [1] the Trustee replied (e.g. pointing out that the $500K of metal is a different asset than the American Express charges), [2] a creditor (thank you!) filed a memorandum in support of the 2004 exam (e.g. pointing out that metal of customers that Ross and Diane were in charge of safeguarding is missing), [3] Ross filed an objection (e.g. saying that the Trustee is harrassing Ross), and [4] the Trustee replied (e.g. pointing out that the Trustee's actions were typically because of an issue Ross caused). The hearing is set for today at 9:30AM PST (12:30PM EST).

Sadly, by my estimation, Diane's desire to essentially delay testifying will have cost creditors roughly $25,000 (that goes beyond what would have been spent if Diane had not objected to the 2004 exam). Including Diane and Ross's costs, and related expenses that have not yet occurred, it could easily top $50K that will have been spent just to delay a single testimony.

Hansen Hired Tulving's Criminal Attorney

June 19, 2017 9:05AM EST
On March 18, 2016, two weeks before the NWTM bankruptcy petition was filed, NWTM owner Ross Hansen paid law firm Wyatt & Blake a $25,000 retainer regarding a criminal matter. The retainer was paid for by Diane Erdmann, either on behalf of Ross Hansen or NWTM. Diane stated that James Wyatt was hired to "[look] into a criminal matter for Ross."

In the depositions where this was discussed, it seemed that nobody was familiar with James Wyatt. For me, though, that name was nearly jumping off the page. James Wyatt is the leading expert on criminal charges against the owners of well established online retail bullion dealers that go bankrupt owing customers millions of dollars. In fact, he is the only attorney with such experience. He is located in Charlotte, North Carolina, where the owner of The Tulving Company was indicted.

I do wish to make it very clear that hiring a criminal attorney in no way indicates guilt. If I had been in Ross' situation then, and could afford the $25,000 retainer, I likely would have done the same thing. It is quite possible that Ross was already aware of a criminal investigation (my understanding is that the Washington Attorney General was investigating or helping investigate in February, 2016).

2008: Negative Net Worth $1.5M

June 18, 2017 7:30PM EST
In going through some court documents today, I found a reference that NWTM filed a 2008 tax return, which showed liabilities exceeding assets by $1.5M.

Further, the negative net worth increased between 2008 and 2016 (except in 2011 due to some speculative hedging gains).

Remember, in 2008 NWTM was investigated by the Attorney General, leading to a consent decree. So how did the AG not notice this?

Diane Responds

June 18, 2017 8:40AM EST
Diane Erdmann, long-time girlfriend of NWTM Owner Ross Hansen, has responded to the Trustee's allegations that she sold $500K of metal to pay lawyers while claiming she had no assets. She is requesting that the court deny the Trustee's request for a 2004 examination, partly because the Trustee started an adversary proceeding against her (where a different set of rules applies regarding depositions). She points out that in the 2 lengthy depositions in June, 2016 she never said she had no assets.

Transcripts of the two depositions were included with the filing. Although they are public documents, I am not going to post them here, due to the amount of personal information they contain. The fact that she filed both transcripts shows that she has confidence in what she said.

I expect to write one or more posts later based on some information from the transcripts.

Trustee Does the Right Thing

June 9, 2017 8:30PM EST
Today was the hearing for the motion that included, among other things, giving the 1990-2008 records to Ross Hansen. If you've read my recent posts, you know that I was quite concerned about this.

At the hearing, however, NWTM's attorney stated that the Chapter 11 Trustee, Mark Calvert, desired to strike the relief requested which would have allowed him to give the records to Ross Hansen. The issue of the old records will be addressed in a future motion.

Kudos to Mr. Calvert for recognizing that this was a concern to creditors, and for seeing to it that that part of the motion did not go through.

Ross Hansen to get NWTM Records?

June 7, 2017 7:50AM EST
On June 2, I reported that Ross Hansen wanted to keep the NWTM records that Chapter 11 Trustee Mark Calvert sought to destroy (pre-2009 paper records going back to around 1990).

Mr. Calvert has filed a reply stating "the Trustee is willing to allow Ross Hansen ... to take possession of ... the Records which the Trustee intends to destroy." He also updated the order to include this (with slightly different wording).

So if things go as expected (e.g. no objection or denial from the court), Ross Hansen will receive the paper records of NWTM from around 1990 through 2008. My understanding is that the judge will rule on this at a hearing on Friday (June 9) at 9:30AM PST. But where both sides want Ross to get the records, it is hard to imagine the judge denying the motion.

In 2005, the NWTM privacy policy stated "Any information collected from visitors to this website will only be used in serving our customers, in completing our business transactions with our customers, and not shared with third parties.".

Concerned? You could let Mr. Calvert know, or if you felt appropriate, the FTC has a website where you can let them know (see the "Alert: Concerned about how a company is handling your personal information?..." link).

Diane's 240oz Gold and 4,000oz Silver

June 5, 2017 2:20PM EST
The "selling metal for legal fees" saga began when Diane Erdmann (NTWM owner Ross Hansen's long-time girlfriend) took about 80 ounces of gold (that allegedly came from NWTM's vault) and sold it to a coin store in exchange for a $99,460 check made out to Ms. Erdmann, which she endorsed to Todd Tracy (of the lawfirm that originally filed the NWTM bankruptcy). In June, 2016, her attorney Daniel Bugbee wove a tale about how the source of the funds (about $335K, including another $25K cash and 120 ounces of gold) was from some of a $134K life insurance policy from 1993, and that "By living a modest lifestyle ... and also thanks to strategic trading and the more than three-fold increase in the price of gold, Ms. Erdmann has allowed the value of her bullion collection to grow significantly over the past twenty years." Yet she had just one receipt from 1997 for $16K.

In that same month, Mr. Bugbee implied that Ms. Erdmann was now 'destitute' (it is unclear what happened to the 120 ounces of gold she had had a couple months earlier; it may have been seized), and assisted Diane Erdmann in sworn testimony where she claimed that she had no assets. What Mr. Bugbee apparently was unaware of is that less than 3 weeks later Ms. Erdmann would somehow come up with over $30K of precious metals to pay legal bills, and within under a year access to another $500K or so of precious metals. I'm trying to think of a logical explanation as to how a destitute woman with could come up with $500K of metal over the course of 10 months. Cash would be more explainable (a $500 bank loan to a destitute woman or a winning lottery ticket). But who would give or loan her precious metals? And what did Mr. Bugbee think about getting an $11,000 check from a coin company to pay Ms. Erdmann's legal bill 4 months later?

Two coin stores and a refinery have submitted documents claiming that Diane Erdmann sold them a total of about 240oz of gold, 4,000oz of silver, 155oz of platinum, and 2 ounces of palladium between June, 2016 and March, 2017. Of the proceeds, about $400K went to attorneys representing Medallic and/or Ross Hansen, about $100K went to Diane Erdmann, and about $10K were checks made out to "Cash." Two of the companies state that Ms. Erdmann requested blank checks, allowing her to fill in the payee (in this case, either herself, "Cash", or one of 6 different law firms).

A $10,000 check was made on June 20, 2016 to Allen Lichtenstein, an attorney representing Ross Hansen and NWTM in the defamation lawsuit. 6 checks and 1 wire were made totalling $305,500 from June 20, 2016 through January 31, 2017 to "Bucknell Stehlik", "Bucknell Stehlik Sato & Orth, LLP" or "Bucknell Stehlik Sato & Stubner, LLP", a law firm representing Medallic Art Company, LLC. Between October, 2016 and January, 2017, 3 checks were made to "Cable Langenbach" or "Cable Langenbach Kinerk & Bauer, LLP", a law firm representing Ross Hansen in the NWTM bankruptcy. 2 checks for about $10K were made out to "Cash." One check for $17K was made out to "Colvin and Hallett" (representing Medallic and/or Ross Hansen). One check for $20K was made out to "Davis Wright Tremaine" (who represented Ross Hansen). Another check for $11K was made out to DBS Law (Daniel Bugbee, representing Ms. Erdmann and either Medallic and/or Ross Hansen). Finally 2 checks were made out to Diane Erdmann, totalling about $100K.

Ross Hansen Objects to Destroying Pre-2009 Records

June 2, 2017 3:30PM EST
In Docket 1050, Ross Hansen objects to the Chapter 11 Trustee's motion to destroy pre-2009 records. The Trustee had written "These records have no value to NWTM or the bankruptcy estate, and that such records simply take up space in NWTM’s facility."

Mr. Hansen believes the Trustee's motion should be denied (so NWTM would keep the records for the time being), and that if it is not, the records should be given to Mr. Hansen rather than destroyed. He points out that some of the records are his personal records (some relating to others businesses of his). He also points out that if fraudulent conveyances are persued, the potential defendants might need those records.

NWTM Seeking $1M Loan

May 22, 2017 11:00AM EST
The Chapter 11 Trustee has requested that the court authorize a $1M factoring arragement (similar to a loan) to NWTM, using the NWTM accounts receivable.

The reasoning can be summarized by this line: "While the Trustee remains convinced of the long-term viability and profitability of NWTM’s business, the Debtor needs an infusion of cash in order to have sufficient runway to allow time for the new CEO and sales team to grow sales."

The arrangement is complex (a type of factoring arrangement), but would give NWTM access to cash that it needs (which is especially important because companies in bankruptcy often have difficulties finding funding).

NWTM to Destroy Pre-2009 Records

May 19, 2017 5:10PM EST
The Chapter 11 Trustee has filed a motion to abandon a 1962 truck, sell some Graco material, and get rid of paper records from before 2009 (that date back to the 1990s).

It is believed that these records will not be necessary (e.g. there are no legal proceedings requiring them). This is better than with the Tulving case, where the Trustee happily gave away the paper records to a company for free (actually, less than free: the creditors were billed for her work to give them away).

$500K Loan by a Destitute Woman

May 15, 2017 8:50AM EST
On June 3, 2016, Diane Erdman (NWTM owner Ross Hansen's long-time girlfriend) was deposed regarding her and Hansen's assets. She claimed that she had about $1,000 of cash, $7,200 of gold, and some silver held by a friend (the amount was not disclosed in court documents, but was implied as being minimal). Her attorney, Daniel J. Bugbee, referred to her as 'destitute'.

In fact, Daniel Bugbee was so convinced that his client was destitute that he objected at least 4 times when his client was asked questions about her assets, complaining that the questions were asked and answered 'multiple times', accusing the questioner of "harassing [Ms. Erdmann] about her state of financial affairs."

What Mr. Bugbee hopefully didn't foresee was information from Docket 1013: that Ms. Erdmann would in less than a year magically come up with about $500,000 to loan Medallic (the company that Ross Hansen bought with an NWTM customer, that just became part of NWTM) to pay their "extraordinarily expensive attorneys." Sorry, magically isn't quite accurate: At least $280,000 of the money Ms. Erdmann loaned Medallic to pay the attorneys was paid via checks and wire transfers from 6 different coin dealers, 5 located in Washington state within less than 30 miles of NWTM's headquarters.

Medallic Now Part of NWT Mint

May 14, 2017 7:40AM EST
According to Trustee Mark Calvert, "Final Judgment was entered in the Medallic Litigation on May 3, 2017 and Medallic has been substantively consolidated with NWTM, nunc pro tunc to April 1, 2016". In English (according to my interpretation as a non-lawyer), that means that in the eyes of the court, Medallic and NWTM were one and the same since the day of the bankruptcy filing.

Judge Denies Trustee's Motion

May 4, 2017 8:20AM EST
From what I have seen, in most cases with a bankruptcy, judges will approve motions made by the Trustee unless someone files an objection. The idea is that if there is a problem, a creditor or other interested party will notice, and object. Of course, this is not always fair (and some judges are more careful than others about rubber-stamping motions), but the way it usually seems to work.

However, we have what appears to be an unusual case here. The judge basically ruled against the Trustee, against the thousands of creditors, in favor of an individual.

Medallic Art Company is owned by former NWTM owner Ross Hansen (who put in $2M) and a former NWTM customer (who put in $3M). Medallic filed a lawsuit where Medallic fought the consolidation of Medallic and NWTM assets. On April 7, 2017 Trustee Mark Calvert filed a motion to convert the customers' $3M ownership interest of Medallic into a $3M claim. Although this would raise claims from about $55M to $58M, the customer would agree not to oppose the consolidation of Medallic and NWTM assets. This would make consolidation of Medallic and NWTM assets much easier.

On April 19, 2017, Calvert stated that Medallic filed a motion to dismiss its claims. Why Hansen chose to dismiss the claims can only be answered by speculation, but he decided to do so. Then on April 21, 2017, the Unsecured Creditors' Committee filed a response agreeing that the motion to convert the $3M ownership interest is in the best interest of creditors. No objections to the motion were filed. On April 24, 2017, the Trustee filed a proposed order. The court then responded with a brief message "Counsel for trustee shall appear on date and time stated in notice to provide information to allow Court to determine if compromise is fair and equitable". And then on May 3, 2017, the judge denied the motion, simply saying "the Court made oral findings of fact and conclusions of law that are incorporated by reference herein.

