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On eBay: Lots of 60 slabbed $1 coins seized from The Tulving Company



[Summary: In Chapter 11 bankruptcy (reorganization) after reports of 6+ month delays, $55.8M owed creditors]
[Threat Level: I have received no legal, verbal, written threats or subpoenas at least as of June 18, 2018]
[Related Pages: court documents, mailing list, tips, Bullion Dealer Data, 341 Meeting]
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NWTM False Claims, Part II

... Motion to Enforce a Prior Court Order

June 19, 2018 4:25PM
Today, a law firm representing a number of creditors filed a "Motion to Enforce a Prior Court Order." From the title, it means that somebody (allegedly) didn't do what the Judge told them to in a signed order. Oops!

In this case, it's pretty much what I wrote in my "NWTM False Claims" post: Calvert is allowing E-mails to be sent out claiming that the Court said things it did not, and trying to cheat (trick people into paying for dies they own, by lying and saying that the court said it was OK). Yikes.

There is an old expression "where there is smoke, there is fire." I interpret to mean that if you discover one bad thing happening, it is MUCH more likely that other bad things are happening there than in some other random location. And while some have referred to allegations of wrongdoing as a "crazy colorful conspiracy theory", this is at least the second time there has been a credible court filing showing that Mr. Calvert disobeyed the Judge (the other one being when he did not return dies that the Court ordered him to).

As a reminder: Medallic and NWTM are two separate companies. Medallic dies were already sold, so this issue only applies to NWTM dies. Mr. Calvert has "huffed and puffed" about how Medallic dies were owned by NWTM/Medallic, not customers. But NWTM dies are different, and in what appears to be all or at least the vast majority of cases, NWTM dies were owned by the customers. It appears that Mr. Calvert implied to the Judge that the Medallic view (that dies are owned by Medallic) applied to NWTM dies, which is false. Many salespeople would tell customers that dies were the property of the customer.

NWTM False Claims

June 15, 2018 4:25PM
In general, just about everyone (except the Trustee) agrees that [1] Medallic dies usually belong to Medallic (unless the customer arranged otherwise), and [2] NWTM dies usually belong to the customer. Chapter 11 Trustee Mark Calvert has done his usual job of obscuring the issue: he keeps referring to the "Medallic dies", rarely mentioning the NWTM dies, possibly making it appear to the Judge that the NWTM dies are owned in the same manner as the Medallic dies. The Judge, to the best of my knowledge, has made no ruling on who owns the dies.

The Judge signed an order allowing Mr. Calvert to settle die ownership issues, and that a hearing will be held on July 17, 2018 to "address claims of interests in or ownership of NWTM Dies of any party that has timely asserted its interest in NWTM Dies and has not settled with the Trustee prior to such hearing". So customers can [1] settle with Mr. Calvert, [2] assert ownership by June 21, 2018 (in which case their ownership will be determined at the July 17 hearing), or [3] relinquish any claims to the dies. Technically, another option is available (an adversary proceeding). The order allows Mr. Calvert to state that NWTM believes that NWTM owns the dies, but allowing customers to assert ownership.

However, I have heard that NWTM is sending out an E-mail stating, in part, "The court has determined that NWTMINT retained ownership of all NWTMINT dies created to produce coins, medallions or other products for customers. The court has approved the settlement for the ownership transfer in the amount of $300.00 per die." However, I have seen nothing in court records or hearings suggesting that the Court has determined that NWTM has retained ownership of NWTM dies -- in fact, the hearing is designed to tackle that issue! I also have seen nothing about the court approving any specific settlement at $300: it authorized the Trustee to settle, but the implication was that it was at whatever the Trustee and the customer agreed to. Think about it, how could the Court authorize the Trustee to settle something if the Court already determined the terms? That's an order, not a settlement. But I'm not a lawyer so maybe I am misunderstanding legal basics.

What is outrageous to me is that the E-mail being sent to customers who are proving die ownership makes it sound like paying $300 is their only option. However, customers have other options (as seen above), including [1] paying ANY other amount that Mr. Calvert agrees to, or [2] waiting for the July 17 hearing. NWTM appears to be misleading people into believing that they are being forced to pay $300, when that is not necessarily the case.

The worst part, however, is that Mr. Calvert is trying to convince the world something that appears to be completely untrue: that NWTM owns the dies. I have talked to many, many people involved who all basically say the same thing about the NWTM (as opposed to Medallic) dies: salespeople were told to tell customers that customers owned NWTM-created dies. As if it couldn't get worse, every $300 fee that is paid will end up going to Mr. Calvert and the other bankruptcy professionals, to help pay their bills, not to creditors.

$420K Sale of Dies to ANS Approved

June 15, 2018 3:05PM
Today the Judge filed an order authorizing the Trustee to sell the order dies to the American Numismatic Society (ANS), for $420,000.

Mediator Kornfeld, Part II

June 15, 2018 11:55AM
In my last update, I mentioned that NWTM is requesting Armand J. (Jay) Kornfeld to mediate the issue of a potential violation of the WARN Act (which was originally a class action lawsuit, that was since voluntarily dismissed). And that Mr. Kornfeld has significant connections to this case.

Yesterday, Mr. Kornfeld filed an unsigned order written by K&L Gates (who represents NWTM via the Trustee), and lists Kornfeld's law office as being the attorneys for the American Numismatic Society, and Armand Kornfeld himself (along with one of his partners) is representing ANS. In fact, Mr. Kornfeld was the one who filed the document with the court. ANS is buying the older Medallic dies from NWTM for $420,000.

WARN Class Action Update

June 8, 2018 5:20PM
In March, I reported that the WARN Act class action lawsuit was dismissed, for unknown reasons. This is in regards to Chapter 11 Trustee Mark Calvert shutting down the company without giving employees 60 days notice, which is required in many cases.

The case re-appeared yesterday, when Mr. Calvert's attorneys filed a motion for an order allowing Armand J. (Jay) Kornfeld to be the mediator of the dispute. If the mediation is unsuccessful, the plan is to file a motion for allowance of an administrative priority claim.

The odd thing about this is that Mr. Kornfeld and Mr. Calvert have interesting connections. For instance, I found out today that Mr. Kornfeld represented Meridian Mortgage Investors Funds II, V, VII and VIII, before Meridian Mortgage was forced into bankruptcy. Meridian is the other notable Chapter 11 bankruptcy that Mr. Calvert was Trustee of before NWTM (Meridian's founder/owner, Darren Berg, is now on the lam after escaping from prison). Mr. Kornfeld wrote that Meridian requested and suggested that the U.S. Trustee's office appoint a Chapter 11 Trustee. That Trustee turned out to be Mark Calvert.

Further, Mr. Kornfeld is the person who originally recommended that Mark Calvert assist Ross Hansen in reorganizing NWTM. And has been involved in "virtually every significant commercial fishing and seafood processing case filed in the Seattle area in the last 20 years" (Mr. Calvert runs a Seattle-based fishing company, and Mr. May is a veritable fishing magnate in Seattle; Calvert's fishing company is owned in part by a fisherman who Mr. Kornfeld helped in a personal bankruptcy before the fisherman was sent to jail for a $6M fraud). And the Assistant U.S. Trustee at the time of the NWTM bankruptcy filing, Thomas Buford (who presumably was involved picking Mr. Calvert), is now working at Mr. Kornfeld's law firm.

April Financial Report

June 4, 2018 1:45PM
Chapter 11 Trustee Mark Calvert has filed the April, 2018 Monthly Financial Report.

At this point, I don't spend much time going over the details of these reports, as there are others who are doing so.

It shows $380K of accounts receivable over 90 days overdue ($164K from before the bankruptcy, $215K since then), of which $298K is listed as uncollectible ($150K before bankruptcy, $147K after). It shows $5.1M owed the professionals. It shows that they are down to 9 full-time employees (from 10 last month), with about an average $58K salary.

It is unclear if the uncollectible receivables are legitimate (e.g. for goods people received), or illegitimate (e.g. money paid for goods that NWTM never delivered, like the golf medals). The reason for writing them off as uncollectible is age and "the hardship of collections with the knowledge that NWTM is closed".

NWTM Assets to be Re-Auctioned

May 29, 2018 7:50AM
The NWTM assets, which were originally sold to Industrial Assets to auction, but that Mr. Parish bought for $2.5M (financed by Mr. May), are now going to be auctioned off as originally planned.

Industrial Assets will be conducting the auction, but it is unclear exactly where the proceeds will go. This is done outside of the court, so there likely will be no records of how much everything sold for or who got the money.

Auction of Misc. Equipment

May 29, 2018 7:45AM
The Trustee has filed a motion to sell various property, including 2 vehicles, a gun safe, refridgerators, a telescope, a metal detector, and a WWII camera. A full list of what is being sold is in the declaration.

Trustee Bankruptcy Violations

May 19, 2018 2:30PM
Judge Alston filed a vacating order. He had previously filed an order allowing the professionals to automatically be reimbursed 80% of their fees after giving certain notice. This order essentially takes back that previous order.

In it, he writes "several Monthly Financial Reports ... filed in this case show the chapter 11 trustee repaid monies loaned to the estate by [his company Cascade Capital] ... without disclosing the loans and without obtaining authority from the Court to repay the loans, in violation of the Bankruptcy Code and the Bankruptcy Rules."

More on May 4 Hearing

May 18, 2018 3:30PM
The May 4, 2018 hearing was important, as it covered the Medallic sale to Medalcraft (approved) and the motion to convert to Chapter 7 (denied). And the Judge started asking questions of the Trustee.

The Judge asked Chapter 11 Trustee Mark Calvert if he knew anything about allegations that someone is planning to use the Chinese dies. Calvert stated that he doesn't know of anybody that plans to use the Chinese dies (other than Medalcraft in accordance with their agreement, which is an interesting story, as Medalcraft shouldn't have anything to do with the Chinese dies). He said "No, I have no knowledge of anyone who plans to use the dies in China." Calvert also stated that he cannot find a buyer for the ~$1M of store inventory (~$2M retail), which is made mostly from the dies in China.

Mr. Calvert stated that he has had "great discussion" with Paul Wagner, and that Mr. Calvert asked Mr. Wagner to "write a memo of his proposed activities post-employment" (which seems odd to me, as his activities during employment seem more important -- and because Mr. Calvert had apparently seen Mr. Wagner's business plan around 2016). Mr. Calvert states that Mr. Wagner has no desire to buy assets from the estate, and has no desire for any intellectual property. But he is looking at the possibililty of manufacturing items in China and selling them on the Internet or to other buyers.

The Trustee's attorney, Mr. Gearin, discussed allegations that metal was not properly inventoried, and pointed out how there is evidence and video of the inventory. Which is completely, utterly pointless, as Mr. Calvert has refused to release any of that evidence, which some have claimed shows that Mr. Calvert inventoried metal that he now denies NWTM has in its possession.Huh. In other words, 'Judge, those allegations are false. Why? Because we say so. Trust us, please.'

Phony Documents Filed

May 18, 2018 2:00PM
On May 10, 2018, there was a document filed with the court purporting to be written by Mr. Parish (who had purchased the NWTM assets with funding from Mr. May). I thought it suspicious, since it was written without an attorney less than a day after Mr. Parish had an attorney file a motion for him, and filed 6 days after the day it was written.