While that is useful information to those who were at the hearing (who may well have expected the denial), the thousands of creditors have no idea what happened. Did the judge not find the settlement with the customer fair? If not, why not? Why would the customer have agreed to the settlement if he did not think it was fair? Will this prevent the Medallic consolidation from being finalized? Hopefully, there was a good reason for this denial.

1,000th Court Document Filed

May 1, 2017 12:25PM EST
On Friday, the 1,000th court document for the NWTM bankruptcy was filed ("Statement of Dayton Landlord Re Assumption of Lease and Related Matters"). That is nearly 18 court documents filed per week, on average.

As a comparison, the Tulving Company bankruptcy is now just over 3 years old, and has under 700 court documents (an average of about 4 per week). The Bullion Direct bankruptcy, which is approaching 2 years old, has just 266 court documents filed (about 3 per week).

The large number of court documents is due in large part to the complexity of NWT Mint -- it is a much larger operation than the other two companies, and unlike the other two, it is still operational.

Medallic Lawsuit Dismissed

April 20, 2017 2:00PM EST
According to the March financial statement:

"The estate has a pending litigation matter with Medallic Art Company LLC, an entity controlled by the former CEO of the Debtor, Ross Hansen. The trial in that litigation was set for May and June, 2017. However, in the week before the preparation of this report, Medallic filed a motion to dismiss its claims. Based upon the dismissal of Medallic's claims, the Trustee is preparing to enter a judgment susbstantively consolidating Medallic with the NWTM bankruptcy estate. The Trustee expects entry of that judgment in early May, 2017."

In other words, the concerns about Medallic being a separate entity from NWT Mint (which would cause a nightmare of expensive issues, trying to figure out what belonged to which company) should now be gone.

March Financial Statement

April 20, 2017 1:50PM EST
Chapter 11 Trustee Mark Calvert has filed the March financial statement.

It shows a small profit of $23,132 for March (not accounting for restructuring costs). There are now 135 full time employees, up from 130. Improved results are anticipated for upcoming months.

It shows that $932K of metal was returned to customers (the stored metal that existed and the owner could be properly determined). NWTM is getting ready to sell or auction surplus equipment.

Regarding the Chapter 11 Reorganization Plan, he states that "The current plan is for the operating company to generate profits that will be distributed to creditors over some period of time. After an agreed upon period of time the company would be sold and sale proceeds would be allocated to creditors."

On a related note, the EEOC settled a discrimination lawsuit that had originally been filed before the bankruptcy, with a $725,000 settlement (in the form of a bankruptcy claim).

February Financial Statement

March 20, 2017 1:10PM EST
Chapter 11 Trustee Mark Calvert has filed the February financial statement.

It shows a small loss for February, which could have been reported as a small (or perhaps more) profit if different accounting had been used. There are now 130 full time employees, down from 140.

Regarding the Chapter 11 Reorganization Plan, he states that "The current plan is for the operating company to generate profits that will be distributed to creditors over some period of time. After an agreed upon period of time the company would be sold and sale proceeds would be allocated to creditors."

January Financial Statement

February 18, 2017 7:45AM EST
NWTM has filed their January Financial Statement. They are down 8 more employees, to 140 full time employees (compared to over 200 at the beginning).

They continue to lose money, but the Trustee believes it is because of the bankruptcy and seasonality. He expects them to break even in February, with with profits starting in the spring.

The Auburn location was closed, which cost about $100K, but that will bring about $300K of annual savings. So that cost will quickly be recovered.

The litigation with Ross Hansen's company is expected to being the first week of May. This needs to be resolved before the reorganization plan can be confirmed. The expected reorganization plan envisions the company running in Dayton, NV with profits going to creditors, but no real details are available yet.

NWTM has Drafted Plan of Reorganization

November 30, 2016 12:20PM EST
NWTM's Chapter 11 Trustee, Mark Calvert, has announced that NWTM has drafted a Chapter 11 reorganization plan, and has supplied a copy to the Creditors' Committee. They are anticipating presenting the reorganization plan to the court.

Typically in a Chapter 11 bankruptcy, a reorganization plan is made, which creditors then vote on. The Creditors' Committee usually provides input on what they are aware that creditors want, to help ensure that the vote will allow the plan to proceed.

NWTM Duped the Attorney General

'Complain to the AG and We Will Delay Your Refund'

October 31, 2016 2:00PM EST
It looks like NWTM managed to dupe the Washington State Attorney General's office several times over the years.

This all starts in 2008, when the Attorney General sued NWTM (after having received just 11 complaints). Somehow, NWTM got the Attorney General to sign a consent decree, effectively giving NWTM the AttorneyGeneral's blessing to operate in a way that is illegal in some states (California requires delivery in 28 days), while being able to use millions of dollars of customer money as float, in exchange for a $58K judgment. Not a bad deal!

Fast-forward to April 1, 2015, exactly one year before NWTM filed for bankruptcy. At this point, the AG now had over 50 new complaints filed, in a pattern showing rising complaint volume. Some customers are just upset (not having realized it might take months to get their orders). But others were cases that clearly violated the consent decree. NWTM was so brazen as to not even respond to the AG for months at a time, never responding to many complaints. At other times, they lied to the AG (often stating an incorrect "drop dead" date, which the AG apparently trusted without bothering to calculate the actual date -- adding 30 days to a given date is not rocket science).

At this point in time, a year before the bankruptcy, I have been told that the Attorney General also had some damning information: NWTM violated the 2008 consent decree by not immediately refunding money to a customer when the "drop dead" date was reached, and then when the customer said he was going to complain to the Attorney General, NWTM advised the customer not to, saying that the owner of NWTM would then get mad and try to delay the refund as long as possible. Assuming my information is correct, this single instance shows [1] NWTM violating the 2008 consent decree with the Attorney General, [2] that NWTM found a way to manipulate customers into generating fewer complaints with the Attorney General, and [3] that the Attorney General ignored an extremely blatant red flag.

It really boggles the mind that the Attorney General could sit on this information for a year, with complaints piling up (over 200 complaints were filed before the bankruptcy). In fact, in 2015, the only companies located in Washington with more complaints than NWTM were Amazon, Microsoft, and Expedia.

Latest Updates (NWTM Might Not Be Sold)

October 4, 2016 5:30PM EST
In the latest Monthly Operating Report, Trustee Mark Calvert states "In consultation with the creditors committee the trustee is working to reorganize the company vs selling the company to maximize the value of the company and therefore the recovery for the creditors."

He also states that he plans to have a Chapter 11 Reorganization Plan ready by the end of the year, with confirmation of the plan around April/May, 2017.

Also, the report says that NWTM plans to mediate the issues with Medallic this month.

Another noteworthy statement: "Continue to respond to subpoenas and to provide information requested to the FBI."

As of August 31, there were 150 employees at NWTM.

From around the time of the bankruptcy filing through the end of August, $1.69M of bankruptcy professional fees have accrued. This breaks down to $855K for the Trustee's attorneys, $482K for the Trustee's company as financial advisors, $169K for the creditor's committee counsel, $147K for the Trustee, and $38K for NWTM's counsel.

$9K Sanctions Against Diane Erdmann

September 22, 2016 8:15AM EST
In Docket 727, the court ruled that the original bankruptcy attorney be awarded $9,194.50 in sanctions against Diane Erdmann. However, it does also state that the sanctions shall not be paid without further order of the court. Docket 580 had the original information about the sanctions.

Deposit Not to be Returned... Yet?

September 22, 2016 8:10AM EST
On August 8, I reported that the judge ruled that the remains of the $150,000 deposit Ross Hansen's girlfriend paid the bankruptcy attorney would be returned to her. However, the Trustee is appealing that decision, and the judge on Tuesday ruled that NWTM could keep the money until a decision is made on the appeal.

Final(?) List of Storage Metal to be Returned

September 20, 2016 8:45AM EST
NWTM has filed Docket 709, with a revised list of metal to be returned to customers.

As you may remember, the previous court documents were fraught with errors. This one, however, I believe for the most part is accurate. I am a stickler for details, however, and given the previous errors, I will nit-pick here as well. Any document with numbers that aren't defined requires scrutiny in my opinion (in this case, there is a number that is clearly an "item number" (e.g. 1 means first item), but looks like it could be quantity).

The biggest issue to me is that one of the customers filed their original Proof of Claim stating that the metal they were owed was leased to NWTM (metal that should be the property of NWTM). The customer did file an amended Proof of Claim showing some stored metal, but the receipts included in the Proof of Claim do not show the items being returned. I imagine the customer simply left out some receipts, and a Proof of Claim is not required for stored property to be return, so this is likely a non-issue (but something that NWTM must scrutinize if they have not yet done so).

The next issue is that several storage customers are no longer listed, with no explanation. I interpret that as "we originally thought this metal belonged to this customer, but we made a mistake. It does not." If I were one of those storage customers, I would investigate further -- but for other creditors, this is not a concern.

In one case, a customer is getting 5 less ounces of gold than was originally planned, with no explanation. And in another case, the customer is getting just 1 gold coin when originally they were going to get 22. Given the level of errors before, these really require an explanation (although there may be one in another document).

Then there is the customer who was originally supposed to get 6 1,000oz bars, but the accountants then counted 7 of them, but now it is back to 6. That is odd, of course. But the other issue is that the court records will show the customer getting 6,000oz of silver, when in fact it will really be around 5,714 (6,714.9 minus the bar they are not getting), as most 1,000oz silver bars are a fair bit lighter (or heavier), as these bars are.

And the final 'nit-picking' issue is that NWTM does not list the property belonging to one of the customers. In this case, NWTM is going to hold onto until they can confirm the property belongs to the customer. But I cannot see how you can ask the court to return an asset (even if it is at some point in the future) without giving any indication as to the value of the asset. From previously filed documents, it seems clear that this is very low value -- but no hint of the item(s) are given, and since other customers had their amounts mysteriously altered, only NWTM knows the exact items here.

$1M Lawsuit Against Hansen's Girlfriend

September 10, 2016 9:05AM EST
The NWTM Chapter 11 Trustee, Mark Calvert, has filed a $1M adversary lawsuit (proceeding) against Diane Erdman, NWTM owner Ross Hansen's girlfriend (who Calvert refers to as Hansen's "de facto wife"). It alleges that Ms. Erdmann had an American Express Platinum card in her name since at least 2007, which she used to buy goods and services both for NWTM and for her own benefit, but NWTM paid all the bills related to the account. During the time she had the card, it states that she charged over $12.1M, most of which appears to have been for NWTM-related purchases.

It alleges that over $1M of the transactions were for non-business purposes, and that she benefitted from the millions of Reward Points.

Court Document: 'NOTICE OF FILING PROOF OF CLAIM...'

September 5, 2016 9:00PM EST
Several people have reported receiving a copy of Docket 653 (without "Doc 653" stamped on it), starting "NOTICE OF FILING OF PROOF OF CLAIM BY DEBTOR OR TRUSTEE" and "The [NWTM] filed a proof of claim in your behalf, pursuant to Fed. R. Bankr. P. 3004. Bankruptcy Rule 3004 allows a Debtor (NWTM) or Trustee (Mark Calvert) to file a Proof of Claim on behalf of a creditor.

From the docket text, this applies only to one specific creditor (with the initials SCR). Specifically, it refers to the claim number, and the claim number it refers to is a claim filed for a creditor "Northwest Territorial Mint" instead of the real name of the creditors. It also shows a bogus address (the address that the first person claiming to be Northwest Territorial Mint used, another artifact of the "impulse claim" system). The form states that the person filing it is NWTM, but the court shows that it was filed by the creditor. It certainly looks like it was filed by the creditor.

So I'm not quite sure why some (all?) creditors are getting this more-than-just-misleading letter from the court. My best guess is that the bankruptcy system is out of control, and that it allowed a creditor to file as NWTM (not just entered their name as NWTM, but checking the box saying that it is NWTM filing the claim on behalf of someone), which then triggered a system of sending out a very misleading notice. If this truly is the case, then they really need to send out another mailing to explain what happened. Otherwise, many people may end up consulting with attorneys needlessly.

Total Claims: ~$55M

September 2, 2016 8:40AM EST
The Proof of Claim bar date was yesterday, so all Proof of Claim forms should be in. All added up, they come to roughly $55M (using a calculator, you get $85M, but that is because of duplicate/shared claims and such). About $15M of that is from lawsuits. This is very close to the $55.8M in the creditor list, but there are some differences (e.g. a $3.7M lawsuit that wasn't included in the creditor list, and a lease customer owed $964K rather than the $52K NWTM claimed).