Today, Mr. Parish has used his attorney to file a declaration under penalties of perjury. He has stated that he neither filed that letter nor instructed anyone to, and did not write it.

Further, that leads back to docket 1469, an anonymous letter written by an NWTM employee. The letter appears to have been printed in a nearly identical manner to the phony document.

Who Lied, Mr. Gearin or Mr. Parish?

May 18, 2018 8:25AM
The day before the May 4, 2018 hearing, Mr. Parish filed a conditional objection (through his attorney) to the Medallic sale (he was concerned that some of the NWTM assets he purchased might be given to Medalcraft). At the hearing on May 4, 2018, Mr. Gearing stated that he spoke to Mr. Parish the night before, and that his objection was withdrawn.

I thought it was odd that Mr. Parish would file an objection the day before the hearing, and by that night withdraw his objection. But it got odder, as Mr. Parish filed a letter with the court (written by him, not his attorney), dated May 4 (the morning after the phone call where Mr. Gearin said he withdrew his objection). His letter, among other things, requested that the sale be denied.

This is one of the many, many things in this case that makes you go "huh?" Did Mr. Gearin really call Mr. Parish the night before the hearing? Did Mr. Parish really withdraw his objection the night before the hearing? Why did Mr. Parish have his attorney file an objection the day before the hearing, but file his own letter the morning of the hearing? I cannot come up with an interpretation of these events other than either Mr. Gearin lying or Mr. Parish lying.

May 18, 2018 1:45PM UPDATE: Apologies to Mr. Gearin and Mr. Parish. Mr. Parish has declared under penalties of perjury that he did not write or file that letter I referred to. Mr. Parish believes it was written by Ross Hansen, who had Mr. Parish sign it under false pretenses.

Trustee Misconduct and Bounced Checks

May 16, 2018 8:45AM
I previously reported that NWTM CEO Bill Atalla filed a motion attempting to get paid what he is owed. Remember, as an employee of NWTM (rather than a professional), he is supposed to be paid in the normal course of business (not requiring court approval, like the professionals).

The Trustee replied, admitting Atalla hasn't been fully paid yet, but claiming that the amount actually owed was quite a bit less.

Today, Atalla replied to the Trustee. He states, for example, "The trustee is seeking to benefit from his own misconduct" (e.g. that he failed to pay bills when due). Atalla also refers to having checks from NWTM bounce. What? I can understand NWTM not writing a check, but writing a check that bounces? How can you justify billing the estate over $1.5M (as Trustee and his accounting firm) when you are bouncing checks? Don't schools teach kids that if you do not have the money in your account, you simply do not write a check? And it was checks, plural. Not a simple one-time mistake.

Undercover Wire Recordings

May 15, 2018 3:50PM
Today, the Federal Public Defender's office filed a stipulated motion to delay the deadline for filing pretrial motions until January 11, 2019 in the criminal case against Ross Hansen and Diane Erdmann.

In the filing, it mentions that "this initial production includes but is not limited to ... undercover wire recordings." In other words, at some point in time, there were undercover wire recordings of Ross and/or Diane.

The Judge Grills Mr. Calvert, Mr. Gearin, Mr. Smith

May 11, 2018 1:25PM
As I previously mentioned, at the May 4 hearing, the Judge brought up the letters several of us wrote to the court.

The Judge mentioned a previous employee of NWTM, who had signed a declaration in support of the sale to Medalcraft. I had written that she now works at Medalcraft, and was the employee that Mark Calvert referred to when he wrote "[she] appears to be contacting customers of the estate and attempting to divert business to the competitor. The competitor’s violation of its nonsolicitation agreement with the estate may adversely impact operational results and give rise to actionableeeds.ges [sic] claims". I also pointed out that Medalcraft was the competitor in question. So were these allegations of mine "unfounded and unsupported" and "based on rumor and innuendo" as Mr. Gearin suggested of my allegations? When the Judge asked Mr. Gearin "Are those allegations all correct?", his first words were "It is true."

The Judge made it clear that he is concerned about the lack of full disclosure, and causes him to think something is being hidden.

Next, the Judge brought up the dies. Mr. Calvert admitted that he "relied on marketing material" for the past 2 years when referring to 400,000 dies. Calvert referred to 400,000 dies as a "Ross number", but the Judge pointed out that for 2 years Calvert has been using that number, even to justify fees for researching dies.

The Judge turned the floor to the Martin Smith, of the U.S. Trustee's office, regarding complaints about the Chapter 11 Trustee Mark Calvert. Mr. Smith decided to refer to colorful characters, indirect references to conspiracy theories, and allegations. The Judge then pointed out that these aren't just specious allegations. He said he has some grave concerns about the case, and is not pleased as being approached as "colorful characters" raising issues.

The Judge then pointed out some "regular payments" to Cascade Capital (Calvert's company). These payments aren't fraud: one example was reimbursement for a payment for an electric bill via a Cascade credit card (to speed up payment). But it isn't allowed. The Judge said "Mr. Smith, I hope you are taking notes. This is yet another problem. We talked about this in October. You did it before, I said you cannot do that. It doesn't matter if it is small."

"Crazy Colorful Conspiracy Theorists"

May 11, 2018 8:40AM
I obtained a copy of the audio of the May 4, 2018 hearing. In this post, I am going to focus on just one seemingly unimportant aspect of the hearing: the allegations of conspiracy theories. Basically, one of the members of the creditors' committee, an ex-member, and myself (along with a few others) wrote to the court with allegations of what has been going on.

The Judge brought up these letters, and proceeded to ask Mr. Gearin (the Trustee's attorney) a question related to them.

Later, Mr. Gearin referred to a small number of people, some of whom have no interest in the case, filing unfounded and unsupported allegations. He suggests they are all baseless, based on rumor and innuendo. Then another attorney twice referred to some creditors believing in conspiracy theories. The U.S. Trustee, Martin Smith, then jumped in the ring and said that this case "has many colorful characters" that go down paths "none of us would imagine are there." Hmmm.

The Judge then said that he hopes the U.S. Trustee's office won't just blow off the letters as "crazy colorful consipiracy theories."

We've got two things here. The letters contain a lot of allegations, which the Trustee's attorney is suggesting are false. And an attorney brought up conspiracy theories, which the U.S. Trustee seemed to agree with. The problem with the allegations is that some/many have already been proven true (in fact, when the Judge asked Mr. Gearin "Are those allegations all correct?" at one point sheepishly admitted that they were true). As for the conspiracy theory (defined as "covert but influential organization is responsible for a circumstance or event"), I don't like going into things like that. But since an attorney and the U.S. Trustee have obviously heard it, I think it is important to bring it up.

The conspiracy theory goes something like this (do not believe that this is all true): Mark Calvert and Ross Hansen got introduced in February, 2016, and conspired to work together in secret to benefit both of them. When a Trustee was going to be appointed, it couldn't be Mr. Calvert (due to his involvement), but Mr. Calvert brags about his "very special relationship" to the then-Acting U.S. Trustee Gail Geiger, who lets him do it (with a bit of help of Mr. Gearin, who conned some creditors into convincing the court to appoint a Trustee). Martin Smith feels that he has "clean hands" since he did not make the authorization himself. Calvert and Hansen acted as though they were enemies, yet conspiring all along, with Calvert shredding evidence that would put Ross Hansen in jail. Calvert would then intentionally cause the company to fail (e.g. ignoring real offers while accepting $10M offers from people who have no money, not firing the 'henchmen', and ignoring great proposals), allowing him and his bankruptcy professional buddies to rack up a ton of fees, Ross would get out of prison (or have minimal prison time, and later dig up his buried bullion), and Paul Wagner would get the multi-million dollar Chinese business. They would cause odd things to occur, like leak a rumor that the "Titanic" medal was stolen (and then returned!), to confuse people and make those looking into the truth seem crazy. And Mr. Gearin told his buddy Mark Northrup (the Unsecured Creditors' Committee attorney) not to remove Calvert as Trustee, so Mr. Gearin threatened UCC members who threatened to remove Mr. Calvert. Meanwhile, Medalcraft is funding Mr. Wagner's business, which is located in Dayton so that NWTM assets can easily be moved there. When anyone gets close, Calvert will threaten to send the FBI after them. And to top it off, the only other person Calvert has sent to jail, Darren Berg of Meridian Mortgage, escaped prison last December!

That's a fairly typical conspiracy theory: it mixes in a few facts with a lot of speculation, with the speculation part getting out of control, yet hard to completely disprove. People who want to believe it will focus on the true pieces, and believe the rest. But where it fails is that Mark Calvert and Ross Hansen aren't smart enough to pull off something like this together.

Note that none of the letters in any way refer to the conspiracy theory. So their comments about conspiracy theories were just meant to belittle those of us that had the courage to write in.

Chapter 7 Conversion DENIED

May 8, 2018 4:30PM
Judge Alston today denied Chapter 11 Trustee Mark Calvert's motion to convert the case to Chapter 7.

In the order, he also changed the requirements of NWTM's monthly financial reports to only require a balance sheet, income or P&L statement, statement of cash receipts/disbursements, and monthly bank statements.

Hopefully, Judge Alston will release the audio of the hearing (as he has for several other recent hearings).

Medallic Assets Sold to Medalcraft

May 4, 2018 5:10PM
Yesterday, Judge Alston signed an order authorizing the Trustee to sell the Medallic assets to Medalcraft.

I don't have further details on the hearing (hopefully the judge will post the audio), so I can't say how the judge handled some of the objections (e.g. that it is unclear exactly what assets Medalcraft is supposed to get, whether they get the NWTM dies and customer lists as well, etc.). No changes were made to the Asset Purcase Agreement.

I have also heard, but have not yet confirmed, that the judge denied the conversion to Chapter 7.

Major Hearing Today

May 4, 2018 8:30AM
Today, NWTM has a hearing to discuss 3 issues (at 9:30AM PDT):
  • Motion to Convert Case from Chapter 11 to 7
  • Motion to Sell Free and Clear of Liens (Medallic sale to Medalcraft)
  • Motion to Approve (I) Deadline to Assert Claims with Respect to Ownership of NWTM Dies; and (II) Settlement Protocol to Resolve Claims to Ownership of NWTM Dies
It seems clear that there is no chance of turning NWTM into a functional business, so I expect the motion to convert to Chapter 7 should be fairly straightforward (although there are objections to it). The main question is who the Chapter 7 Trustee would be, as numerous people have suggested that Mr. Calvert should not be the Chapter 7 Trustee, and there are questions as to how he was picked to be the Chapter 11 Trustee, and whether there were conflicts of interest. Mr. Calvert put it like this: if the court converts the case to Chapter 7, "the identity of the chapter 7 trustee will be determined in due course by the United States Trustee post-conversion.". Quite mysterious.

The Medallic sale is even bigger than the conversion, which is mostly just a technicality. There have been allegations that lots of material has already been shipped to Medalcraft, allegations that Mr. Calvert and Mr. Wagner authorized Medalcraft to request any dies their customers wants. There have been several objections to the motion, but perhaps the most serious being one that was filed late yesterday afternoon (less than 2 business hours before the hearing). It essentially asks (this is my wording) 'Please wait until there are more details on the Medallic assets and a full inventory of NWTM assets, or if you allow the sale, please do not allow any assets to be moved from Dayton or Green Bay until I can inventory them.'

This may end up calling Jerry Moran's bluff (Mr. Moran is the owner of Medalcraft): he has stated that if the Judge does not authorize the sale by the end of today, he will walk.

Finally, there is the issue of the dies: Mr. Calvert wants to charge customers $350+shipping for dies, but there is a lot of controversy around that (e.g. in many cases customers own the intellectual property, and in many cases customers own the dies and should get them for free -- which Mr. Calvert said he would do, but history shows that is a lie, as he refused to return dies to a customer where the court ordered the return of the dies).

More Details on NWTM Assets

May 4, 2018 8:10AM
Michael Parish, who bought the NWTM Assets, filed a objection to the Medalcraft sale.

In the objection, he points out that Copper Leaf LLC (one of Rodger May's companies, that handles investments) loaned money to Michael Parish in order to purchase the NWTM Assets from Industrial Assets. The purchase price was $2.5M, which would have given Industrial Assets an immediate profit of $550,000.

It confirms a report I had heard that Mr. Parish sent someone to NWTM's Dayton facility to inventory the items, and that Chapter 11 Trustee Mark Calvert NWTM would not allow him in. I had heard a report that the police were called, and that Mr. Calvert initiated an emergency teleconference with about a dozen participants, but cannot confirm that.

Mr. Parish objects to the sale because the NWTM assets and Medallic assets appear to be comingled either in Dayton or Green Bay. Mr. Parish "believes that there are numerous pieces of assets, supplies and other personal property that Medalcraft could obtain that are owned by him." Part of the issue is that the Medallic sale uses broad terms such as "tools associated with the making of Chains of Office and Maces" that are not specific enough to determine in all cases whether property would be part of the NWTM assets or Medallic assets.

Coincidental Connections

May 3, 2018 1:40PM
As I have recently written about connections between various people, I want to be clear that connections are not in any way supposed to indicate that anything sinister is going on. Yes, I *do* think that there are bad things occurring in this case (not necessarily illegal). But I don't want my readers thinking that just because two people are associated outside of this case means that they are up to something.

A connection between two people or organizations is almost always benign. Many of the lawyers in this case have worked with other lawyers in this case, simply because that is their job. For example, Judge Alston represented the creditors' committee of Natural Molecular Testing (one of Mark Calvert's other 2 cases as Trustee) as recently as June, 2015 (just before he became a Judge). And I've seen the last name "Hansen" come up a lot, and even "Erdmann" -- but they all seem unrelated to Ross and Diane. I even found a connection between the attorneys for The Tulving Company (California) and NWTM. And it's normal for someone to offer a share of their business to associates of theirs. And Northrup has represented fishing companies. These things just naturally happen.

That said, I do this because sometimes there are connections that do end up showing something potentially sinister (typically a conflict of interest). For example, I discovered that a victim of fraud (not NWTM) used 2 attorneys that the perpetrator had paid (not as a client).

I have written (and will write) about various connections, in most cases assuming they are benign, writing mainly because readers may find the connections interesting.

Something is Fishy in Seattle

May 2, 2018 10:05AM
This could also be called "strange bedfellows": a CPA (also a Certified Fraud Examiner and bankruptcy professional) starts a fishing company, then takes on another CPA (also Certified in Financial Forensics) as a co-owner. A bankrupt and about-to-be-disbarred-for-fraud attorney brings in 5 more people as owners (including himself), one who doesn't seem to exist, and another who was bankrupt then and now is in prison for being a "'financial predator' who stole millions from widow and partners". This book writes itself.

In 2009, Mark Calvert formed a fishing company: Northland Fisheries Group, LLC. He started as the sole owner, but in 2011, he had 8 other people join as owners, with a 9th joining in 2012. Some we know.

PersonPositionJoinedInfo
Mark CalvertPart Owner
Founder
2009Chapter 11 Trustee for NWTM bankruptcy.
Chapter 11 Trustee for $140M Ponzi Scheme.
Tod McDonaldPart Owner2011Did $225K of financial work for NWTM via Calvert's Cascade Capital.
Lead financial investigator for a $140 million ponzi scheme.
Bruce HullPart Owner2011Bankrupt when he became a part owner.
Disbarred in 2013 for embezzling over $100,000 from trust accounts of clients.
JM, BM, TM, DC, JBPart Owner2011Referred by, and using disbarred attorney for mailing address.
WWPart Owner2011Referred by, and using disbarred attorney for mailing address.
Name does not seem to exist in the United States.
Jody CannadyEmployee2011Did $115K+ of financial work for NWTM via Calvert's Cascade Capital.
Led the botched NWTM bankruptcy inventory.
Terry CosgrovePart Owner2012An expert in the fishing industry, that went to prison in 2017 for embezzlement.
(red indicates theft; yellow indicates the person used the services of the broke, disbarred attorney both before and after he was disbarred).

The member that joined in 2011, and appears to have brought on most of the other members, was an attorney. Unknown to Mr. Calvert, Mr. Hull was bankrupt (again; he also filed for bankruptcy in 1996). On March 10, 2011, his business bank account balance was $-25.43. On June 13, 2011, his personal bank account had a negative balance. In March through June of that year, the attorney got by by taking funds out of a trust account for one of his clients (by the end of June, the $80,000 in that trust account had dwindled down to $25.89). He also had other money issues going back at least as far as 2009; for example, he had a trust account for a client in 2009 that had a $-491.19 balance. He was disbarred in 2013. One wonders how he came up with the money be a part owner of Calvert's fishing business?

The rest of the owners as of 2011, aside from Calvert, his associate, and the disbarred attorney, were apparently referred to Calvert by the disbarred attorney. They used his address in 2011 (before he was disbarred), and kept using his address through the filing of the latest annual report. Presumably, the disbarred attorney had not pillaged their trust accounts.

That's bad, yes. But not as bad as it could be. Further digging shows that one more person joined as part owner of the company, in 2012: Terrance L. Cosgrove, who was well known in the fishing industry. He was still listed as a part owner as of June 20, 2017. The Seattle Times refers to him as a "'financial predator' who stole millions from widow and partners."

Mr. Calvert's Cascade Capital Group touts their maritime experience, which goes well beyond Northlake: "Cascade Capital Group is active in a variety of maritime-based industries, including commercial fishing operations in the Pacific Northwest, seafood processing and storage, construction of vessels, shipyard operations, maritime equipment construction, shipping, and logistics."

So Calvert and Cascade are fish experts. Let's look at some connections. Next, we look at Rodger May, who was the high bidder on the Medallic assets, yet Mr. Calvert was fighting to disallow his bids. Mr. May is a veritable fishing magnate: he claims that he "is both a pioneer in the fisheries world, and one of the most successful individuals in fisheries", currently the chairman and CEO of Northwest Fish Company, and oversees the management of $100M in assets. I'm wondering if Northlake Fisheries considers Mr. May to be a competitor of theirs? And does Mr. May know that Calvert is in the fishing business? Does Mr. May know that digraced Terry Cosgrove is a part owner of Calvert's fishing company?

One last piece of information: Terry Cosgrove (the guy behind the $6M fraud) filed for bankruptcy in September, 2010. His bankruptcy attorney was a man by the name of "Armand J. Kornfeld", who represents many people in the fishing industry. To make a long story short, he turns out to be the very same "Jay Kornfeld" that Ross Hansen was discussing bankruptcy with, who referred Ross to Mark Calvert. He has "developed an expertise in the commercial fishing industry, with involvement in virtually every significant commercial fishing and seafood processing case filed in the Seattle area in the last 20 years.".

Please note that connections between people do not in any way indicate any wrongdoing.

U.S. Trustee Connection

May 1, 2018 3:35PM
I started following NWTM and Ross Hansen in August, 2014. When I start following a company or an individual, I look deeply into their past, and all their connections.

With the first case I followed, The Tulving Company, I never even thought of investigating the Chapter 11 Trustee (who was a former FBI special agent) or the U.S. Trustee's office. When the NWTM case started, Martin L. Smith was the Attorney for the United States Trustee, and Thomas A. Buford was the Assistant U.S. Trustee. They have worked together on cases for at least 6 years, likely quite a few more. Mark Calvert is "wet behind the ears" with at being a bankruptcy Trustee; I can only find evidence of 2 other times he was a Trustee before this (Meridian in 2010, and Natural Molecular Testing in 2013).

Given the many allegations of what is going on, I figured I should look a bit more into connections behind the scenes, of people involved after the bankruptcy filing. I'm working on a post "Something Fishy in Seattle", and as I'm working on it, something odd came up.

On April 22, I wrote about how a Jay Kornfeld introduced Ross Hansen to Mark Calvert. So what did I find out? That Mr. Buford, the Assistant U.S. Trustee, quit in 2017, and went to work for Bush Kornfeld LLP, Jay Kornfeld's law firm. The same one that introduced Ross Hansen to Mark Calvert. Mr. Kornfeld once represented someone Mr. Calvert knows in a personal bankruptcy.

It is likely a coincidence that Mr. Buford ended up at Kornfeld's law firm. But for further coincidences, Mr. Buford is one of 8 faculty members of the King County Bar Association (for Continuing Legal Education). Of those 8, Ross Hansen used 3 of them as attorneys for the NWTM bankruptcy (J. Todd Tracy and Steven J. Reilly of The Tracy Law Group, and Alan J. Wenokur). The 2 attorneys for The Tracy Law Group withdrew because a Chapter 11 Trustee was appointed by the U.S. Trustee, and Mr. Wenokur withdrew because Ross Hansen no longer needed his services, presumably also because a Chapter 11 Trustee was appointed.

Can You See NWTM?

May 1, 2018 9:35AM
Someone sent me these pictures reportedly from an empty office building about 2 miles from NWTM's offices in Dayton, NV. I was hoping for something a bit closer up, where you could see what was going on. But I thought these pictures were worth sharing nonetheless, as those people that haven't been to Dayton don't quite realize how nice a view there is.

Possible Recourse: Washington State 'Tort Form'

April 30, 2018 8:55AM
I just heard from a creditor that let me know that he heard that Washington State has a tort form that you can fill out if you think that you suffered a loss as the result of negligent actions of a state agency.

So why might the government be responsible? The key here is that the Attorney General's office [1] basically allowed NWTM to operate owing customers millions of dollars (through the 2008 Consent Decree), and [2] seemingly ignored complaints all but shouting "NWTM owes customers millions of dollars!". One good example is the person who complained to the Attorney General in April, 2015, after NWTM had violated the 2008 Consent Decree. That alone should have immediately caused an investigation. But it gets worse: when the customer threatened NWTM that he would file a complaint with the Attorney General, NWTM advised him not to, saying that Ross Hansen would get mad and try to delay his refund as long as possible. If the Attorney General's office doesn't take action on a complaint like that, what complaints do they take action on?

I have no legal training, so I cannot begin to say whether or not Washington State may be liable; it is quite possible the statute of limitations may have expired. However, if you think that this may be an avenue worth pursuing, be sure to read my page on the Attorney General which goes into further details about their role in the NWTM fiasco.

Did Calvert Hedge?