One key takeaway is that the electronic filing of claims ("impulse claims" as I call them) is great for businesses, but very flawed for filing by individuals. In this case, of the 774 claims that were mailed, 0.0% entered their name incorrectly. Of the 2,249 electronic claims, 1.0% gave a street address as their name, and 3.9% gave Northwest Territorial Mint as their name. Those combined 4.9% of electronic claims will (if nothing is done) receive a check made out to their street ("Payable To: 1234 Main Street") or to NWTM. Given the large number of claims with such a basic error, who knows what percentage of electronically filed claims may have other errors.

NWTM Couldn't Get Pan American Their Silver

August 30, 2016 1:55PM EST
Pan American, a Canadian Mining company (NASDAQ: PAAS) has since 2005 consigned silver to NWTM. NWTM would mint products (presumably Pan American branded), and NWTM would sell them on consignment. Per the agreement, the silver was the property of Pan American until sold. Like traditional storage customers, there was a contract that spelled out how NWTM would store, segregate, and insure the metal.

However, in January, 2016, Pan American apparently had concerns, and requested their 70,000oz of silver back. NWTM agreed to give back their metal in installments of 15,000oz per month for 5 months (the last month being 10,000oz). Pan American says that the Trustee informed them that failed to safely store, segregate and mark their silver. Given the facts we now have available to us, it seems clear that NWTM did to Pan American what it did to its storage customers: ignored their contracts and sold metal that did not belong to them.

Accounting Nightmare, Further Details

August 26, 2016 1:10PM EST
Someone suggested that the errors that I mentioned in "Accounting Nightmare" were subjective, and therefore nearly immaterial. Errors in this case are subjective (for example, if all but one entry has a 'total' column, that is inconsistent, but might not be considered an error).

So I have now gone through every customer listed in Docket 458 to have metal returned, and categorized errors as 'minor' or 'major'. I consider a major error to be: NWTM requesting to send the customer more metal than they are owed, the total listed in the declaration not matching the total in the original motion, the weight on the scale showing less than what is listed in the motion or the declaration, the weight listed in the motion does not match the actual weight. I minor error is one that should not have an effect on the outcome, mainly where the description times quantity does not match the total (e.g. description of "1Oz CML", quantity of "1", total of "75" -- it should be a quantity of 75, not 1).

Of the 29 customers (30 if you count customers listed twice), I count 10 11 with major errors, 5 with just minor errors, 2 with missing information, and 12 11 that do not have errors. That's 38% with major errors. And just over 1/3rd with no errors at all. And from the chart, you can see that many customers have multiple errors. [Note: the chart does not include 2 lease customers; lease customers should not be treated the same as storage customers]

[click chart to see full image]

Proof of Claim Deadline Thursday

August 26, 2016 12:15PM EST
The deadline for filing Proof of Claim forms is Thursday, 09/01/2016.

If you have not yet filed a Proof of Claim form, you must do so if you want to receive any distribution(s) that may be made.

I would suggest doing so electronically, to help ensure that a mail delay will not jeopordize your claim. You can fill it in electronically by going to http://www.wawb.uscourts.gov/eclaims.htm by clicking on "Submit a Proof of Claim" and using case #16-11767. Note that you are the Creditor, Northwest Territorial Mint is the Debtor.

Attorney General

August 24, 2016 4:40PM EST
In 2008, the Washington Attorney General's office looked into NWTM's habit of delaying orders for several months, and signed a consent decree with NWTM. It was assumed that the AG looked into NWTM's practices, saw that they were solvent, and that is why they allowed the practice to continue. They wouldn't allow a bankrupt company continue to delay orders several months, right?

According to an article by the Federal Way Mirror, the Attorney General received hundreds of complaints before the NWTM bankruptcy (and refers to thousands of complaint documents). The article mentioned that even if NWTM did not respond to the AG within the allotted time, the case would be closed.

A number of customers have wondered if the Attorney General can be held accountable for this.

I bring this up today because of an article by the Everett, Washington HeraldNet. It refers to "a fraud orchestrated by the state's own Attorney General", where there was "a secret pact by the state’s experts, with the blessing of the state Attorney General, to systematically destroy emails and repeatedly deceive the plaintiffs about what they were doing." Interestingly, I used the same term "blessing" when I previously (on April 25, 2016) referred to the 2008 NWTM decree by saying "the State of Washington gave NWT their blessing to allow length shipping times, making financial problems very difficult to see from complaints."

Accounting Nightmare

August 23, 2016 2:45PM EST
We know that despite having many accountants on the payroll, NWTM had terrible accounting records. Chapter 11 Trustee Mark Calvert was assigned the task of identifying bullion owned by storage customers and returning it. The storage records were very poor, but some metal was labeled with the customer name and had not yet been "poached" (stolen by NWTM). In Docket 458, Mr. Calvert identified $1.1M of storage metal belonging to about 32 customers, and requested that the court to give him permission to return it to the customers. He states that it was segregated inventory, not commingled with metal owned by NWTM.

The bankruptcy records turn out to be a nightmare, too. The first problem is that all the metal was weighed in avoirdupois pounds, whereas bullion is traded by troy ounces (or metric measurements), making accounting more difficult than it needed to be (e.g. what they show as 1.0 pounds is about 14.5 troy ounces) and introduced errors. The next problem is that many of the pictures did not show the bullion (so there were bars with serial numbers that were not visible), making it impossible for other storage customers with serial numbers to know if NWTM is giving their property away to someone else. Finally, there were supplemental declarations from accountants to confirm the numbers that were filed in Docket 458, but they were fraught with errors (none of which they identified). Examples include:

Customer 9-2. Docket 458 shows NWTM identified 1,830.0oz of silver belonging to this customer. The accountant states that she found 1,830 1oz silver rounds, and a total of 1,830oz of silver. However, while she includes 3 boxes (labeled 600, 600, and 630 rounds), the weights add up to 59.795lbs, or only 872 troy ounces. Either the accountant did not properly add up the contents of the boxes, or they are counterfeit, and she did not verify the weight.

Customer 5-2. Docket 458 shows NWTM identified 6,008oz of silver belonging to this customer. The Creditor List (NWTM-supplied) and Proof of Claim both show 6,200oz of silver owed the customer (this could be explained by NWTM "poaching" 192oz of silver). However, the accountant states that she found 6,500oz belonging to the customer. From the pictures, it is impossible to even estimate the amount of silver (I count 19 visible boxes, whereas only 13 belong to the customer). Worse, the accountant states that the 6,500oz consists of 5 monster boxes (500ea) American Silver Eagles and 8 monster boxes (500ea) of Canadian Maple Leafs. The customer claims she is owed 6,200oz: 4,000 silver eagles, 700oz Pan American bars, and 1,500 silver maples. This shows that [1] NWTM is trying to send her 300 more ounces of silver than she is owed, [2] NWTM is trying to send her 4,000 of metal that is not legally hers (the 8 monster boxes of maples, which she had previously sold back), and [3] she did have 4,000 silver maples and sold 2,500, so NWTM didn't even bother to remove them from her storage account when she sold them.

Customer 9-9. Docket 458 shows NWTM identified 777oz of silver belonging to this customer. The NWTM-supplied creditor list also shows 777oz. The customer claims she had 2,215oz (again, not an issue -- NWTM likely "poached" 1,438oz of her metal). But the accountant stated "I confirmed there are 1106 - 1oz silver rounds .999 and 1 - Silver American Eagle marked for [customer]. In total, I found 1,299 ounces of silver stored for [customer]." The accountant appears to have added 1,106+1 incorrectly (last I checked, it was 1,107, not 1,299). And neither that 1,107 or 1,299 adds up to the 777oz Docket 458 shows. The photos show 1,200.5 troy ounces (including boxes and packaging), making 1,299oz impossible and the 777oz highly unlikely. The most likely correct weight is 1,107 troy ounces, a number they do not even list.

Customer 9-13. Docket 458 shows NWTM identified 5.0oz of silver belonging to this customer; this was an obvious mistake (the description is "5 - 1oz Silver American Eagles - Sealed Monster Box"; monster boxes contain 500 coins). The accountant identified 1 monster belonging to the customer, for 500oz. This is obvious not 5.0oz, but it is also not 5 monster boxes as the Docket 458 error implied.

Customer 9-16. Docket 458 shows NWTM identified 6,000.0oz of silver belonging to this customer. The customer claims they had leased 18,786.4oz of silver to NWTM. That normally means that NWTM would use the metal somehow, and replace it with different metal at the end of the lease (so there would be no metal belonging to the customer until the lease was over). But it gets worse: the accountant identified 7,000oz as belonging to the customer, which differs from the 6,000.0oz originally stated. But even that isn't even right: the photograph shows 7 silver bars totaling 6,715 troy ounces (7 bars that are commonly referred to as 1,000oz bars, but not labeled as such, that are expected to weigh a fair bit more/less than 1,000oz).

Customer "Pick Up - Scott" is only identified by first name, unlike all the others. Docket 458 shows NWTM identified 0.2oz of gold belonging to this customer. But it specifies that it is a "1922 St. Gaudens" -- a coin with a weight of about .96 troy ounces. An error. The accountants did not provide further details about this customer.

Customer 9-23. Docket 458 shows NWTM identified 0.7oz of silver belonging to this customer. However, it was for 2 proof silver eagles and a necklace. As almost any NWTM customer knows, a silver eagle weighs slightly over 1oz, so this is another clear error. I believe it was 0.7 avoirdupois pounds (including the necklace, proof boxes, and cardboard box), but was mistakenly listed as 0.7 troy ounces.

Customer 9-20. Docket 458 shows NWTM identified 840oz of silver belonging to this customer. The first problem is that the accountant stated "I confirmed there are 10 - 500oz Pan American silver bars...", when in fact they were 100oz bars (I'll call that a typo). But that brings a new problem: the accountant identified 1000oz, compared to the 840oz originally stated. The customer Proof of Claim states that the customer is owed 840oz. So NWTM is again trying to return more than the customer is owed, as with Customer 5-2. And like Customer 5-2, it appears that the old NWTM never removed metal from segregated storage belonging to the customer after she sold it (she originally had 10 100oz bars, but sold 2).

Finally, included in the pictures was a monster box of silver eagles with the name of 2 other storage customers crossed off, and replaced with the name of the customer NWTM now attributes the metal to. I am concerned that while NWTM currently attributes this one one customer, they previously attributed it to another customer. How to we know that the metal does indeed belong to the customer NWTM currently says it belongs to? If the other 2 customers are not owed any monster boxes of silver eagles, there should be no problem. But if either is owed a monster box of silver eagles, this opens up a can of worms.

So here we see out of about 32 storage customers with metal to be returned, at least 8 had errors that appear to have been caused by the bankruptcy professionals. And their accountants apparently did not notice a single one of the errors! How can accountants filing declarations with the court, declaring that what they say is true and correct under penalty of perjury, not notice a single one of these errors?

Worse, we see that the bankruptcy professionals are planning to return more metal to some people than they are owed, and trying to give metal belonging to the estate to customers. And, we can see that in fact customer metal was at times comingled with NWTM metal (in the case of Customer 5-2 and Customer 9-20).

Internal Code for Storage Theft: 'Poaching'

August 20, 2016 1:15PM EST
NWTM customers stored about $8M of metal, of which only about $1M is known to exist. The other $7M or so -- most of the metal stored with NWTM -- was either lost or stolen. $7M of metal doesn't just disappear, and nobody has suggested it was lost, making theft the only plausible explanation.

A court document filed yesterday shows that NWT referred to their act of taking metal belonging to customers as "poaching" (one definition is "to take without permission and use as one's own"). The exact phrasing from a box stored for a customer was "Customer Supplied - No Poaching!!" written in large letters. This was for a storage order received on April 11, 2014.

NWTM stored two types of metal for customers: metal purchased from NWTM, and metal sent in from customers. NWTM rarely gave out serial numbers or other identifying information to storage customers purchasing from NWTM, so that metal was safe for NWTM to steal (their mantra was "we can just mint more"). If the customer asks for the stolen metal, NWTM finds some and sends it to them. Customer supplied metal, however, is very different: the customer may have written down serial numbers or have taken pictures that could uniquely identify the metal. If NWTM steals that metal, the customer may find out if they ask for their metal back, which could then expose the whole scam.

To me, the phrasing (and exclamation marks) first shows that the practice was widespread. You don't come up with an internal term for theft if it just happens once, and you don't use large letters and exclamation marks unless you are trying to avoid something that is easy to happen. Next, it shows that poaching was authorized by the company (specifically, the implication is that non-customer-supplied metal is OK to poach). It also shows that someone at NWTM clearly knew this was wrong (or else you wouldn't use the term "poaching"). And finally, it suggests that knowledge of the theft was known to many employees (this wasn't an internal memo to a few people, it was very obvious to anyone with access to the vault).

Medallic Suing NWT Mint

August 15, 2016 4:10PM EST
Medallic Art Company, LLC ("MACLLC") -- a company formed in October, 2009 to own Medallic Art Company assets -- is suing NWTM. It wants the court to state that MACLLC is separate from NWTM, that it owns the assets bought in 2009, those assets should not be part of the NWTM estate, that leases from MACLLC to NWTM are valid and in default, and MACLLC is entitled to royalty payments.