April 29, 2018 7:25PM
Experienced bullion buyers know that dealers need to know whether or not hedge, and how much to hedge. If you don't hedge, you take on the risk of a market change.

In the case of Calvert-era NWTM (after Ross Hansen had the company file for bankruptcy), it seems like NWTM is taking on the risk. Specifically, the United States Golf Association paid NWTM $22,815 in November, 2017 for 1,300 troy ounces of silver. NWTM apparently never bought it (they refused to respond to USGA's request to get the metal, money, or medals back). So did NWTM hedge the price of 1,300oz of silver? I see no signs of NWTM doing any hedging, although with Calvert's inability to communicate with creditors, it is a possibility. But obviously Calvert did not properly account for the $22,815 if he cannot return the cash, metal, or the medals he was supposed to make.

Ross Hansen's Friend Buys NWTM Assets

April 25, 2018 4:35PM
In my previous post, I mentioned that I am going through the audio from the April 20, 2018 hearing.

In it, Mr. Neu (the attorney for Chapter 11 Trustee Mark Calvert) says that Mr. May was no longer interested in purchasing the NWTM/Medallic assets as of April 19 (which is odd, given that the Trustee was requesting the Court approve a sale to Medalcraft without mentioning whether Mr. May was still bidding).

Mr. Neu then said that Mr. May entered into an agreement with Industrial Assets (who bought the NWTM assets for $1.95M, and was planning to auction them) to purchase all the NWTM assets that Industrial Assets bought. Mr. Neu then said that Mr. May is financing this on behalf of Michael Parish who is Ross Hansen's friend.

Michael Parish was brought up in court before a few times, including at a recent hearing where it was mentioned that Mr. Parish was "trying to get his hands on the assets" via Mr. Hansen. He also appeared in docket 1110.

300,000+ Dies Lost

April 25, 2018 4:35PM
The Judge released the audio of the April 20, 2018 hearing. It regarded destroying documents, sale of Boy Scouts dies, and the protocol for selling dies to customers.

In it, the Judge asked "Let me ask, are there 400,000 dies, roughly?" Remember, both Ross Hansen and Mark Calvert previously referred to more than 400,000 dies (Mr. Calvert did in January of this year). Mr. Neu (the attorney representing Mr. Calvert) said that Paul Wagner recently did an inventory of the dies at Dayton, and identified 80,000 to 100,000 dies, plus there are an unknown number of dies located in China. I'll try not to ask about the inventory coming up with "80,000 to 100,000."

The Judge then asked about the ~320,000 dies that were unaccounted for, and the Judge believed they were in China, and Mr. Neu led him to believe that.

The catch is that the information I have shows that there are only around 26,000 dies in China. I'm guessing nobody thinks that there could be anywhere near 300,000 dies in China.

Most of the 300,000 missing dies were "junk" unrelated to coins (e.g. for jewelry), and had little value. But why did Mr. Neu not mention this at the hearing? And where did those 300,000 dies go? Did Mr. Wagner completely botch an inventory (which I highly doubt), or did someone get those 300,000 dies? And if so, who? And if so, why did Mr. Neu not tell the Court about it?

Of course, this assumes that the 320,000 or so missing dies are just the "junk" ones, and not important ones (NWTM/Medallic customers). But given that Medalcraft apparently said that there is only about a 50% chance that any given Medallic customer dies exist, it suggests that someone not only got the "junk" dies but also some valuable ones. Uh-oh.

Was Sealed Indictment Leaked?

April 24, 2018 4:25PM
The indictment against Ross Hansen and Diane Erdmann was signed, filed, and sealed on Thursday, April 12. It was unsealed on Monday, April 16.

On Saturday, April 14, I received an E-mail from someone who seemed disappointed that I had not yet written about the indictment of Diane Erdmann. I ran a search, and explained that there was no sign of an indictment, so if there was one, it was almost certainly sealed. I assumed that this person was simply mistaken. It never occurred to me that he might know of the existence of a sealed indictment.

Then the day after the indictment was unsealed, I heard from someone who claims that he heard about the indictment on Friday, April 13. This person claims to have heard it secondhand (he heard it from someone he trusts, who got it from someone with access to the sealed indictment -- whose identity I will not post here). Normally I would be willing to quickly dismiss such a claim (especially hearing about it after the indictment was unsealed). But not in this case. This source has been quite reliable with information.

So was the existence of the sealed indictment leaked? The only way that it could not have been is if both [1] The person hearing it on April 13 lied to me (or was lied to), *and* [2] The person who E-mailed me on April 14 was just guessing about the indictment or mistaken about it. As for #2, in the over 750 days since the bankruptcy filing, this is the only person who told me that an indictment had been filed (until it actually was, and was unsealed). The odds of someone happening to write that within the 4 days that the indictment was sealed seem very, very small.

Piercing the U.S. Trustee Bond

April 24, 2018 1:45PM
When a corporation owes money, the owners/shareholders are not normally liable for the debt. There is a legal term called "piercing the corporate veil", that in some cases allows people to go after the owners.

In a bankruptcies, the Trustee is usually required to post a bond "in favor of the United States conditioned on the faithful performance of official duties by the trustee or trustees." According to one bond issuer, the bond "works by covering a claim for fiduciary duty violations by the bankruptcy trustee. These violations may include theft, misappropriation of funds or property, misrepresentation, and so on."

Before I get accused of suggesting that Mr. Calvert is involved in such activities, I am bringing this up because the lawyer for one creditor stated to Mr. Gearin (the Trustee's attorney) a few weeks ago that he is prepared to "seek relief... which may include... a proceeding on the Trustee's bond." This is due to a creditor paying money in late 2017 for silver for medals, never receiving the medals, the silver, or their money back.

If this were to happen, it sounds like it would involve an adversary proceeding (like a "mini lawsuit" within the confines of the bankruptcy proceedings), making it a somewhat more difficult (and costly) procedure than simply filing a motion.

The original bond was set at $300,000, increased to $750,000, increased to $1.2M on July 5, 2016, and increased to $2M on August 23, 2016. In the March, 2017 Monthly Financial Report, Mr. Calvert stated that "Trustee increased the bond for the large cash inflow", but did not state how much the new bond is, nor has it been reflected in court records yet.

UPDATE April 28, 2018 7:25PM: The new bond is set at $3M.

Did Calvert Overbill? Did Cascade Underbill?

April 22, 2018 6:50PM
Looking at the July, 2017 Monthly Financial Report, the income statement shows a total of $457,275 in "Trustee Fees" billed from April, 2016 through July, 2017.

Comparing this to the Trustee's application for compensation, we see that "the Trustee incurred a total of $602,160.00 in fees during [April 2016 through July 2017]".

The first thing I note is that the monthly fees in the income statement exactly match the application for compensation for July, 2016 and March, 2017. This helps show I've at least got the right category.

The next thing is that for many months the income statement shows a flat $30,000 fee. For example, in April 2016, the income statement shows $30,000 for "Trustee Fees". Yet he billed $52,780 on the application for compensation. To the untrained eye -- in this case, meaning anyone who hasn't been given information leading to where the missing $22,780 appears on the income statement (if at all) -- it appears as though either Mr. Calvert "guessed" how much he would charge when preparing the statement (and never corrected it), or included the extra $22,780 in some other category.

Note that the discrepancies aren't limited to where Mr. Calvert entered $30,000 for his fee: for example, in April, 2017, the income statement shows $21,920, but he billed $24,640.

The billing for Calvert's Cascade Group is similar. The income statement shows $883,852 billed for "Cascade Capital Group Professional Fees", but they only billed for $819,579. For most months, they billed less than the income statement showed. But in November, 2016 the income statement showed -$37,118 (perhaps Cascade provided a discount?), but Cascade billed $26,230. And in December, 2016, the income statement showed $103,730 in Cascade fees, but Cascade only charged $18,096. Huh.

Isn't the point of the U.S. Trustee requiring accounting reports so that people can understand the profitability and other financial concerns of the debtor? How can you do that when there are apparently guesstimates and overcharges and undercharges?

How Mark Calvert Became Chapter 11 Trustee

April 22, 2018 1:40PM
Since early on, I've wondered how Mr. Calvert became the Trustee. I found it odd that he was hired, given his high-school level of accounting sloppiness (note to self: if I get sued for that, I need to re-read my "accounting nightmares" posts). I've discussed it a bit, but found out a lot more today.

It sounds like Mr. Calvert first became involved at the suggestion of Jay Kornfeld, an attorney that Ross Hansen was using in February, 2016. Ross met with Mr. Kornfeld on February 26, 2016, and Mr. Kornfeld suggested that Mr. Calvert become involved in the discussions. On March 1, 2016, a full month before the bankruptcy filing, Mr. Kornfeld discussed the NWTM situation with Mr. Calvert. Ross first met with Mr. Calvert (along with Mr. Kornfeld) at NWTM on March 5, 2016.

Mr. Calvert and his firm reportedly prepared a number of documents related to restructuring NWTM, including detailed "to do" lists, projected cash flow statements, staff reduction plans and timelines.

This goes beyond what was originally known.

DateDescription
Feb. 23, 2016$38M defamation verdict in Cohen case
Feb. 26, 2016Mr. Kornfeld suggests to Ross that Mr. Calvert become involved in discussions
March 1, 2016Mr. Kornfeld discusses the case with Mr. Calvert
March 5, 2016Mr. Kornfeld, Mr. Hansen and Ross meet at NWTM
March 14, 2016"[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"
March 18, 2016Domain 'existingbullionorders.com' registered
March 18, 2016Ross pays Hannes Tulving's criminal attorney a $25,000 retainer. The funds come from cash that Diane deposited earlier in the day
March 25, 2016Mr. Kornfeld advises Ross that Mr. Kornfeld and Mr. Calvert will not proceed. The reason for this is unknown.
March 25, 2016Ross contacts Tracy Law Group to handle NWTM bankruptcy.
March 26, 2016 and
March 27, 2016
Ross and Diane reportedly enter the NWTM vault and remove metal.
March 31, 2016$150,000 of funds are wired to Tracy Law Firm as a retainer for the bankruptcy filing. The hiring requires that Elliott Bay Asset Solutions be the CRO.
April 1, 2016Bankruptcy petition filed
April 5, 2016Ross' attorney files motion to hire Bill Weisfield of Elliott Bay Asset Solutions, LLC to be Chief Restructuring Officer
April 5, 2016Mr. Gearin communicates with Tracy Law Firm about objecting to hiring Mr. Weisfield as CRO, apparently as Mr. Calvert's personal attorney.
April 6, 2016Mr. Cohen files an objection to the motion to hire Mr. Weisfield
April 6, 2016U.S. Trustee files an objection to the motion to hire Mr. Weisfield
April 6, 2016Mr. Weisfield withdraws from consideration
April 7, 2016 9:30AMHearing on appointing a Trustee.
April 7, 2016Judge Alston signs order that the U.S. Trustee will appoint a disinterested person to serve as trustee.
April 8, 2016 3:10PMU.S. Trustee requests the Court to allow Mr. Calvert to be the Trustee.
April 8, 2016Mr. Calvert signs acceptance/declaration: "I met with representatives of the Debtor to discuss whether my firm, Cascade Capital Group, would be engaged to provide restructuring services to the Debtor. I met with the Debtor's principal Ross Hanson. After meeting with Mr. Hanson [sic], my firm declined to undertake the engagement. Neither my firm nor I were paid any fees by the Debtor. Neither my firm nor I have any relationship with the Debtor or Mr. Hanson."
April 9, 2016 or
April 10, 2016
FBI calls Mark Calvert to discuss NWTM.
April 11, 2016The Judge allows Mr. Calvert to be the Trustee.