The legal ownership of corporations, LLCs, and partnerships is usually impossible to obtain from public records. Ross Hansen essentially claims that Medallic Art Company is owned by him and Richard Bressler (each owning 50%) with Ross putting in $2M and Dick putting in $3M. The $2M Ross put in was obtained from an owners' draw from NWTM . The company has 2 employees: Ross and Diane Erdmann, his girlfriend.

NWTM Chapter 11 Trustee Mark Calvert previously stated "it appears that [NWTM] transferred money to Ross to allow him to buy Medallic when the company was insolvent," and that Medallic is "so commingled into the operation of Northwest Territorial Mint it cannot be broken apart." It seems clear that the while the transaction was intended to be by Ross Hansen (and NWTM customer Dick) and not NWTM, the $2M was taken out of NWTM as an owner's draw immediately before the purchase, at a time that Mr. Calvert claims NWTM was insolvent (which the backlog of bullion orders at the time seems to confirm).

I have found no references to any source that creditors could have used to find out that Medallic was owned by Ross and Dick, until after the bankruptcy petition was filed. On the contrary, the Internet is full of information suggesting that Medallic was owned and operated by NWTM. It appears that NWTM claimed that Medallic was a division of NWTM, a subsidiary of NWTM, and acquired by NWTM. For example:

DateSourceWording
03 Mar 2016Medallic website"Medallic Art Company is a division of Northwest Territorial Mint"
23 Jul 2009COINlinkHeadline: "Northwest Territorial Mint Acquires Historic Medallic Art Company"
Article starts with "Northwest Territorial Mint, the world’s largest private mint, has acquired the historic Medallic Art Company."
23 Jul 2009Auburn Reporter [NWTM] has purchased a competitor", "[NWTM] bought Medallic Art Co."
24 Jun 2013Coinweek"Northwest Territorial Mint and its subsidiary companies Medallic Art Company and Graco Industries."
04 Jul 2013coinworld"Northwest Territorial Mint, headquartered in Auburn, Wash., is parent to subsidiaries Medallic Art Company in Dayton, Nev., and Graco Industries in Tomball, Texas."
23 Sep 2014WHOIS
(domain ownership)
medallic.com "Registrant Organization: Northwest Territorial Mint"
(NWTM has the exclusive right to use the domain name)
09 Apr 2016Carson Now"Medallic Art Company, a subsidiary division of Northwest Territorial Mint, said a corporate spokesman who wished not be identified."
[current]Medallic website"If you seek employment information, please visit our employment page."
(links to NWTM)
[current]Medallic website"We have the largest and most experienced team of professional sculptors and die engravers in the country."
(their 2 employees are Ross and his girlfriend)
"Our team of full-time graphic designers"
(how can Ross and Diane be full-time graphic designers?)
[current]Washington State Department of RevenueShows that Northwest Territorial Mint, LLC filed "Medallic Art Company" as a trade name that it does business as.
(the DoR states that an LLC must file a trade name for "operating under a name other than the name registered with the Office of the Secretary of State.")

So it appears that Ross, through NWTM, was claiming pre-bankruptcy that Medallic was a division of NWTM (not legally separate from NWTM), was a subsidiary of NWTM (meaning NWTM owns a controlling interest in the company, which is its own separate legal entity), was acquired/purchased by NWTM, and run by NWTM. From that, customers would naturally assume that any assets of Medallic would be assets of NWTM (either directly owned by NWTM, or owned through a company that NWTM owns).

The question becomes: if NWTM clearly claimed that it owned Medallic, how can NWTM's sole owner think that the assets do not belong to NWTM? From a strictly moral standpoint, I think the best solution would be for Medallic to drop any claims of ownership, and file an unsecured Proof of Claim for any value it believes it is owed. Let them be in the same position as NWTM customers. Remember, too, NWTM's beliefs on ownership: it stored $8M legally owned by its customers, yet appears to have used $7M of it to pay bills.

July Financial Report

August 15, 2016 10:15AM EST
NWT Mint has released their July, 2016 Financial Report.

It shows a net profit of $312K for June, and a net profit of $13K for July. July's lower net profit appears to have been due in part to higher salary/labor costs (which may be due to severance packages, as they decreased the number of employees by about 20% in the past 2 months). As before, I believe this does not include reorganization expenses. It also shows that they are still working on getting a database of cash in and cash out from 2007 to 2016.

The Chapter 11 Trustee, Mark Calvert, said that there are 3 options under consideration: [1] a quick sale of the assets, [2] sale of the assets following a period of internal reorganization and stabilization, or [3] a filing of a plan to reorganize the company. He reiterates that a history of reliable financial records and operating reports will be very important to maximizing the sale price of the company.

It also mentions that the court has required more detailed proof of the ownership of the storage inventory before returning it to customers. This is good, as there were concerns from creditors that metal marked as belonging to one customer might really belong to another (e.g. if NWTM 'borrowed' some bars from Customer A and sold them, then replaced them with bars from Customer B -- in this case, the bars would likely legally be the property of Customer B, even though they are listed as belonging to Customer A).

It appears that the Tomball sale generated $954,418.18 of cash (not including expenses).

And, on a lighter side, NWT Mint generated $7.42 from Pizza Hut for ordering. That appears to be a rewards program that gives them 4% back on their pizza purchases.

Hansen Not in Contempt

August 9, 2016 8:40PM EST
Today the Judge ordered that the Trustee's motion to hold Ross Hansen in contempt is in the most part denied, except perhaps for an alleged violation of the automatic stay for demanding a return of the deposit held by the original bankruptcy attorney.

May Financial Report

August 9, 2016 1:45PM EST
NWT Mint has just released their May, 2016 Financial Report.

NWTM showed a net profit of $321K for May, compared to a $69K loss in April. This does not appear to include bankruptcy fees, but seems to show that there is hope for the company being able to make it through Chapter 11 bankruptcy (reorganize in some fashion, likely with creditors taking a sizable loss, rather than liquidating the assets, which would likely result in a larger loss for creditors).

Deposit to be Returned

August 8, 2016 4:30PM EST
Shortly after the bankruptcy filing, Mr. Hansen's girlfriend Ms. Erdmann wanted to get back the unused funds that she had paid the original NWTM bankruptcy attorney as a deposit for working on the bankruptcy. The Trustee, Mark Calvert, felt that the funds instead belonged to NWTM.

The judge has ruled that the remaining funds should be returned to Ms. Erdmann. The judge also ruled that Ms. Erdmann intentionally and egregiously violated the automatic stay (which prevents people from attempting to collect money from a bankruptcy company), and while it did not cause any damage to NWTM, it caused damage to the law firm holding the money, and sanctions may be imposed on her. It states that Ms. Erdmann is held in contempt for the violations of the automatic stay.

In the decision, the Judge states that the $75,000 cash and approximately $200,000 of gold bullion Ms. Erdmann had came from a $133,900 life insurance payout from 1993, that was apparently parlayed into at least this $275,000. Ms. Erdmann could only come up with one receipt from 1997 buying $15,798 of gold and silver from NWTM. She said that she made other purchases, but the documents were lost or destroyed in 2012. When asked if she disclosed any gains on federal tax returns, she refused to answer, stating "It's my business." However, the Judge stated that she was not required to prove where the money came from.

Contempt, Part II

August 8, 2016 4:10PM EST
On June 28, Chapter 11 Trustee Mark Calvert filed a motion for contempt against NWTM owner Ross Hansen. There was a hearing scheduled for August 5. Ross Hansen responded, saying that the Trustee's motion was more about litigation tactics than real concerns. He includes a deposition showing that Mark Calvert requested the NWTM security officer to surveil Mr. Hansen to try to uncover assets, including looking at an airplane that Mr. Hansen owns, and tracking Mr. Hansen via his cellphone.

Mr. Calvert replied, asserting among other things that that Mr. Hansen requested that an employee disable a machine and destroy copies of computer files (which Mr. Hansen had denied), stating that 6 boxes of coins shipped shortly after the bankruptcy filing were not property of Medallic Art Company, and that Mr. Hansen interfered with the Graco sale. It also states that Mr. Hansen tried to make a $600K bid on Graco using Olympic Trading Company as a financial backer, but Olympic had only committed $100K.

In Docket 574, a declaration is made that the 400,000 coining dies that Medallic claims to own are not owned by Medallic. It also states that there are no records showing that the $300,000 coining press that Medallic claims to own is indeed owned by Medallic. Then in Docket 575, an NWTM employee states that at a lunch with 5 people, Mr. Hansen stated that if Mr. Calvert led him astray, Hansen would "beat Mark Calvert to death with a baseball bat."

In Docket 577, Mr. Calvert requests that Docket 569 be stricken.

Then, Mr. Calvert filed a separate contempt motion for Mr. Hansen for failing to comply with an order compelling him to produce documents (bank and credit card statements), and requests sanctions in the amount of $5,000. Apparently, he said that they were part of NWTM's records, and did not order copies from the bank(s).

So there has been a lot of behind-the-scenes activity, which gets quite confusing, but ultimately does not (so far) appear to be of much importance to creditors.

Contempt

June 30, 2016 9:15PM EST
The Chapter 11 Trustee, Mark Calvert, has filed a motion requesting the court enter an order holding Ross Hansen in contempt for his violation of the Court's orders.

Among other things, it states that Mr. Hansen has informed Mr. Calvert that he intends to take control over NWTM's assets through Medallic Art Company. It alleges that Mr. Hansen requested that an employee disable critical manufacturing equipment, destroy some records, and provide copies of the destroyed records to Mr. Hansen.

What seems most concerning is that if was is alleged is true, it sounds like Mr. Hansen really is interfering with the business (it states "Mr. Hansen is an intimidating presence for employees"). Hopefully, if it is true, he will stop and allow the bankruptcy process to take its course. The worst thing he could do is cause damage to NWTM.

Motion to Return Stored Metal that Exists

June 28, 2016 7:40PM EST
Today, Trustee Mark Calvert filed a motion to return stored metal to the storage customers whose metal existed at NWTM.

It also acknowledges that only $1.1M of the $8.2M of stored metal could be found. It does not specify what NWTM claims happened to that stored metal, which was the property of customers.

Proof of Claim Forms Required: by September 1

June 21, 2016 8:10PM EST
The judge has allowed Chapter 11 Trustee Mark Calvert's request to require all creditors to fill out a Proof of Claim form. At this point, with the entire creditor list including addresses having been made public, it is not as much of a privacy concern as it would have been.

The docket urges creditors fill out the Proof of Claim online, but I highly disagree with that. I refer to the online Proof of Claim system as the "impulse claim" system, as it makes it very easy for someone to file a claim without carefully going over it. About 1 in 30 creditors will, if nothing is done, receive a check payable to "Northwest Territorial Mint" -- that almost certainly would not have happened with electronic filing. So if it were me, I would mail in a Proof of Claim form.

UPDATE: Note that if you were waiting on an order that was not delivered, the first $2,850 or so of your order may qualify as a priority claim (with the rest, if any, being a standard unsecured non-priority claim). If you think that you may qualify, you should check off the appropriate box.

'Looted', 'Stole', 'Thief'

June 16, 2016 7:05AM EST
There hasn't been much of interest going on with NWT lately -- until yesterday.

Yesterday, Chapter 11 Trustee Mark Calvert filed a Trial Brief, discussing the legal standard to be applied at an evidentiary hearing on June 22. What makes it interesting is that for the first time we are seeing phrases like 'The evidence will show... Diane Erdmann and Ross Hansen stole from NWTM in the weeks prior to its bankruptcy filing' and 'A thief does not take title to assets stolen from another' and 'The evidence will show... that Diane Erdmann and Ross Hansen looted assets from NWTM prior to the bankruptcy.'

This is specifically referring to funds that were used as a retainer to pay the bankruptcy attorney, without which the bankruptcy likely could not have occurred, and my understanding is that without the bankruptcy all the assets would have gone to the person who won a defamation judgment against NWTM. Since NWTM assets were frozen, the attorney could not use NWTM funds to pay his retainer. So to me, it looks like this move ultimately benefited most creditors.

Meanwhile, Diane Erdmann filed a Trial Brief countering this, explaining that the money came from a life insurance settlement, which she invested in precious metals and kept in private safety deposit boxes and her personal safe, and through strategic trading she took advantage of the 3-fold increase in the price of gold. She points out that if she or Ross Hansen needed more money, they would have just increased their owners' draw, that there would be no need to resort to theft.

Why NWT is Still Selling Stuff

June 2, 2016 2:35PM EST
I had two people ask me today why NWT is still accepting orders. The general idea was "They owe me money, how can they take new orders???" I thought others might be curious, hence this post.