Scheme To Prevent Bids for Medallic

April 22, 2018 12:15PM
From the looks of it, NWTM and/or Medalcraft came up with a nifty scheme to ensure that Medalcraft would get the Medallic assets. Part I: Move part of the value of Medallic to Medalcraft, Part II: use a "poison pill"-like strategy with a bogus threat to walk if the Judge doesn't approve the deal the day of the hearing.

In August, 2017, NWTM was furious at Medalcraft, threatening legal action. Somehow, though, by February, 2018 NWTM and Medalcraft were nice and cozy, and Medalcraft put in a "stalking horse bid" (a normal bankruptcy process, a guaranteed bid before an auction). After Medalcraft was outbid, NWTM cancelled the high bid from the qualified bidder as unqualified, and announced Medalcraft the winner -- but the Judge ruled that wasn't fair. Odd things then happened, such as NWTM offering to let Medalcraft pay less to be fair, Medalcraft offering to pay more to be fair, and the high bidder offering more to become qualified. Somehow, though, the high bidder backed off (why would the high bidder back off?), and NWTM again considers Medalcraft the high bidder. NWTM has approached the Court to approve the sale.

This time, though, it's a bit different. They are pretending it is an arms-length transaction, with Chapter 11 Trustee Mark Calvert pointing out that Medalcraft will walk away if the Judge does not approve the sale the day of the hearing. But things have gone further, with Medallic telling customers that Medalcraft now has the die information, Medallic referring customers to Medalcraft, and Medallic even shipping dies to Medalcraft. Medalcraft even appears to have been given the Medallic customer list. For every customer Medallic refers to Medalcraft and every die they send to Medalcraft, the value of Medallic goes down further, reducing the value to other potential bidders if the Court does not approve the sale.

Now, I'm sure that Calvert would say this is an arms-length transaction. But how in the world can it be? In an truly arms-length transaction, Medalcraft would be treated almost exactly the same as other bidders (the exception being that they were the stalking horse bidder). But Medalcraft has gotten NWTM employees, Medalcraft has violated their non-solicitation agreement, Medallic has sent business to Medalcraft, Medallic has sent dies to Medalcraft, and Calvert is pushing Medalcraft's bogus threat to walk away (Calvert is "concerned" that Medallic will walk if the peak season is over, but Medalcraft's threatened "drop dead" date is after the peak season is over). Did Paul Wagner chat about his personal business with other bidders? Did Calvert treat Mr. May the same way? Did Calvert treat other bidders (such as the one who put down a $100K deposit, only to have Calvert accidentally sell some of the assets he bid on) the same way? From the facts -- mostly hidden from the Court -- it does not seem like an arms-length transaction.

Added: 'Threat Level'

April 22, 2018 8:30AM
I have just added a 'Threat Level:' line in the summary section above the top post (the lines in [brackets]).

To be clear, I have not received any threats regarding NWTM. However, given that multiple people in the case have been accused of threatening people in various ways, the escalated nature of this case, and that much of what I write doesn't sit well with the people I am writing about (it's the nature of what I do), I need to be aware of the potential of receiving threats.

The 'Threat Level' above is a failsafe of sorts, in case I am threatened in a way that I feel compelled to either stop writing about NWTM or receive a threat that I don't feel comfortable writing about (e.g. a threat from a lawyer that says they will take legal action if I mention the threat). I will try to occasionally update the date there (perhaps every few days). If it has been a long time since the date was updated, it is a sign that I may have received some sort of threat that I do not feel comfortable writing about. This way, if I am forced not to write about a threat, that fact will come out.

In a different case I follow, I did receive a lengthy draft complaint, and it isn't at all fun, especially when I don't get paid for my services. But I do not cave in to frivolous legal threats.

That said, if I *do* receive some sort of threat, including any threatened legal action, I will do my best to publish it here. I do not in any way consider myself to be above the law, and I do my best to ensure that my writing does not violate any laws or ethics. If I do something illegal, it will have been by mistake, but even so, I should be judged appropriately. Given what I have seen going on, I feel that a policy of immediately publishing any threat is best to help avoid receiving any.

If you feel that I have written something defamatory (remember, "defamatory" almost always means something that is not true), please feel free to contact me. I will treat the issue with the same urgency that you do. The only time I am aware that I wrote something actually defamatory (by mistake), I was notified quickly and had it removed within an hour of the E-mail being sent to me (minutes after I received it).

Busted: Yes, NWTM is Sending Dies to Medalcraft

April 21, 2018 5:40PM
I previously reported that I wrote a letter to the Judge (something I have never done before). One of the lines was "I have heard a credible report that some dies have been shipped from NWTM's location in Dayton to Medalcraft, in anticipation of the sale." That's something that I did not feel comfortable posting here, since I could not prove it (unfortunately, I do not have a team of hackers to assist me, just the occasional kind soul that leaves an anonymous tip).

Today, however, I received evidence that proves that NWTM is shipping dies to Medalcraft. Yet another "rumor"/"allegation" proven true.

So, Mr. Calvert, are you playing fair and shipping dies to other bidders as well? Are you charging Medalcraft the $300+shipping that you want to charge previous customers?

You would think that would be enough news for a single post. But I also wrote to the Judge "given that Mr. Calvert appears to have sold items twice, we need to make sure he doesn't give away the NWTM dies by mistake." Remember, Medalcraft is waiting approval to buy just the Medallic dies ("Medallic Company owned Dies" from the past 20 years). Maybe Mr. Calvert feels it's OK to jump the gun on the sale to Medalcraft. But certainly he wouldn't send NWTM dies to Medalcraft, right? The evidence I received shows that NWTM dies are indeed being sent to Medalcraft, too. Those are property of the estate (or customers) that Medalcraft hasn't even expressed any interest in. So why is Medalcraft getting those dies?

CEO Asks Court For Payment

April 21, 2018 9:30AM
Bill Atalla, the CEO that the Trustee hired, was terminated on December 29, 2017 along with other NWTM employees.

His situation was a bit different, in that he was hired with court approval, with a clear employment agreement. He has filed a motion with the court to get paid his severance, pay for time he spent working after his termination, vacation pay, and some other misc. items.

It would be interesting to see what would happen if all the other employees did the same. I imagine it wouldn't make sense for most employees to pay an attorney to pursue it, and the class action lawsuit regarding the WARN act was voluntarily dismissed (for unknown reasons), but it would certainly be interesting to see the Trustee's reaction.

Atalla also filed an objection to the conversion to Chapter 7. The best line comes after pointing out that the $50M of creditors and the debtor would not benefit from a conversion to Chapter 7, when he writes "So who will benefit from conversion? Only the trustee and his professionals."

More on Die Sales

April 21, 2018 9:00AM
The Trustee filed the March, 2018 monthly financial report, which I have been going over.

True to form, the Trustee makes a vague statement about the dies: "The Trustee has confirmed the dies available for sale, for which there are 3 different offers for different types of dies. Provided the Court approves the protocol for these sales, the sales are anticipated to be complete in April."

Again, "Huh?".

The first piece is that these sales cannot all be completed in April. There is a hearing on May 4, 2018, to see if the Medalcraft sale goes through, which includes the recent Medallic dies. How can the Trustee expect to complete the sale before the Judge approves it? And how can the Judge approve the sale of other dies in just 6 business days when Calvert hasn't even filed a motion about them yet?

Next, there has been confusion since the beginning about the quantity of dies, how many have no value to a mint (e.g. the jewelry dies), whether the Chinese dies are included, how many may have already been sold (e.g. if the Tomball sale ended up including any), the exact (or approximate) number of each type of die, and whether any have been shipped to other mints without the knowledge of the court. This new statement just adds to the confusion.

The Trustee so far as only really mentioned one set of dies: the dies he wants Medalcraft to have ("Medallic Company owned Dies... associated with any customer for which there has been a sale within the past 20 years."). So unless the Trustee has changed things, there's that. That would leave (if memory serves): [1] NWTM dies (e.g. the dies that NWTM had made in-house for many years), [2] Older Medallic dies, [3] Chinese dies (located in China, around 26,000 of them), and [4] "Junk" dies (e.g. jewelry dies).

The Trustee also took a $100K deposit on an offer that included many (perhaps all) of the Medallic dies, but I'm assuming that deal is done (the Trustee accidentally sold assets that were to be included in that sale). As of March, the Trustee was also expecting to sell older Medallic dies to "NY Numismatic Assoc". But who is he planning to sell the NWTM dies to? There has been zero mention of those dies. Perhaps Sierra Mint?

Where Are Sales Coming From?

And Why Bank With Texas Account?

April 20, 2018 5:25PM
Today, the Trustee filed the March, 2018 monthly financial report.

It shows $153,605 of Core Operating Sales in March. The inventory sold was valued at $45,000 (exactly the same as February), with total costs of goods sold of $99,171 (inventory cost, labor, etc.).

The catch is that NWTM is shut down, with the NWTM website no longer taking orders, and Medallic is referring people elsewhere. Where is this business coming from?

One reader pointed out that NWTM is still selling inventory on Amazon, and that they have 596 items for sale (accounting for thousands of items, as many have 10+ in stock). Many/most/all are fulfilled by Amazon, which means that Amazon has them in their possession (does this inventory appear in court documents?). But it appears that Amazon orders only accounted for about $4,000 of that $153,605. So that doesn't cover much.

The descriptions of receipts of money simply show "Custom Customer." But from everything Chapter 11 Trustee Mark Calvert has said, it sounds like Medallic did the custom minting. And Medallic isn't accepting more orders from what I have seen. So it sounds like this is actually the Chinese business (which did custom orders). But where are these orders coming from?

And to add to the confusion, the accounting appears to be a bit wonky: it shows Amazon, PayPal, wire transfers and a few other similar payments going into the general operating account (8106) as expected. But on February 16, 2018, a $40,000 transfer was made from the general operating account (8106) to the "Texas Sale Proceeds" account (8122) that had been dormant for months. They then started depositing checks into that Texas account, and even the $195,000 deposit for the NWTM assets was wired from K&L Gates (the attorney dealing with escrow) into that account. Then they would transfer funds that had come into the general operating account into the Texas Sale Proceeds accounts, and pay some bills from each account. Huh.

UPDATE April 21, 2018 9:20AM: One person believes this money may be from "collections" -- NWTM trying to collect money owed from past invoices, and/or payments for orders that were placed (but not paid for) before the websites shut down. Another believes this is for coins to wholesale buyers.

"...for the Trustee to either sue all former customers"

April 19, 2018 8:35AM
The Trustee filed a response to some objections to his proposal to sell the dies for $300 each plus shipping.

He makes a number of good points (e.g. that the dies need to be out of the Dayton facility by June so they need to be gone by then, and that while the price would seem astronomical before the bankruptcy, the price factors in the legal fees and such). However, at the end, he writes "It would be extraordinarily burdensome, expensive, and time consuming for the Trustee to either sue all former customers to resolve the issue of ownership..."

I'm not sure why he would contemplate the idea of suing all former customers of NWTM (including that guy that spent $10 to buy a medal in 2008, that doesn't even know what a die is, and isn't owed any money). Maybe it is just my lack of legal training, and it is normal for a Chapter 11 Trustee to consider the possibility of suing all former customers.

NWTM Asset Auction Surprise: Bought In Whole

April 18, 2018 2:30PM
A company called Industrial Assets, d/b/a BidItUp, bought the NWTM assets for $1.95M in March, which we knew about. They were planning to auction to equipment (which they valued at over $5M) on May 2, 2018.

The surprise came within the past few hours, when the website changed, and now states "AUCTION CANCELLED • FACILITY SOLD IN ITS ENTIRETY". Presumably, someone came in with an offer for all the assets, that exceeded what BidItUp felt it could reasonably expect in the auction (somewhere well over the ~$2M they already invested). Why else would BidItUp cancel the auction?

So now it is time to report a rumor I had heard 2 days ago: that Ross Hansen had a "big deal" in the works, that he had found some investors (as he so often seems to), and repurchased NWTM in part or in whole, and that it would happen this week. I also heard that he asked the court on Monday for permission to travel to Nevada (where the NWTM assets are located), as early as yesterday.

From the reports, it sounds like Ross Hansen may have purchased the NWTM assets. To be clear, this only includes assets that were already sold (e.g. not the dies, inventory or Chinese business). Since BidItUp already bought the assets, this is happening outside the courtroom, so the records likely will not be public.

Executed Arrest Warrant

April 18, 2018 8:25AM
To help remove any doubt, here is a copy of the executed arrest warrant. This is the form that shows that Ross Hansen was ordered to be arrested (in this case, he self surrendered).

Pleading Not Guilty, Public Defenders

April 17, 2018 3:20PM
After going through what must have been dozens of lawyers over the past few years, some paid in cash and others bullion, Hansen and Erdmann have been assigned public defenders. Ironically, they made a sworn financial statement that they are "financially unable to retain counsel." The irony is that Ms. Erdmann claimed that she was effectively destitute (her attorneys' words), and then came up with $700K of bullion to pay legal bills. Mr. Hansen was assigned Jennifer Elizabeth Wellman and Dennis Carroll, and Ms. Erdmann was assigned attorney Michael G Martin.

Both Hansen and Erdmann pleaded Not Guilty. A jury trial is scheduled for 6/25/2018 at 09:00 AM

Further Arrest Details

April 17, 2018 8:40AM
I have heard that Ross Hansen and Diane Erdmann have not been detained, but were allowed to self-report to their initial appearance, which was yesterday at 2:00PM.

Although the court has not yet released details of bail, I have heard that they were both released without bond, on their own recognizance (essentially a promise to show up for court appearances). I have also heard that they are restricted to travel only in the Western District of Washington, although some exceptions may be made.

This information does not come from the court, but I believe it to be from a reliable source.

UPDATE April 17, 2018 3:10PM: I have confirmed this information. Hansen and Erdmann are also required to surrender any passports they may have. They also "must not harass, threaten, intimidate, tamper with, improperly influence, or injure... victims of crime."

Ross Hansen and Diane Erdmann Arrested, Indicted

April 16, 2018 8:05PM
On Thursday, April 12, 2018, the U.S. Attorney filed an indictment (criminal case 2:18-cr-00092-RAJ in the Washington West District), against Ross Hansen and Diane Erdmann. They were arrested today, and the case was unsealed today. They were charged with 10 counts of wire fraud and 10 counts of mail fraud.

[Please remember that everything stated here is an allegation, not necessarily a fact]

It states that "Although Hansen and Erdmann fulfilled some standard bullion customer orders, these orders were fulfilled by using money from newer customers." It states (as we knew) that the fraud was similar to a Ponzi scheme. It also points out the now-infamous "it is our policy to ship orders promptly after you have properly paid us" notice on the website. It says that starting around 2015, NWTM sent out E-mails fraudulently stating reasons why orders would not be timely delivered, such as "due to unprecedented demand."

It further refers to the term I uncovered, the "drop dead" date, that was used internally. It points out, as I have, that many orders were not shipped by the "drop dead" date. It goes on to say that Diane Erdmann "intentionally fulfilled some standard bullion customer orders with the wrong type or brand of bullion". It states that "more than half of the silver bullion orders over $5000 placed in January 2015 were not fulfilled until August 2015 or later."

It states that Diane Erdmann specified that smaller orders be filled first (which makes sense, as it results in fewer people complaining). It states that 93% of the dollar value of silver orders in 2015 were not shipped within the required 10 weeks. It states that Diane "Erdmann also prioritized fulfilling orders where the customer had threatened to file a lawsuit or to contact the authorities." It states that NWTM employees (at the direction of Mr. Hansen and Ms. Erdmann) regularly lied to customers regarding delays, including telling them that NWTM had to fulfill government contracts or because the U.S. Mint was not producing certain products.

It states that Hansen and Erdmann "fraudulently inflated the amount of precious metals inventory in the enterprise software to allow additional sales to be entered into the system." It points out that storage metal was used to fulfill customer orders, and that employees referred to it as "borrowing" or "pulling" from storage (as opposed to the term "poaching" seen on some storage boxes). In some cases, the storage metal was never even purchased.

It states that multiple employees asked for inventories, and Hansen and Erdmann refused.

It mentions that Pan American silver, which had consigned 75,000oz of silver to NWTM, requested the silver back around September 30, 2015, and was told they would get it back in installments from February 2016 to June 2016 (they never did return any of the metal, nor did they have any allocated to Pan American).

It states that Hansen and Erdmann took owners' draws of over $1,000,000 from 2012 to 2016. It also mentions the $700,000 of metal that they sold for attorney expenses.

Information in the filing suggests an investigation that started in 2014.

References: Indictment, Order issuing bench warrant, Department of Justice news release.

Epic Trustee Fail

April 14, 2018 11:55AM
Imagine sending a bank wire to NWTM for $22K for silver to be delivered in about 8 weeks, not getting it, and having nobody respond to your requests, hiring a lawyer to send a demand letter, and still getting no response.

This sounds like 2016 when people were yelling "That damned Ross Hansen!" But in this case, it happened a few months ago, and it should be "That damned Mark Calvert!"

The United States Golf Association, USGA, paid $22K on November 16, 2017 for silver for medals that NWTM was going to make for them by January 5, 2018. But NWTM apparently never even started working on the metals. On December 21, 2017, a week before the company shut down, NWTM even sent an invoice to make 2 more dies. The USGA never received the medals or the dies.

How in the world can Mr. Calvert shut down the company, laying off 100 employees, yet keep paying a skeleton crew to purportedly finish up business, but not finish orders NWTM already promised customers and taken money for? Apparently it wasn't profitable enough. Mr. Calvert wrote in February "The Trustee has completed certain profitable work in progress after the closing of the plant with the skeleton crew that remains employed in connection with the winddown and liquidation efforts of the estate." In fact, NWTM took in $405K in January and $158K in February for "Core Operating Sales". Presumably the USGA medals just weren't profitable enough to finish. Or return the money for. And not even profitable enough to justify a phone call to let them know they weren't going to get their order.

If NWTM took in well over $500K since the company shut down, and couldn't even complete a $900 order (part of that $500K, for 2 dies), how much of that $500K is money that NWTM took in and did not find profitable enough to make or return the money for? How many new creditors are there since Mr. Calvert took over?

Can Mr. Calvert have NWTM file for Chapter 11 bankruptcy... again? Creditors can force companies into Chapter 11 bankruptcy... but can they force a bankrupt company into bankruptcy?

Did NWTM know it could not deliver those orders it took money for? Can a company take orders it knows cannot be delivered?

Another Allegation of Trustee Failing to Respond

April 14, 2018 12:05PM
The United States Golf Association recently filed an objection to one of the Trustee's recent motions.

In it, it claims that NWTM lured USGA into making purchases that NWTM stated would begin to be delivered by January 5, 2018 (one E-mail shows that they were all supposed to be delivered by January 5). Apparently, NWTM never notified USGA that they had shut down, and NWTM deposited a check two weeks after shutting down (for 2 new dies), and then never delivered the product.

USGA writes "The Trustee failed and/or refused to respond to USGA’s requests for compensation sent in February 2018 after learning of NWT’s non-fulfillment of the order..., and its further demand sent in March 2018".

This is starting to sound very, very familiar. I do my best not to "take sides", although recently someone felt that I was "vilifying" the Trustee and those around him. My response is "I calls 'em as I sees 'em" -- I write about whoever does something that needs to be written about. This is a very, very good example of why I write what I write: the Trustee has shown a clear pattern of refusing to respond to people when it doesn't fit his needs. It is true that I have zero evidence that he has not responded to people (and that's why I didn't write about it the first time I heard about it). But I have clear evidence that plenty of people have alleged that he has not responded to them. Had I not written about it the first time, people would not have gotten very useful information about the Trustee. I don't intend to vilify, but if the only way I can warn people makes it sound like I am vilifying, I'm going to warn people.

"We're Broke, Want a Die for $300?"

April 14, 2018 9:25AM
NWTM has very, very little cash. We know that, for example, because they were late in paying employees their last paycheck.

But now the Trustee has apparently filed a motion that would allow him to sell dies back to the customers that paid to have them made, for $300 each (plus cost of shipping). It appears that part of his rationale for charging $300 is the costs of storage, but that appears to have already been built into the fee that was charged to create dies. In the words of one creditor, the sale of the dies is "a mechanism to extract additional consideration to compensate for the estate’s dire administrative insolvency."

That is clearly more than what it would cost to return them to the customers, and much more than what the Trustee feels the dies are worth. It appears that he wants to take advantage of the small percentage of customers who really need their dies back, to collect some extra money to help pay him. Remember, the estate doesn't have enough to fully pay back the professionals, so every extra dollar he can collect is an extra dollar that can be used to pay the professionals.

Mr. Gearin's Trustee Prediction

April 10, 2018 7:25PM
After the bankruptcy filing on April 1, 2016, many creditors were contacting Seattle bankruptcy lawyers for advice. When four of them contacted Mr. Gearin (who at the time was the personal attorney for now Chapter 11 Trustee Mark Calvert), they all requested that he speak on their behalf at an April 7, 2016 hearing to state their preference that a Chapter 11 Trustee by appointed.

Mr. Gearin stated "I informed them that I would seek to be employed as the Trustee’s counsel in the event one was appointed". This begs the questions: Had the U.S. Trustee already decided on Mr. Calvert? Did Mr. Gearin know that Mr. Calvert was already chosen, or did he expect to solicit the business of any Trustee that the U.S. Trustee's office would happen to appoint? How did the U.S. Trustee -- who presumably had no idea that NWTM would be filing for bankruptcy until it did on April 1, 2016 -- go about making the decision on making Mr. Calvert the Chapter 11 Trustee?