NWT Mint filed for Chapter 11 bankruptcy. Chapter 11 is "reorganization", where a company continues business, but with their debts "stayed" (compared to Chapter 7, which individuals typically file, where everything is liquidated and split among creditors after bankruptcy fees are paid). With Chapter 11, the business continues taking orders as it had before. Any pre-petition debts (money owed before filing for bankruptcy), however, cannot be collected (which gives the company "breathing room" to continue operations). Bankruptcy law determines (over time) who gets how much money. In this case, if it were not for the bankruptcy filing, any legal judgments (such as the $12.5M defamation judgment against NWT Mint) could possibly cause NWT assets to be sold to pay the judgments, effectively shutting down the company.

If the company makes a profit, this benefits creditors. Yes, someone paying $120 for a $100 product will get that $100 product (and you won't get the $100 products you paid for). But if after expenses that brings $5 or $10 of profit, that's an extra $5 or $10 that can go to creditors (after bankruptcy expenses). And if the business can be run well for a year or so and then sold, as the Trustee hopes to do, it might be able to bring in a good amount of money that also can end up going to creditors (again, after bankruptcy expenses). So continued operation of the company should benefit creditors.

In this case, the Chapter 11 Trustee Mark Calvert chose to shut down the bullion operations. So there is no longer any way to order bullion through NWT (except perhaps some small quantities through their store), with NWT focusing on custom minting instead. Although I haven't seen the reason for this, it was almost certainly because the bullion operations was a money-losing operation.

Status Report

June 2, 2016 1:25PM EST
The Chapter 11 Trustee, Mark Calvert, has posted the Status Report (see also Exhibit A, Exhibit B and Exhibit C).

Of note:

  • On the day that the jury verdicts were awarded, NWT ceased maintaining its records of cash held in its Federal Way vault. It had $225K cash at that time, and $3K cash when the bankruptcy petition was filed.
  • The Trustee anticipates filing an adversary proceeding against Medallic Art Company, LLC (“Medallic”) and Mr. Hansen. Medallic has asserted that it owns certain assets located in Dayton, Nevada, and Texas, which the Trustee believes are assets of the Debtor. As Mr. Hansen confirmed in testimony before the court on May 27, 2016, Medallic has no employees, other than Mr. Hansen and his girlfriend Ms. Erdmann.
  • Mr. Calvert stated that the $2 million component of the Medallic purchase price was funded directly from the Debtor’s bank accounts.
  • Total cash transfers within the ninety day period prior to the petition were approximately $11 million and total precious metal, coin and product deliveries during the ninety day period were approximately $6.8 million.
  • The Trustee mentioned that some creditors who had placed orders for metal have filed Proof of Claim forms alleging that they are priority creditors due to 11 U.S.C. § 507(a)(7), which applies to the first ~$2,850 of deposit money in connection with the purchase of property “for the personal, family, or household use of such individuals, that were not delivered or provided.” No comment was made on whether this may be valid or not, but the total if all Proofs of Claim for such customers are amended to use the priority, the total priority claims would be around $10M. This would benefit low-value creditors with unfulfilled orders, but would likely not benefit those owed a lot of money and those with stored metal.

Court Documents, PACER, and RECAP

June 2, 2016 10:25AM EST
Some of you have been closely following the court documents.

I download most of them, and place them online here.

The official source is through PACER. The catch is that you are billed $.10 per page ($3.00 maximum per document), which includes the list of dockets. If you spend less than $15 in a quarter, your fee is waived. There is an RSS feed at https://ecf.wawb.uscourts.gov/cgi-bin/rss_outside.pl that lets you see when new documents are added. To get all NWT documents from PACER would cost hundreds of dollars, which is why I put them online for free.

Today, I installed RECAP, which helps everyone reduce the PACER costs. It works with Firefox and Chrome, and automatically will link to a free copy of a document if RECAP has it (and if not, when you download it, it will automatically upload to RECAP for others to get for free). It does not increase your PACER fees in any way. I would encourage people who are accessing court documents through PACER to use RECAP, as it will help reduce the fees for everyone.

Graco Sold for About $1M

June 2, 2016 7:05AM EST
According to a status report filed last night, the court approved the sale of Graco on Tuesday to Ira Green Holdings, Inc. for 'approximately $1,000,000."

It looks like the total purchase price is $1M exactly, plus the assumption of contracts which appear to provide a benefit to NWT of another roughly $175,000 (although I could be wrong about that).

Hansen Proposing MAC/Tomball/NWT Deal

May 25, 2016 9:25PM EST
The unsecured creditors' committee has filed a statement saying that Ross Hansen made a proposal, that would keep Tomball as part of NWT Mint (so it would not be sold), and would have various arrangements between Medallic Art Company (MAC) that Ross Hansen is a 50% owner of and NWT Mint.

On the surface, it seems like a legitimate proposal. However, there are some unanswered questions so far. One that immediately comes to mind is that it include various insurance that MAC would agree to provide. NWT Mint's storage customers reportedly only have about $1M of metal compared to the $8M they have stored. If that is not covered by insurance -- as the storage agreements state -- the idea of this accepting this proposal would seem to be an insult to creditors. Hopefully, either all the stored metal is there, and if not, there is insurance covering it.

Audio of Creditors' Meeting

May 24, 2016 12:50PM EST
For those that are interested, I have a copy of the audio of the creditors' meeting available. Note that most people will prefer the transcript. The audio is about large, at about 175MB (you can right-click the link and choose "Save target as" to download it).

New Activity

May 23, 2016 8:45PM EST
A bunch of court documents were filed today.

First, Medallic Art Company, which Ross Hansen bought a 50% interest in for $2M in 2009, as filed a motion to force the Trustee to make $25,000/month payments to Medallic Art Company for use of its equipment (that it has been paying for several years). It also includes an exhibit showing a letter that Mr. Calvert sent to employees stating that they would be terminated immediately if they communicate with news agencies or Ross Hansen or Diane Erdman. A news agency is a company like the Associated Press that sells news to other companies that provide news. The filings also show that NWT owes Medallic Art Company $1.5M.

Next, Medallic Art Company filed an objection to the Tomball sale, pointing out that NWT Mint paid $3M over time for Tomball assets, and suggests that the sale for $600K plus $150K in assumed liabilities would be a "fire sale."

Then, Harris County filed an objection to the Tomball sale, saying that it should have a provision for their taxes to be paid.

Finally, Ira Green, Inc. filed an objection to the Tomball sale, saying that they wish to submit a higher and better offer.

I would like to add a note to NWT employees: if you choose to contact me via E-mail, I will not publish anything unless you clearly state otherwise (I consider myself an advocate, not media). You can also provide anonymous tips (you can use Tor for even more anonymity; in any case, I would not recommend submitting a tip on an NWT computer). I treat privacy and confidentiality very seriously.

Creditors' Meeting Overview

May 20, 2016 5:10PM EST
Although it was a long meeting, there isn't a huge amount of information that came up that I haven't already mentioned here. However, the transcript is certainly worth taking a look at.

  • Ross Hansen's girlfriend, Diane Erdmann, was the vault manager at Federal Way, and kept an inventory of what was brought in and shipped out on a daily basis.
  • Ross would normally take out money (an owner's draw, similar to a salary) by taking cash from the vault, although would be paid by check in the past.
  • The lack of financial statements was explained as due to the ERP software failing; they tried replacing it with Epicor (which ironically Bullion Direct used) and SAP. They spent $2M or so on that, and decided to focus on the business instead.
  • While it was mentioned that Ms. Erdmann receives money from owner's draws that Ross takes, nobody asked about the $50,000 per month in personal American Express card payments that NWT Mint was paying for Ms. Erdmann.
  • When asked if metal stored for customers was segregated and if it was used in the mint's business operations, Ross Hansen said "I believe that -- and I could be wrong -- but I believe that most -- all metals that were -- that were put into storage are in storage."
  • When the U.S. Trustee asked Ross Hansen if he ever invaded the metal stored for customers for other uses, Mr. Hansen said "To my knowledge, no."
  • Storage customers have wondered about insurance. Mr. Hansen said they have a type of insurance called "jewelers block insurance". Nothing was said as to whether it may cover metal that NWT was storing for customers.
  • Some checks customers sent were missing, and Mr. Calvert is trying to find if any were deposited into any non-NWT accounts.
  • Mr. Calvert immediately made backups of security tapes, which record over themselves "over a period of time." It was not mentioned what the time period is, whether they have days of security footage, months, or years.
  • It seems clear that some stored metal is there, and some is not.
  • Mr. Calvert stated "It appears -- it appears that when he was short of cash, he would drop the price, close to the spot price, to increase orders. But the reputation of the long delivery resulted in less people buying. And as a result, there wasn't enough money to keep going."
  • It seems clear that the bullion operation of NWT is what resulted in massive losses. The "irregularities" only apply to the bullion operations.
  • Mr. Calvert intends to run the operations in Dayton for about a year to increase the value and get proper accounting records, and then sell it.

Creditors' Meeting Transcript

May 19, 2016 7:30PM EST
The official bankruptcy site added the transcript of the Creditors' Meeting. You can find it here.

I will be going over this very carefully, and reporting on it (likely tomorrow, as it is getting late on the East Coast). And a special thanks to Mr. Calvert for getting the transcript to creditors, and to the person who alerted me to it.

UPDATE: You can also view this now on an web page I set up if it is easier.

Only $1M of $8M Stored Metal Found

May 19, 2016 2:10PM EST
I have heard that the NWT inventory only came up with about $1M of metal stored for customers. The creditor list that NWT filed shows that storage customers have about $8M of metals stored at NWT.

The storage contracts that I have read all appear to be crystal clear: the metal belongs to the customer. If the metal cannot be found, it would be considered either lost or stolen. And losing $7M of allocated customer metal (the majority of the metal being stored) seems quite far fetched. Further, the storage contract requires NWT to insure the metal, which I highly doubt occurred.

More Creditors' Meeting Notes

May 19, 2016 12:25PM EST
This comes from yesterday's Federal Way Mirror article.

  • Bradley Cohen, who won the $38.3M defamation lawsuit, agreed to release $190,000 back to the estate that he obtained from a court-appointed seizure.
  • Mark Calvert, the Chapter 11 Trustee, said the mint has been insolvent since 2009 or before, suggesting Ponzi-like activities began prior to 2007. To me, this is significant since the State of Washington investigated them in 2008, and should have checked their finances at that time.
  • Owner Ross Hansen said that he believes the assets are worth $20-$25M, although Calvert believes them to be worth much less than that.
  • It is 'less clear if all "owner's draws," which is how Hansen took compensation, were logged.'
  • Ross Hansen had $156,000 worth of coins seized from his home several weeks ago.
  • Calvert said "The FBI and DOJ (Department of Justice) is a one-way highway when it comes to information, and justice will take time."
  • Calvert cut the staff from about 240 employees to about 200 employees.
  • Unfortunately, Calvert estimated there would be less than 10 percent of recovery for general unsecured creditors
  • Calvert said that there was a higher amount of storage contracts than physical inventory

The King Does Not Have Priority

May 18, 2016 7:10PM EST
Several people have read today's Wall Street Journal article about the bankruptcy, and expressed concern that the King of Norway was getting priority over other creditors.

The Wall Street Journal wrote "Another thread: Mr. Calvert assured a nonprofit that the King of Norway will still receive 36 gold medals from the mint to present to scientists who win this year’s Kavli Prize. He found a buyer willing to pay $600,000 for the company’s Houston mint that flooded last month."

The first thing I want to point out is that these are two totally unrelated threads. The sale of the Houston business does not have anything to do with the medals ordered by the nonprofit.

The nonprofit had 108 ounces of gold stored with NWT Mint, apparently in the exact same way as other creditors that have metal stored there. Several weeks after the bankruptcy was filed, the nonprofit placed an order for the medals (which use 108 ounces of gold). With the arrangement, the nonprofit would pay for the work NWT did to create the medals and would supply the gold for them. However, the gold they supplied was separate from the gold that was stored at NWT.

The end result is that the nonprofit is in exactly the same position it would have been if it had done nothing with NWT, and had someone else make the medals.

Forums for Discussing NWT Mint

May 16, 2016 7:55PM EST
I have just added a forum for discussing the NWT Mint bankruptcy.

I will still post here and send out occasional E-mail updates, but the forums will offer a place where creditors can interact with one another if desired. Note that while the forum is intended for NWT creditors, anyone may view and post there.

Did You Pay with a Credit Card?

May 16, 2016 1:25PM EST
Did you order metal from NWT Mint and pay with a credit card?

If so, and you should file a dispute with your credit card company immediately if you have not yet done so. Typically in bankruptcies a credit card company is responsible for reimbursing customers who did not get their orders.

If you paid by credit card and have already filed a Proof of Claim form, and your credit card company reimburses you, make sure to withdraw your Proof of Claim (intentionally not withdrawing the claim might be considered bankruptcy fraud, which is taken very seriously).