The question of how Mr. Calvert became Trustee was curious before, after we found out that he had spent quite a bit of time with Hansen and NWTM (more so than his declaraction would suggestion). Now it becomes even curiouser, knowing that his attorney made a verbal objection to the CRO motion, and that his attorney attended the hearing on the CRO motion to state that 4 creditors (not his actual paying client) wished for a Chapter 11 Trustee to be appointed.

Trustee's Attorney Involved Before Trustee Appointed

April 10, 2018 4:45PM
I found out today that Mr. Gearin, Chapter 11 Trustee Mark Calvert's attorney, was involved in the case before Mark Calvert was appointed.

As background, the U.S. Trustee filed a motion to appoint Mark Calvert on April 8, 2016, and the Judge approved the appointment on April 11, 2016. On April 12, 2016, Mr. Calvert filed a motion to authorize employment of K&L Gates (the law firm Mr. Gearin works for). The K&L Gates expense application shows that K&L Gates first billed for services on April 8, 2016.

However, earlier that week, on April 5, 2016, Tracy Law Firm on behalf of NWTM (who was then run by Ross Hansen) filed a motion to appoint Bill Weisfield and Stuary Heath of Elliott Bay Asset Solutions (EBAS) as the CRO (Chief Restructuring Officer), after EBAS spent "considerable time" consulting with NWTM. That CRO job is the exact same job that Ross Hansen wanted Mark Calvert to have, as of mid-March, 2016. Somehow, the FBI called Mark Calvert on April 9 or April 10, before he was appointed Trustee. And by April 12, Mr. Calvert was reportedly flaunting the fact that he was receiving calls from the FBI in front of Ross Hansen.

Yet hidden in a document I discovered today, there is a reference to Mr. Gearin discussing objections to the CRO motion with the Tracy Law Firm on the day it was filed. And in another document I looked at today, I found out that Mr. Gearin was at the time Mr. Calvert's personal attorney. The next day, the well publicized creditor in the defamation lawsuit filed a formal objection, and later that day Tracy Law Firm filed a response saying that EBAS withdrew from consideration, and the day after that, NWTM and the U.S. Trustee filed a stipulation that a trustee (rather than CRO) would be appointed. That Trustee ended up being Mark Calvert. Oh, and Mr. Gearin attended a hearing about the Trustee appointment, stating that 4 creditors wished for a Trustee to be appointed -- and that he did not charge them to do so.

A few days after the bankruptcy filing, Mr. Hansen is looking at EBAS to be the CRO. Mr. Gearin is one of those who object. The formal objection is that there should be a Trustee and not a CRO. But rather than hire EBAS, the U.S. Trustee hired Mr. Calvert.

Mr. Calvert worked with Mr. Hansen for about 2 weeks in the month before the bankruptcy was filed, for about 20 hours (even attending at least one management meeting), with Mr. Hansen hoping Mr. Calvert would become the CRO. After spending that time with NWTM, Mr. Calvert decided he would rather be the Trustee, so he declined the position of CRO, and when Mr. Hansen found someone else to be CRO, Mr. Calvert apparently had Mr. Gearin call to verbally object (which does not normally appear in court documents). Mr. Gearin then showed up at the hearing (again, something not normally showing up in court documents), stating that 4 creditors wanted a Trustee to be appointed. And sure enough, a day later, the U.S. Trustee appointed Mr. Calvert as Trustee.

[I do assume that Mr. Gearin is ethical, and that when he talked to those 4 creditors that he did not bill, he did not in any way lead them into their desire to see a Trustee be appointed. He did tell them he would seek to be the Trustee's counsel.]

NWTM's Bankruptcy Website Gone

April 10, 2018 5:00PM
Early on, the website "existingbullionorders.com" was set up and used for the NWTM Chapter 11 bankruptcy, as the official bankruptcy website. And it was updated as recently as last month.

Chapter 11 Trustee Mr. Calvert, however, somehow let the domain name lapse (expire), on March 17, 2018. WHOIS records show that the registrar hasn't let the domain go yet, and NWTM has about a week to get it back. Any IT guys over there at NWTM who can take care of this ASAP? You know I'm going to post an "I told you so" if someone else grabs the domain.

This brings up a piece of information I hadn't thought about before: the domain was registered on March 18, 2016. That's a full 2 weeks before the bankruptcy filing, and appears to be during the time Mr. Calvert was interacting with NWTM regarding him coming on as a CRO. So this brings up some new, seemingly unimportant, questions: Who picked the odd website name of 'existingbullionorders.com'? Who actually registered the domain (it belongs to NWTM, but someone decided to register it)? If Mr. Hansen registered the domain, why did Mr. Calvert use it rather than a more appropriate "nwtmbankruptcy.com" (costing no more than about what Mr. Calvert bills for 2 minutes of his time)? If Mr. Calvert chose the name, why did he do so before he was officially on board, and why would he choose such an odd name?

UPDATE April 19, 2018 3:15PM: The domain is back. Apparently the NWTM IT guy read this and renewed the domain.

Was Some Missing Metal There?

April 10, 2018 1:05PM
I heard something interesting this morning.

A creditor who had metal stored with NWTM supplied the FBI with the serial numbers of the bars that were missing. This is pretty standard: if you believe something is stolen from you, and contact the FBI, you let them know what you have. And we already know that the FBI was involved at some point after the April, 2016 inventory started.

But the interesting piece is that the creditor reportedly claims that the FBI said that they saw at least some of the creditors' metal in the photographs of the inventory. But Mr. Calvert apparently has told the creditor that he never had the creditors' metal.

I do not have any way to contact the creditor, so I cannot assume this to be true. However, this goes to the very heart of what is wrong with the bankruptcy: despite Mr. Calvert's early bold claim that his goal was "to share as mcuh information as possible", he is sharing nothing. Zilch.

UPDATE April 29, 2018 3:05PM: It turns out the report is true. While I cannot confirm that the FBI said what they did, there is a creditor who has filed a document with the court that "On or about March 2018, most of the metals in question were easily findable by an FBI agent whom I contacted to look at the original Inventory that Mr. Calvert had repeatedly not allowed me to see."

My Letter to the Court

April 10, 2018 8:15AM
I wrote a letter to the court, which was filed yesterday (docket 1579). This is my first time writing to a court.

I am not linking to it here, just as I typically do not link to court documents submitted by creditors (unless it is clear they are OK with them being published). I also included some information that I did not feel comfortable publishing on this website (e.g. credible, but unsubstantiated, allegations). Linking to the letter could be considered the same as publishing it here. Being filed as a court document, it is available to the public, but it is in a much different context (e.g. it is clear that the goal is to get information out, and not to harm anyone who has done nothing wrong).

On this website, I get pulled in two directions: on the one side, I want to publish as much information as possible for creditors (and others) about what is going on with the bankruptcy, especially since the bankruptcy process in general is usually far from transparent. On the other side, people are (for good reason) protected by defamation laws. In almost all cases, I can publish the truth without fear of being sued. But when it comes to allegations, it opens up a can of worms. I hear a lot about what is going on, but there is also a lot that I simply cannot publish because I cannot prove it is true.

The goal of my letter was to get some information into the hands of people who can do something with it, if they so desire. Much of it is a re-hash of what I've written here, pointing out many of the issues with the case that have come up over the past 2 years. It also includes some allegations, which I felt necessary to get into the light of the court, in case there is truth behind them.

Auction May 2, 2018

April 9, 2018 1:50PM
Someone told me they heard that there was an NWTM auction near the end of April. I hadn't heard anything about this, so I did some digging.

It looks like Industrial Assets Corp. (d/b/a BidItUp), the company that the court authorized to purchase NWTM equipment for $1.95M, is auctioning the NWTM equipment that it bought. However, they state that the auction is "By Order Of The United States Bankruptcy Court...", which is inaccurate. The court ordered that BidItUp could buy the equipment for $1.95M, and it contemplated that BidItUp might auction the equipment (but nothing requires BidItUp to do so; in fact, the idea of them selling directly was also contemplated). Hopefully, nobody will be confused and bid higher than they otherwise would, thinking that somehow creditors may benefit (it wouldn't be the first time that happened!).

The actual auction is on May 2, 2018 starting at 8:00AM. There are previews April 26, 27, 30, and May 1. They state "Assets Formerly Of Northwest Territorial Mint, LLC – Complete State-Of-The-Art Full-Service Coining Mint ... The Largest Us Mint Manufacturer Ever To Come To Auction ... Over $5 Million Dollar Valuation - too much to list all!!"

Medalcraft's Final Offer: $1M

April 2, 2018 9:10AM
Things only get more and more interesting with the offers for the Medallic assets. We now have the 4th instance of what appears to be a party increasing their bid without needing to. Medalcraft now wants to pay $1M for assets that before it wasn't willing to pay more than $810K for after getting outbid with a $825K offer.

This is odd for a number of reasons. First, they originally offered $700K, but raised that to $810K during the bidding (presumably the most they would be willing to pay). Yet when Medalcraft's Mr. Moran received the call that his $810K bid won (and hearing that Mr. May made an unsolicited, unaccepted bid of $900K), Mr. Moran kindly offered to pay $910K "if that would make a difference." Mr. May later offered $1.25M. However, the motion to accept Medalcraft's offer suggests that Mr. May's $1.25M offer disappeared somehow (Mr. Calvert says he was in discussions with Mr. May to buy all the remaining assets, and hadn't heard back, but never mentions the $1.25M offer).

Medalcraft has stated that they will walk away if the court does not approve this offer (technically, he said he would walk away if the offer wasn't approved by the court by May 4, but that happens to be the date of the court hearing).

So where did the $1.25M by Mr. May offer go, and why did Mr. Moran raise his bid? I can't make sense of this.

'$1M Accounting Error?' - Update

March 29, 2018 8:15AM
On February 24, 2018, I wrote about a possible $1M accounting error. It seemed related to a "Inventory Brass-Copper Adjustment" line item in the Income Statement. In February, 2017 there was a $150,001 credit (gain) in this category, and in March 2017 there was a $938,844 debit (loss).

What I just found was the explanations. For February, Calvert wrote "Inventory: At the time of bankruptcy no physical inventory had been done for Copper and Brass. We now have a value and inventory and made the adjustment this month with a 25% reserve." A perfect explanation: balance sheet inventory went up $170,951, $150,001 of which was attributable to the copper/brass adjustment, and it shows up as income in the "Inventory Brass-Copper Adjustment" category. That's roughly 500,000 900,000oz of brass/copper; a lot, but imaginable.

But March is where common sense disappears. The balance sheet inventory goes down $942,332, with $938,844 of a loss shown on the income statement attributable to "Inventory Brass-Copper Adjustment". And this time Calvert wrote "We did an inventory valuation for all precious metals in the vaults plus system reports for nonprecious metal inventory. We discovered Copper, Brass and Nickel metals were not included and made the adjustment Feb 2017 with a 25% reserve." Huh? The second setence is a recap of the February, 2017 change. Precious metals prices didn't go down enough to justify a $938K loss. And to have negative income from "Inventory Brass-Copper Adjustment" implies that there was $938K of brass/copper inventory that was overvalued, but we know from February that it was only $150K.

How can you lose $950K of brass and copper a month after your inventory shows that you have $150K of brass and copper? That's roughly 5 million ounces of brass and copper. In difficult-to-move 70 pound boxes, that would be over 4,000 boxes!