News Articles

May 16, 2016 1:15PM EST
This is a bit late, but in case people are interested, here are some of the more notable articles since the bankruptcy filing:

18 May 2016 Federal Way MirrorFormer owner of Federal Way’s Northwest Territorial Mint in hot seat during creditors meeting
18 May 2016 Wall Street JournalSilver Buyer Facing Sanctions Is One of Many Layers to Mint’s Bankruptcy
10 May 2016 COINWeekNorthwest Territorial Mint Bankrupt, Bullion Buyers May Lose Millions
09 May 2016 Federal Way Mirror"Attorney General's Office had hundreds of complaints before Northwest Territorial Mint's bankruptcy"
03 May 2016 Federal Way Mirror"Court appoints Northwest Territorial Mint trustee, creditors to meet May 11"
08 Apr 2016 The Seattle Times"Precious metals firm put under Chapter 11 trustee"

Searchable Inventory List

May 16, 2016 8:50AM EST
I have added a webpage that lets you view an search the NWT inventory.

This is the inventory from the bankruptcy schedules, and likely does not include any customer inventory. The inventory contains over 18,000 listings, so this is a massive (3MB) webpage. It will likely take at least 10 seconds to load and process commands, and likely will not work with many browsers.

Alternatively, you can download the data as a .csv file, for processing in Excel, OpenOffice, or other spreadsheet/database programs.

Some Information on the Creditors' Meeting

May 15, 2016 6:45PM EST
I finally have some information on the meeting.

It lasted over 3 hours, and I understand that it will be continued at a later date. NWT Mint owner Ross Hansen was there, put under oath, and was asked many questions.

I have heard that Ross Hansen was there without a lawyer, but unwilling to answer a number of questions. Some of the questions related to metal that was taken out shortly before the bankruptcy filing, that presumably belonged to Ross's girlfriend and likely was used to pay the bankruptcy attorney (who has since withdrawn).

It was mentioned that for the past 3 years, no taxes were filed, and their accounting has not been working during that time.

An FBI agent was present at the meeting.

An inventory has been completed, but they are not in a position yet to identify which owners of stored metal had their names attached to allocated metal in the vault. Those that have stored metal at NWT should be contacted within a few weeks. Allocated metal will not be considered NWT assets, but returned to the customers. However, it seems that much of the allocated metal is not there or marked as such. If a storage customer does not have metal allocated in their name, they will be considered a general unsecured creditor.

I understand that the audio of the meeting has been prepared, and will likely be available by the end of the week. I will post more details after going through the audio.

Info on Creditors' Meeting Wanted...

May 11, 2016 5:10PM EST
As I write this, the Creditors' Meeting should be in progress.

If anyone is/was there and has any information to share, I would be happy to hear from you. You can either or you can provide information anonymously at the tips page.

UPDATE:: It's getting late on the East Coast, so I likely won't be able to provide any updates until tomorrow, as I haven't heard anything about the meeting yet. Any information would be very welcome!

UPDATE:: As of 4:00PM EST on Thursday, I have not heard anything.

Creditors' Meeting Questions

May 11, 2016 12:40PM EST
I have compiled a list of some questions that creditors would like asked at the Creditors' Meeting, which can be downloaded as a 3 page PDF file.

If you are going to the meeting, and feel like asking any of these questions, I'm sure other creditors would appreciate it. I just included the questions as presented to me by creditors.

I have also sent a copy to the U.S. Trustee (who I understand runs the meeting), with a copy to the Chapter 11 Trustee (who answers questions), to help increase the chances that the questions will get asked.

Bankruptcy Schedules

May 10, 2016 3:45PM EST
[I will be updating this as I get through all the documents]

  • Total listed liabilities are $55,861,961.76 (only $72,753.76 of that is secured)
  • Total assets listed are $6,476,227.75 (but that is a 'best guess', not actual market values)
  • They have $1.4M of accounts receivable
  • Of the $55.8M owed, $26.8M is for unfulfilled bullion orders, $8.2M is for storage customers.
  • The checking account has $1,007.07 in it, with an extra $3K of actual cash
  • There are no known payments to NWT Mint's owner, Ross Hansen, since September, 2015 (and payments for the past year total only about $10,000).
  • NWT Mint shows $554K in American Express payments for Ross Hansen's girlfriend over the past year. Interestingly, only 10 of 12 payments appear to have been made by NWT Mint.
  • There are "Possible inventory losses under investigation"
  • Regarding stored metal (which *should* exist, and therefore reduce claims), the schedules stated "Debtor stored personal property for certain customers, Trustee has commenced a detailed storage inventory which will be provided to creditors when completed."
  • Tax returns have not been filed since 2010. This is eerily similar to Bullion Direct.
  • Despite apparently having 7 accountants on staff, NWT Mint "did not have standard bookkeeping or accounting practices, and did not generate financial statements or account reconciliations for many years."
  • There was a $10,000 check made out to CASH on February 29, 2016.
  • $3,960 was paid to survivalblog.com on February 16, the website that dropped NWT's advertising in December, 2014 calling NWT Mint "deplorable" -- and retracted 4 days later.
  • Bullion wholesalers received $2.5M in the 90 days before the bankruptcy filing, working out to $10M/year -- a tiny fraction of what customers ordered
  • Refunds to customers appear to have been around $8M in the 90 days before the bankruptcy filing, working out to about $30M a year.
  • Payroll is about $8.8M/year (from a prior court document)
  • There is a State Senator that is owed money
  • One interesting asset is a satellite phone
Docket 221 - 206Sum, Summary of Assets and Liabilities for Non-Individuals
Docket 222 - Schedules A,B: Assets - Real and Personal Property (400+ pages)
Docket 223 - Schedule D: Creditors Who Have Claims Secured by Property (2, City of Tomball, $72.7K)
Docket 224 - Schedule E/F: Creditors Who Have Unsecured Claims (minus creditor list, for privacy). Shows $55,789,208 of claims.
Docket 225 - Schedule G: Executory Contracts and Unexpired Leases. Shows 7 contracts/leases with unknown values.
Docket 226 - Schedule H: Co-Debtors. Does not list any.

$55.8M Owed, ~$6.4M Assets

May 10, 2016 3:30PM EST
NWT just filed the bankruptcy schedules. There is a massive amount of information to go through. What I see at first glance is that all claims are currently listed as disputed (given the state of NWT records; if not listed as disputed, they could potentially be legally liable for debt that did not exist).

The $6.4M of assets is not the current market value, but based on net book values and/or good faith estimates.

I will be posting more, with links to the schedules, soon.

Category# CreditorsAmount OwedAverage
Unfulfilled Bullion Order2755$26,865,458$9,751
Storage Customers102$14,413,359
$8,272,784
$141,307
$81,105
Judgment1$12,505,945$12,505,945
Vendor156$3,975,515$25,484
Lease Customers26$3,488,154$134,159
Custom Gold/Silver17$420,942$24,761
Unfulfilled MAP262$260,506$994
TOTAL3,319$55,789,208 

Mailing List

I have a mailing list that I have set up for customers who are owed money/metal by Northwest Territorial Mint (and anyone else who might be interested in updates.

I strongly urge creditors to sign up for the list, as I expect to E-mail reminders about certain important dates (such as the 'bar date', the last date to file claims, if Proof of Claim forms are necessary).

Two Attorneys Suckered by Impulse Claim System

May 10, 2016 3:15PM EST
I have previously mentioned my dislike for the electronic Proof of Claim system, which is helpful for the court, but not for creditors. I refer to it as the "impulse claim" system, as it makes it much easier to file an unnecessary claim (over 1,500 claims have been filed so far that are not required, with many creditors not realizing that their information is public record).

One sign of the problems with this impulse claim system is that there are now 53 creditors claiming that their name is "Northwest Territorial Mint." That's because the average customer is not familiar with bankruptcy, and does not know whether they are the debtor or creditor.

I thought it was just individuals who were making mistakes due to the impulse claim system. But no, that isn't the case. Two law offices have now submitted duplicate claims -- both filed electronically. Both had made errors in their name and/or address in the first claim, that I doubt would have occurred if they had to file a paper claim. But worse, both of them filed DUPLICATE claims. Why? Well, it turns out that the court doesn't let you choose the creditor name from a drop-down box, and it ONLY lets you file an amended claim if you choose your name that way. In other words, the impulse claim system lets you file a duplicate claim, but refuses to allow you to check the "amended claim" box.

I really need to find whoever oversees the courts and see if I can get them to stop the whole impulse claim nonsense, or at least fix it. It has proven damaging to customers, and in this case will cost money to sort through the duplicate claims.

Creditors' Meeting on Wednesday

May 9, 2016 2:10PM EST
As a reminder, the Creditors' Meeting is on Wednesday, May 11, 2016, at 1:00PM (in some places it says 2:00, but that appears to be a 'placeholder' to ensure that enough time is allotted for the meeting). The meeting will be at US Courthouse, Room 4107, 700 Stewart St, Seattle, WA 98101.

The public is welcome to attend creditors' meetings. There is no requirement for creditors to attend. It gives creditors an opportunity to ask questions of the debtor (NWT Mint). Most likely, there will be a lot of information presented at the meeting. If it is like similar meetings, it could easily last several hours. I do not know if the owner of the company, Ross Hansen, will be attending.

As soon as I hear details from the meeting, I will be sure to post them here. I expect to be able to get a copy of the audio (likely within a week or two) and post it online, along with important details from the meeting.

If you have any specific questions you wish to be asked, and cannot make it, please let me know, and I will try to pass them on (I cannot, however, guarantee that they will be asked or answered). Also, if you are planning on attending the meeting and may be willing to ask some questions on behalf of creditors that cannot attend, please let me know.

May 10, 2016 1:10PM EST
UPDATE: The creditors' meeting is not a hear or true legal proceeding; the judge is not allowed to be present at Creditors' Meetings. The goal of these meetings is primarily to give creditors a good idea of what the financial situation of the company is.

Graco Awards Manufacturing to be Sold

May 6, 2016 9:05PM EST
Mark Calvert, the Chapter 11 Trustee, has filed a motion to sell NWT Subsidiary Graco Awards Manufacturing for $600,000 (UPDATE: plus assumption of an estimated $150K of liabilities), or a better offer if one comes in in time.

This is discouraging, as $600,000 is only about 1.3% of the estimated claims, and yet the cash is considered important to preserve other aspects of NWT. This is a very clear sign that there is no cash or metal backing the estimated $30M of unfulfilled customer orders.

FBI Raid?

May 5, 2016 3:10PM EST
I heard a report (which I have not been able to confirm) that a location associated with Northwest Territorial Mint was recently raided by the FBI, and that they discovered a fair bit of bullion (not in a company vault).

That said, this is the type of thing that is not easy to confirm; usually government agencies do not confirm or deny investigations. Also, the fact that there was bullion is not unusual in this case (compared to a company that does not handle bullion). However, if true, this would answer a question that many have been asking (whether the government is investigating the situation).

May 6, 2016 7:35AM EST
UPDATE: It has been confirmed that the FBI has an ongoing investigation into the activities at Northwest Territorial Mint.

May 8, 2016 8:00AM EST
UPDATE: It looks like the raid was not by the FBI, but instead done by a deputy sheriff, to collect a judgment (not against NWT), but could possibly have seized NWT property. The FBI is, however, investigating what went on at NWT Mint.

Unsecured Creditors' Committee

May 2, 2016 4:35PM EST
I had forgotten to mention this previously -- an Unsecured Creditors' Committee has been formed, and has an attorney they are using.

In a Chapter 11 bankruptcy, an unsecured creditors' committee is usually formed, and consists of several of the unsecured creditors that are owed the most money. The committee has a number of functions, but is essentially formed to protect unsecured creditors. In some cases, it will investigate the assets, liabilities, and actions of the company as well.

Upcoming Dates & Information

May 2, 2016 4:30PM EST
The Creditors' Meeting is on Wednesday, May 11. I expect a lot of information to come out of that meeting. As a reminder, while the meeting is intended for creditors, creditors are not obligated to go. If it were me, I would go if it was within reasonable driving distance. I expect to be able to get a copy of the audio of the meeting and post it here.

Then on May 18, the bankruptcy schedules are due. This will likely include a lot of financial information as well, and answer many questions.

Finally, the court ordered a case management conference for Friday, June 3, 2016 at 1:30PM. By Friday, May 27, the Trustee is required to provide some other financial information. This meeting is listed as "no mandatory, but strictly voluntary" for all interested parties other than the Trustee. However, if you go, there are caveats (e.g. you should bring an attorney or be willing to enter into stipulations -- presumably you could just go and listen, but that is not clear).

Defamation Award Upheld

April 29, 2016 8:00AM EST
Yesterday, a Nevada federal judge upheld the defamation verdict against NWT Mint, its owner, and one employee.

NWT had submitted a motion for a retrial, which was denied.

Court Overwhelmed by Proof of Claim Forms

April 28, 2016 8:50AM EST
According to Docket 140, the Clerk of the Court has "expressed concern as to the Court's ability to process large numbers of paper claims." The court appears to have at least 8 people who are authorized to enter paper Proof of Claim forms.

The court wants people to file claims electronically. That likely saves the court money, but these "impulse claims" harm creditors. The vast majority of creditors in bankruptcy cases are businesses, and electronic claims work well for them. But for people who are not familiar with bankruptcies, errors abound. For example:

  • 42 people declared under penalty of perjury that their name is "Northwest Territorial Mint", and they are owed a total of $344,960.11. That's because on the electronic form asks for "Who is the current creditor?" and I'll even admit to having been confused between "creditor" and "debtor" when I first encountered bankruptcies. When filling out a paper form, you'll be much more likely to notice that you didn't put your name anywhere on the form. Of those 42 bogus claims, 100% were filed electronically. The same thing happened with Bullion Direct.
  • In most cases, in Chapter 11 bankruptcies, Proof of Claim forms are not required. And at this point, it is not known whether they will be required. Proof of Claim forms are public documents, and bullion purchasers often want to keep their information private. The electronic Proof of Claim forms make it much more likely creditors will file unnecessary Proof of Claim forms.
  • The electronic form automatically hides the types of priority claims a user might be entitled to. This makes it less likely that creditors will choose "Up to $2,850 of deposits toward purchase..." that may well apply in this case. This could potentially cause a creditor to receive no money when they otherwise would have received some money.
So we see [1] customers lose privacy by sending in Proof of Claim before knowing that it is required, [2] those who do choose to file a Proof of Claim form are much less likely to make a mistake if they print a copy and mail it in, and [3] The court may have difficulties handling all the claims.

Tips Wanted: Loose Lips Save Ships

April 25, 2016 10:40AM EST
It is said that loose lips sink ships. However, if the ship is already starting to take in water, loose lips can save lives. In this case, it's the customers of NWT who are owed many millions of dollars. NWT appears to have had serious financial issues for months or perhaps years, that much is now known.

If you have information or documents you think I should see, you can either E-mail me directly or use the anonymous tips form. I am looking for information about NWT, not specific orders. I never publish information sent to me via E-mail without permission. When information is sent via the anonymous tips page (where I cannot respond), unless stated otherwise, I assume it is OK to share (but in most cases do not). I take great care to ensure that anyone sending me information (even anonymously) cannot be identified (for example, if I were to post a document sent to me, which I rarely do, I would normally convert it to a different file format to provide an extra layer of protection).

If you have any information about NWT Mint that you think I should know about, you can either or you can provide information anonymously at the tips page. I want to again thank those who have submitted tips.

NWT Had Serious Problems

April 25, 2016 9:25AM EST
Until recently, the only firm data I had on bullion delivery issues at NWT was BBB complaints. Those are not very unreliable in this case, between issues with the local BBB and many complaints being unjustified (I.E. complaints about delivery delays when the expected delivery date had not yet been reached). It also got tricky because the State of Washington gave NWT their blessing to allow lengthy shipping times, making financial problems very difficult to see from complaints.

However, I now have Proof of Claim forms. These are documents I get directly from the government, that state right on them that you can get sent to prison for a false claim.

I have looked at a not-quite-random sample of claims (picked based on claim number ranges). NWT gives out a 8-10 week timeframe as their estimated shipping time, and is allowed a 30-day grace period, after which NWT is "restrained from failing to pay to the consumer, immediately after the expiration of the period, either the full spot market price on the day the period expired or the price the consumer originally paid for the goods, whichever is greater, in addition to all shipping and other charges." That leaves NWT 100 days after receipt of good funds -- a maximum of about 119 days from the date of the order if you include 14 days for checks to clear and 5 days for checks to arrive.

Of 22 claims I looked at where I can determine the order date and/or cleared funds date, 13 were at or past the 120 day deadline (as of the date of the bankruptcy petition). That is more than half, all of which NWT was supposed to have refunded. One order was 254 days old (over 8 months) at the time of the bankruptcy filing. These were not orders that merely "slipped through the cracks" -- half of all orders I checked were beyond the deadline imposed by the State of Washington consent decree.

Worse, at least 2 of those orders were not for NWT Mint products, which is important because the lynchpin for NWT's business model is that they mint products in batches, causing the delays (you order, then they mint the product). But they can get a $1,000FV bag of quarters or 1oz platinum bars within days from bullion wholesalers.

Also, at this point I should mention that the voluntary petition shows that NWT leased over $3.5M of metal from customers. I have not heard yet from anyone who leased metal to NWT (either directly or via Proof of Claim), so I do not know the details of their leasing. However, it appears that $3.5M of metal leasing was essentially a loan from customers.

In other words, the large judgment appears to have just sped up a bankruptcy filing, rather than being the cause of it.

Top 20 Creditors

April 22, 2016 8:30PM EST
The bankruptcy petition listed the 20 unsecured creditors with the largest claims, as required.

Of them, the 2 largest related to the large defamation judgment, and Proof of Claim forms have been filed for those.

Of the other 18, 2 have filed a Proof of Claim so far: one for the exact amount listed, and one for about 66% of the amount NWT Mint had listed their claim as. And another claim has been filed from someone showing that should have made it to the list of top 20 creditors.

NWT Requesting Court Require All Creditors to File Proof of Claim Forms

April 22, 2016 8:20PM EST
The Chapter 11 Trustee has filed a motion for the court to designate September 1, 2016 as the bar date (deadline) to file Proof of Claim forms.

It states that NWT would notify creditors that they must file a Proof of Claim, using a notice that states that anyone required by the order to file a Proof of Claim who does not do so would not be treated as a creditor. In other words, all creditors would be required to file a Proof of Claim.

To me, this suggests that NWT Mint does not have accurate enough records to properly identify all claims. Specifically, Chapter 11 creditors are only required to file a Proof of Claim if they are not on the creditor list (scheduled), or they are listed as disputed, contingent, or unliquidated.

Claims Explosion ($22M and counting)

April 22, 2016 6:55PM EST
There have been about 1,000 Proof of Claim forms filed in the past week. Many of them are duplicate (some triplicate) claims, making it very hard to figure out the total claims and average claims. And as is typical, there are many big errors (e.g. 36 people claimed that their name is "Northwest Territorial Mint" -- imagine trying to deposit that check).

The Judge filed an Order to Show Cause, blaming the hundreds of paper Proofs of Claim, improper forms, and duplicate claims on instructions published by the Chapter 11 Trustee. He has ordered that the Trustee show cause why the Court should not impose restrictions on the Trustee's operation of the debtor's business.

I should add that there may have been a good reason for publishing the information (which did get updated a day or so after it was published), and I have in other cases referred to the Claims E-Filing process as "impulse claims" because people tend to blindly fill out the form without thinking about the legal implications, whereas filing a paper form helps ensure that people really think about what they are doing. The Claims E-Filing by itself tends to cause many creditors to file claims that are completely unnecessary, that they very likely would not fill out if they had to take the time to write everything down on paper, sign it, and mail it to the court. And many people file the "impulse claims" without even realizing that it is a public document, and anyone can see their name, address, amount of bullion they bought, and other information from the supporting documents.

From the numbers, there are now approximately 1,000 customer claims (many duplicates), averaging about $10,000 each (not including the $12.5M judgment).

Court Documents

April 21, 2016 8:35PM EST
I have added a page at http://about.ag/NWTDocuments.htm with many of the court documents.

I do not have links to all the documents there; if there are any you would like access to, please let me know.

UPDATE: The original links went to Bullion Direct documents, they are fixed now!

NWT Mint's Attorney Withdrawing

April 19, 2016 7:50AM EST
The bankruptcy attorney for Northwest Territorial Mint is requesting that the court allow them to withdraw as attorney.

It verifies that there was a restraining order that "prevented any funds of [NWT Mint] being transferred to any third party." This is something that customers reported NWT Mint telling them, but had not yet been confirmed. As a result of this restraining order, the deposit with the law firm was paid for by 2 third parties. It is unclear who will receive the money that has not yet been used.

It also states that "the attorney-client working relationship between TTLG and Mr. Hansen, as the member of Northwest Territorial Mint LLC has deteriorated to the point where any continued representation of the Debtor is not possible."

One interesting note is that it shows that most of the creditors were entered into their software as priority claims, which strongly suggests that they were treating orders as deposits, giving up to about $2,850 of the money owed those creditors priority over standard unsecured claims.

UPDATE: The bankruptcy attorney representing Ross Hansen in the NWT bankruptcy has filed a similar motion.

~$30M-$40M Owed Customers?

April 16, 2016 8:25AM EST
I am going through Proof of Claim forms that have been filed so far, trying to estimate how much money is owed NWT Mint customers.

At this point, 140 claims have been filed, totaling $2.5M. It seems that almost all of them are from individuals that are owed money, mostly for bullion. The average claim is about $17,000. We also know that about $10M is owed the ~17 customers who made the list of 20 largest unsecured claims, and that there are about 3,000 creditors (based on the number of people listed in the bankruptcy petition).

With about 3,000 expected creditors, if each claim averaged $17,000, that would be $51M. However, the $17,000 average claim is based on the people who have submitted claims fairly early, and it is often the people who are owed the most who file claims quickly (with Bullion Direct, the average claim was somewhere around 1/2 of the average of the early Proof of Claim forms). On the other hand, only 1 of the top 20 creditors has filed a claim so far.

From these numbers, my hunch is that the total owed customers will be around $30M-$40M (which does not include the $12.5M of the defamation judgment that NWT owes, money owed businesses, the IRS,e tc.).

Proof of Claim Form

April 15, 2016 4:20PM EST
With the NWT Mint bankruptcy, creditors are being instructed to file a Proof of Claim form. This form is used to document how much you are owed.

You can go to the bankruptcy website and click on the "Proof of Claim" tab on the top of the page. It has a link to the Proof of Claim form, the address to send it to, and an address to send a copy to NWT Mint as well.

Each bankruptcy is different, and in this one, you should go to that page and follow the instructions there for filing a Proof of Claim.

NWT Financials Due May 18, 2016

April 15, 2016 1:30PM EST
As I previously reported, the Chapter 11 Trustee requested to have until June 10, 2016 to file the bankruptcy schedules (financial information about NWT Mint). The judge signed the order today, but only allowed NWT until May 18, 2016 to file the schedules.

This is not something that creditors need to do anything with. When the schedules are filed, however, they will provide a lot of details about NWT Mint's financial situation, and I will post much of that information here.

Notice of Chapter 11 Bankruptcy

April 14, 2016 9:05AM EST
The Notice of Chapter 11 Bankruptcy has just been filed.

This is a document to inform creditors that the company is in Chapter 11 bankruptcy.

Bankruptcy Website

April 13, 2016 7:25PM EST
Northwest Territorial Mint has set up a website at http://existingbullionorders.com/ to keep customers informed of the bankruptcy process.

The site states that you need to file a Proof of Claim form. Normally, in a Chapter 11 bankruptcy, Proof of Claim forms are only required if you are either not in the list of creditors (which will be filed later), or if you are not correctly listed (e.g. the amount is wrong, or listed as disputed, contingent or unliquidated), or you are notified otherwise by the court (e.g. if the case converts to Chapter 7).

If it looks like the Proof of Claim form is indeed necessary, I will provide information to assist people (although I cannot provide legal advice, as I am not a lawyer). In many cases, it is best not to fill out a Proof of Claim form unless required, as they are fraught with errors (which costs money to fix, that comes out of money that would otherwise go to creditors). One of the key issues with Proof of Claim forms with bullion customers is that nobody seems to know if customers are allowed to take advantage of a ~$2,775 priority claim (I am not aware of any bullion bankruptcies where this was addressed). In this specific bankruptcy, it could be an important question.

UPDATE: In the NWT Mint bankruptcy, creditors are being instructed to fill out a Proof of Claim form. You can go to the bankruptcy website and click on the "Proof of Claim" link on the top of the page for further details.

Letter to Employees

April 12, 2016 5:30PM EST
I have received a copy of a letter that was sent to NWT Mint employees recently.

It explains what the current situation is (e.g. the judgment and bankruptcy), and points out that the company has a promising future. It points out the beauty of the NWT products, and their importance. It also points out how Kitco had a much larger debt, and it has survived for about 5 years so far afterwards.

I won't go into more details, as the document was intended for employees, but felt a general outline would be useful for creditors.

As a reminder, if you have any information about NWT Mint that you think I should know about, you can either of you can provide information anonymously at the tips page.

Motion to Extend Time to File Schedules

April 12, 2016 5:15PM EST
Mark Calvert, the Chapter 11 Trustee, has filed a motion with the court to extend the deadline for filing the bankruptcy schedules and statement of financial affairs until June 10, 2016. They were originally due on April 18. These are the documents that go into detail about the financial shape of the company (assets, liabilities, list of creditors, recent payments, and so forth).

The motion states that NWT does not have regularly prepared financial statements. It also states that partially prepared schedules have already been made.

Although the delay is disappointing, it is understandable. In the Tulving bankruptcy, it took 6 months before the schedules were filed. And while Bullion Direct had theirs ready in just over 3 weeks, they were shoddily prepared and highly inaccurate. So a delay in the financial documents is not necessarily a bad thing.

Chapter 11 Trustee Appointed

April 8, 2016 8:20PM EST
The U.S. Trustee has appointed Mark Thomas Calvert as the Chapter 11 Trustee.

Interestingly, before the bankruptcy Calvert had met with NWT Mint owner Ross Hansen to see if Calvert's firm would be interested in providing restructuring services to NWT, but Calvert's firm declined to undertake the engagement. Aside from that, however, Calvert and his firm have no connection with NWT or Hansen.

Creditors' Meeting on May 11 1:00PM

April 8, 2016 1:30PM EST
I have just heard that the 341(a) meeting (a/k/a Creditors' Meeting) is going to be held on May 11 at 1:00 at the US Courthouse, Room 4107. The Creditors' Meetings often cover a lot of information.

There is no requirement for creditors to go to the Creditors' Meeting. With Tulving and Bullion Direct, only a few creditors went. What I usually tell people is that I would go to a Creditors' Meeting if it was within driving distance, otherwise I would not.

Chapter 11 Trustee to be Appointed

April 7, 2016 7:10PM EST
The judge has ordered that a Chapter 11 Trustee be appointed, after both the U.S. Trustee and NWT Mint agreed to it.

Also, the judge authorized NWT Mint to pay its employees and utility bills.

CRO Request Withdrawn

April 6, 2016 9:15PM EST
NWT has made a court filing saying that the proposed CRO has withdrawn from consideration as CRO.

Opposition to CRO

April 6, 2016 5:35PM EST
Bradley Cohen, who won the defamation judgment against NWT Mint, its owner, and an employee, is objecting to the appointment of a CRO. He is requesting that a Chapter 11 Trustee be appointed instead (as happened with The Tulving Company).

UPDATE: The U.S. Trustee has also opposed the appointment of a CRO, and has requested a Chapter 11 Trustee be appointed. At this point, I think it is unlikely that a CRO will be appointed.

CRO To Be Appointed

April 6, 2016 7:55AM EST
Northwest Territorial Mint has requested that Bill Weisfield and Stuart Heath of Elliott Bay Asset Solutions, LLC, an independent third party, be appointed CROs (Chief Restructuring Organizers) of NWT Mint. The reason listed was to gain the trust and support of creditors.

My understanding is that the idea behind this is to give creditors some peace of mind that the company is being overseen by people who had no involvement in any issues that may have led to the bankruptcy.

Northwest Territorial Mint Files for Bankruptcy

April 1, 2016 8:25PM EST
Today, Northwest Territorial Mint filed for Chapter 11 bankruptcy (reorganization). The case is 16-11767-CMA in the Western District of Washington.

It estimates 200-999 creditors, with assets of $10M-$50M, and liabilities of $10M-$50M. However, the creditor list appears to show about 3,150 creditors. The top 18 creditors, not including the two owed the $38M judgment, appear to be owed $10.8M.

I have a redacted copy of the voluntary petition available (which removes pages with information on creditors).

Judge Says NWT Mint Cannot Refund Money

March 30, 2016 9:30PM EST
According to a Washington TV station King5, a judge has said that NWT Mint cannot refund money to customers.

The news report states that there are 100 to 200 customers that are owed money.

Writs of Execution

March 29, 2016 2:30PM EST
On March 24, the court entered writs of execution against Northwest Territorial Mint, as well as its owner and one employee, in favor of Mr. Cohen and his company.

I have also heard from several customers that they are being told that NWT Mint is trying to appeal the judgment, and working on a plan to help protect customers. I was also told that checks are not being sent out because of the judgment, but have been unable to confirm that.

Motion for New Trial; "Nothing left in NW Mint's vaults"

March 21, 2016 1:15PM EST
On March 14, Northwest Territorial Mint filed a Motion for a New Trial.

Bradley Cohen filed a response a day later, stating among other things "[Cohen's] counsel has also been advised ... NW Mint has dissolved all of the metals they are holding for clients to fill orders and there is nothing left in NW Mint’s vaults."

Mr. Cohen also included a transcript of a cross-examination of Mr. Hansen where he is asked "In fact, you haven't filed tax returns for 2012, 2013, 2014 or 2015; isn't that a fact?" and he states "That's correct."

$38M Defamation Verdict

February 23, 2016 7:45PM EST
A Los Angeles businessman recently was awarded $38M from NWT Mint, its owner, and an employee.

I do not know yet if there are plans to appeal.

Full details are at the link above.

UPDATE: NWT Mint is responsible for $12.5M of the judgment.

How I Analyze

January 22, 2016 5:00PM EST
I'm sure a number of people wonder why others write negatively about NWT Mint, yet I do not. To get the obvious out of the way, let me make it clear that I am not being compensated in any way by NWT Mint, nor have I been threatened by them in any way (unlike a bullion wholesaler that sicced their lawyers after me).

First, here is what I do not look at:

  • Orders not be shipped within a few days. Although most bullion dealers ship within a few days of good funds, NWT's niche is minting products on demand based on orders they receive, which takes time (in exchange for a better price).
  • Orders not being shipped within 28 days. Some states require bullion to be shipped within 28 days, but I see no such laws that apply to NWT Mint.
  • Taking orders knowing they cannot be fulfilled as advertised. This one is tricky -- this is what Hannes Tulving was accused of (and agreed to plead guilty to). The difference in my mind is that while The Tulving Company took orders that it knew would take months to be delivered (if at all), NWT Mint appears to be getting the majority of orders out on time (the 8-10 week timeframe, with an allowed 30-day delay, and option for money back if it goes beyond that).
  • Lawsuits. There are some lawsuits that NWT is and has been involved in. However, there is a big difference between a customer suing because they never got their $100,000 order or because the bullion dealer couldn't repay a $9.2M loan (neither involve NWT), versus a sexual harassment lawsuit (which did involve NWT). In my mind the first two affect the chance a customer will get an order, the second does not.
  • Past activities. I believe that old problems (say, 10+ years) by a company and/or its principals do not affect current operations (which is why I rarely brought up the FTC issues with Mr. Tulving from around the late 1980s).
That said, there are some things that I look closely at:

Float. One of the biggest concerns I have with any bullion dealer is float -- money that they have received without having yet shipped the order(s). For example, if NWT Mint does $300M of business a year, with $100M of that being non-government, and half of that is bullion orders, then the 8-10 week shipping window would mean they have float in the order of $7.6M to $11.5M. A company has to do something with that money, and to my knowledge, there are no laws covering what they may do with it. They could have it sitting in a bank account, could buy enough 1,000oz silver bars for each order immediately, or it could have been used to pay expenses; it is normally impossible to tell from the outside. Presumably, the Washington Attorney General looked into the financials in 2008, and found it acceptable. But this is something that I try to monitor as best I can for anomalies.

Refunds. With BBB complaints, I have noticed that while refunds were originally quoted as 2 business days, that went up to 5-7 or 10 days in late 2014, then 2-3 weeks in early 2015, and 4-6 weeks more recently. NWT Mint explains the reasoning (such as having accounting verify that the order has not been sent, unwinding the position, etc.). However, a delay like that could simply be due to not having enough money to process the refunds. Taking a long time to process refunds in a company with a lot of float is a red flag, and could be a sign of simply not having enough cash on hand to process the refund (which could either be due to a dire financial situation, or simply not planning well enough for refunds).

Delays. I try to gauge the percentage of orders that are delayed beyond the initial shipping window, and the percentage of orders that hit the 'drop dead' mark (the end of the first delay period, where the customer can request a refund either of the price they paid or spot). This is important because it shows a potential financial trap: if NWT bought silver when the order was placed, and spot went down, NWT has to process a refund at the price the customer paid (but when selling the silver backing the position would lose money). While many BBB complaints refer to delays, the majority seem to be within what is expected (e.g. they were quoted a 4-6 week delay for a refund, but did not actually wait).

BBB Complaint Volume Update

January 22, 2016 8:40AM EST
This is a quick update regarding the volume of BBB complaints.

On January 2, the BBB was showing 203 complaints closed within the past 3 years. Today, it is showing 211. That's 8 new complaints in 20 days, which works out to 12 complaints per month. This is below their average since April.

The number of complaints closed in January is on track to be on the high side. This appears to be due to a number of complaints that were originally closed in December, but re-opened to allow NWT to respond (the local BBB seems to have some technical issues). Even so, it is not expected to exceed the month with the highest volume of complaints (August), which is a good sign.

Reassuring Call With CEO

January 11, 2016 8:25PM EST
On Friday, I was able to talk to Northwest Territorial Mint's CEO, Ross Hansen, to discuss his company.

Before I continue, there are certainly some people who do not like the way the company operates. And they may also not appreciate the position that I am taking here. I did have serious concerns before talking to Ross, and was quite reassured by what he said. I am aware of issues that the company and/or CEO have had, but only pay attention to issues that I believe may affect the chances of customers getting their orders, which is my key concern.

Here are some key facts he gave me:

  • They process about 165,000 orders per year. That means that well under 1% of orders result in a BBB complaint.
  • They have not borrowed any money from banks, not even for equipment. They own all their equipment.
  • They are also a much larger company than most bullion dealers, with numerous locations, lots of employees, lots of assets.
  • About 65% of their business is for U.S. Government contracts, which at times have shipping/production priority.
  • Their business model is to offer a great product, at the best prices -- in exchange for long shipping times and occasional delays. They custom mint their own products, and run them in batches based on the orders they have. They could borrow money to have a large inventory, but then their costs would rise, and they would no longer be competitive on price.
Ross was also frank with me that sometimes mistakes do happen, sometimes there are delays, and sometimes things can slip through the cracks. But for the most part, everything works as expected.

This information helps fill in some of the gaps in what I can read from BBB complaints (which provide me with a lot of information). For example, while there is a large volume of BBB complaints, it is small compared to the number of orders they take.

Their business model is also very different than most bullion dealers, and isn't for everyone (to be honest, it isn't for me). And that is a big part of the BBB complaints. If someone places an order with NWT without realizing that there is a long wait for delivery, they will understandably be upset. However, the website does make the shipping time reasonably clear.

Analysis of BBB Complaints

January 11, 2016 4:05PM EST
I spent a lot of time going through all the BBB complaints, reading every single one of them, categorizing them, tracking the delays, price paid, and so forth.

As I was aware, there was an uptick of BBB complaints starting around April, 2015, reaching a peak in August. The fact that it peaked in August is important: the lack of higher volumes of complaints since then does not suggest serious financial problems (which is what I would be looking for). What would most concern me is if there were ever-increasing volumes of complaints each month, but that is not happening.

The uptick could be explained by a number of factors. For example, there are a number of complaints from people who have not yet reached the expected shipping date of their order, but are simply worried. These people may have read a complaint somewhere online, for example, that pushed them to file a BBB complaint that they otherwise would not have filed. Another example is that NWT may have changed their advertising, which might attract a different group of customers who are more likely to file complaints.

Ultimately, I do not see signs that NWT is unable to ship orders out by the time promised, aside from the occasional glitch (although a number do enter the 30-day delay period, as is explained to customers before ordering). And when that does happen, the customer can either wait for the metal or get a full refund (and I have verified that customers do get a full refund, even if spot has gone down).

I will continue to monitor the BBB data. I would be happy to any NWT customers, both those that have issues and those who do not. This will give me a better sense of how things are working at NWT. You can also provide information anonymously at the tips page.

Ordering from NWT: What to Understand

January 7, 2016 4:00PM EST
Most people order bullion from bullion dealers, who typically ship in-stock items anywhere from the day good funds are received to about a week afterwards.

However, Northwest Territorial Mint mints their own products, and as such, works differently. For various reasons (such as minting many of the products they sell), their orders typically take 8-10 weeks to be delivered. This is stated, for example, on the "Product Information" section for each product. It is also stated when you begin your checkout. It is also stated in their terms, and I understand there is a checkbox saying that you have read the terms.

If the product is not shipped by the time the quoted shipping time is reached, NWT will send out an E-mail stating that there is a delay, which gives them 30 more days to ship the order. If they do not ship the order by the end of those 30 days, you may wait for delivery, or you are entitled to a refund of the greater of the price you paid or the liquidation value.

At any point in the process you may liquidate your order, at a price dependent upon the current spot price.

Page Started

January 5, 2016 7:30AM EST
I am starting this webpage today, covering the Northwest Territorial Mint (NWT Mint), as a result of the BBB changing their rating of NWT Mint to 'F'.

I am in the process of analyzing the data that I can obtain, and contacting NWT Mint.

The BBB reports over 200 complaints in the past 3 years, with over 150 in the past year. Many people complain that they place an order, and find out about an 8-10 week delay. At the time of the expected delivery date, they receive a notice saying it may take up to 30 more days. Now, many people are complaining that they do not receive their order by the second deadline, and that they are told refund requests will take 4-6 weeks to process.



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