UPDATE March 29, 2018 8:25AM: It appears that the March, 2017 financial report has another note: "At time of bankruptcy we did not know what precious metals would be returned to customers, with research and approval from the court we have that value and reduced inventory in March 2017 for that value." I often point out I am not a lawyer, but I'm not an accountant either. It seems that Mr. Calvert and his crack accounting team knows what I don't: when you hold $1M of inventory for storage customers, and it is listed as an asset in inventory, you fix it by reporting a $1M loss as "Inventory Brass-Copper Adjustment". Because we all know customers stored pounds of brass bouillion with NWTM. Yikes.

Is NWTM Donating to Charity?

March 27, 2018 8:20AM
I have heard that an employee was told that some items were donated to charity after NWTM shut down in December.

If anyone has any information on this (e.g. if you were told the same thing, who may have said it, if you know of what items may have gone or to where), I would very much appreciate hearing about it (you can get my E-mail address or send an anonymous tip here).

UPDATE March 27, 2018 5:40PM: I have gotten a response from one person so far, who has stated that nothing has been donated to charity (as should be the case). Unless I hear further, I think it is safe to assume that nothing has been donated to charity.

Trustee to Sell to Boy Scouts Dies

March 27, 2018 8:25AM
The Trustee has filed a motion to sell medallions, dies, and awards with Boy Scouts of America designs on them to the Boy Scouts of America for $30,000.

Will Calvert Destroy Art?

March 26, 2018 8:15AM
Chapter 11 Trustee Mark Calvert recently filed a motion to destroy paper records from either before 2012 or before 2013 (depending on which court document you choose to read).

One reader pointed out that the archive boxes include hard copies of artwork, labelled with a code starting with the letter "A" followed by a 6 digit number. These were apparently used for all NWTM projects (domestic and imported), including designs that were never produced (including hundreds that were never ordered after the bankruptcy).

Will Calvert Tell Court of NWTM Dies?

March 26, 2018 7:45AM
Chapter 11 Trustee Mark Calvert has gone to great lengths to explain to the court that Medallic had a policy of owning the dies they created for customers. And, from what I have heard, for the most part this is true: with some exceptions, Medallic customers were told that Medallic owned the dies.

But I'm concerned that I haven't seen mention in court records of the NWTM dies. NWTM created tens of thousands of dies. The NWTM dies, from what I have heard, were usually considered property of the customer. But if Calvert isn't mentioning them in the court, what is he expecting will happen to them? Is he expecting to sell them for scrap? Sell them to someone willing to bid on them? Give them away to someone? Or will he do what I imagine he would be required to do: return them to their rightful owners?

Converting to Chapter 7

March 24, 2018 8:20PM
Yesterday, Chapter 11 Trustee Mark Calvert filed a motion requesting that the case be converted from Chapter 11 (reorganization) to Chapter 7 (liquidation).

I am trying to figure out what impact, if any, this may have for creditors (technically, the bankruptcy officials are considered administrative creditors, but I am referring to people owed money before the bankruptcy filing).

The Deteriorating Chinese Business

March 23, 2018 2:45PM
Chapter 11 Trustee Mark Calvert has been making a big stink about how the Medallic assets need to be sold soon, as 75% of Medallic's business is done between February 1 and May 1 (information which, interestingly, comes from Medalcraft).

However, it has been said that about 30% of NWTM's business was done with companies in China producing the product, and it is a high profit business, generating over $1M of profit annually. That's a nice chunk of change.

So what has happened to it?

It seems that NWTM employees have been taking bits and pieces to other companies. I am aware of what appears to be at least four companies that have hired NWTM employees, and are reportedly finding ways to get business from NWTM customers. I have heard rumors that Calvert was presented with a business plan from someone interested in running the Chinese business, who felt like it was overlooked and could be obtained cheaply. But it is not getting mentioned in the court documents (which is exactly why it is being overlooked), and the business is deteriorating. Shouldn't Calvert be speeding up the sale of the Chinese business, in addition to (or instead of) Medallic?

Once competitors have gobbled up all the customers, the customer list will have nearly no value. Except, of course, to those who already helped themselves to it. Taking an order from an NWTM customer is fine, cold calling or E-mailing NWTM customers is not.

UPDATE March 23, 2018 4:30PM: To be clear, the Chinese business was almost exclusively part of NWTM, with very little (if any) Medallic business being done in China.

New Request to Destroy Records

March 23, 2018 7:30AM
Yesterday afternoon, Chapter 11 Trustee Mark Calvert filed a motion to abandon or destroy company records prior to around 2012. Last May, he had requested to destroy or give away records dating before 2009, but that motion was apparently denied.

It is unclear what he would do with the records if they were abandoned, rather than destroyed. In a bankruptcy, property that is abandoned goes back to the debtor. Would they go back to Ross Hansen?

And of course, there is what appears to be a glaring error. The motion starts by "requesting authority to abandon and destroy business records of NWTM from before 2012", but the proposed order states "The Trustee is authorized to destroy all business records of NWTM that pre-date the year 2013." Remember, 2012 is a whole year, so you have to phrase things properly. You cannot say both "get rid of records before 2012" and "keep records after 2012". The poor records from 2012 get lost if you do that.

This is also interesting because Calvert declares that he is "unaware of any litigation or other bankruptcy estate matters for which such records could become relevant." However, documents from 2009 were 2012 were pulled from NWTM's records for a hearing just 1 week ago.

WARN Class Action Lawsuit Dismissed

March 21, 2018 8:15PM
The WARN class action lawsuit, which alleged that the Trustee violated the WARN Act (which typically requires 60 days notice before mass layoffs and/or plant closings for companies with over 100 employees), has been dismissed without prejudice. This was done with a joint stipulation, meaning that both parties agreed to it. The "without prejudice" means that the same case may be brought again.

I do not have any further information as to whether this was because there was evidence clearly showing that the WARN Act was not violated (so the plaintiff would not have an incentive to continue the case), or if the case is going to be re-opened in some other way (such as in a different court), or if there is some other reason. I will update this if I hear more.

FBI Investigation Started ~October, 2015

March 21, 2018 2:00PM
I have recently reviewed information showing that Mark Calvert stated that Ross Hansen had been under FBI investigation since around early October, 2015.

The FBI interviewed at least one former high level NWTM employee in December, 2015, who mentioned the interview to another high level employee working at NWTM at that time.

Sell to the Lowest Bidder?

March 20, 2018 3:50PM
I have obtained the audio to the March 16, 2018 hearing. It mentions that at the March 9, 2018 hearing, the Judge re-opened bidding (which the Trustee's attorney Mr. Gearin forgot, so he was telling Mr. May that they would not re-open the bidding, even though Mr. May's attorney pointed out that the Judge ordered the re-opening of the bidding).

As we know, Medalcraft put in an initial 'stalking horse' bid of $700,000. At the auction (before the March 9 hearing, between Medalcraft and Mr. May), the bids went up to $810,000 for Medalcraft and $825,000 for Mr. May. Then, the Trustee was concerned about Mr. May's credentials (despite him having been qualified to bid), so the Trustee declared Medalcraft as the successful bidder. Then, according to Mr. Gearin, Mr. May made an unsolicited bid for $900,000. The Trustee then called Jerry Moran of Medalcraft to explain that while his $810K bid won, Mr. May later made an unsolicited bid for $900,000 -- at which point Mr. Moran offered to increase his bid to $910,000 "if that would make a difference." Huh? If I won something in an auction for $810K, I wouldn't volunteer to pay $910K.

In any case, court documents show that the $910K counter-offer (which appears to have been completely solicited by the Trustee) was somehow relayed to Mr. May's attorney (at which point I would assume it was a valid bid). Mr. May's attorney then countered with a $950,000 bid on March 14. And then on March 15, Mr. May's attorney raised his bid to $1,250,000 (presumably to make up for what Mr. Gearin may have considered drawbacks with Mr. May's offer).

So both parties have increased their bid (at least 3 times total) without needing to. That makes little sense to me.

And then in court, Mr. Gearin said that the Trustee was willing to accept the original $700,000 bid (a bit more than half the highest offer) "if that is what we need to do to get the sale to go through." Is Calvert trying to sell to the lowest bidder?

And no mention was made of an offer made by a different party in February, complete with a deposit, that included the Medallic name (which this auction is selling). How can you hold a deposit for a bidder and then sell some of the items out from under him that he is bidding on?

Potential Bidder Diverted Business

March 20, 2018 9:15AM
It looks like I didn't read the August, 2017 monthly financial report carefully enough. It says:

"One former sales employee has taken a position with a direct competitor who had executed a nondisclosure and nonsolicitation agreement with the estate in connection with its expression of interest in acquiring the estate’s business. The former employee appears to be contacting customers of the estate and attempting to divert business to the competitor. The competitor’s violation of its nonsolicitation agreement with the estate may adversely impact operational results and give rise to actionableeeds.ges [sic] claims."

I believe that I know who both the employee and the competitor are, and if I am correct, this is not the same employee whose E-mail I recently quoted. It is not known from what is written if this company put in a bid we do not know about, put in a bid that was never accepted, or a bid that is still being considered. But what appears certain, from "actionableeeds.ges claims", is that whoever wrote this is a lawyer that has a pet cat that sometimes walks on the keyboard.

Any Company Can Use Chinese Dies?

March 20, 2018 8:20AM
I received an anonymous tip that "Another company can use the NWTMINT dies if they are the ones from China. As long as the owners are on board."

It isn't as simple as that. This issue combines U.S. and Chinese laws, as well as the policies of a company in China. There are issues of who owns the physical dies, who owns the artwork, and who can use the dies. And the big issue of how to contact customers.

Ross Hansen stated at the Creditors' Meeting that NWTM owns 10,000s of dies in China. If NWTM is the legal owner of the dies (which Mark Calvert presumably believes, as he believes NWTM owns the dies in the U.S., and has not stated otherwise regarding the Chinese dies), it is unclear how another company could use them. Next, if NWTM owns the copyright to the artwork (which may depend on whether they designed the entire image, whether they worked on a crude drawing from a customer, or whether the Chinese artists created them), another company should not be able to use them.

But perhaps the biggest issue is that it would be very difficult to generate business this way legally. Sure, you could say "Hey, if you did business with NWTM and had medals made in China and know the die numbers, we can work with you!". But that isn't going to get you far quickly. You're going to need to contact NWTM customers, and know the die numbers, for best results. But the NWTM customer list is the property of the NWTM estate. As far as I know, it would be illegal to use the customer list without permission.

Judge Denies Motion to Sell to Medalcraft

March 19, 2018 8:35PM
A few hours ago, Judge Alston filed an order denying Chapter 11 Trustee Mark Calvert's request to sell the Medallic assets to Medalcraft.

This comes after such strange things as Mr. Calvert apparently putting the interest of customers over creditors, and a report of Mr. Calvert ignoring a company attempting to make an offer in 2017.

Medalcraft has stated that they have no connection or relation to NWTM or Ross Hansen, and negotiations were free from any fraud, collusion or bad faith.

NWTM Lost Domain Names

March 19, 2018 8:25PM
NWTM has many domain names, ranging from nwtmint.com to bikercoins.com to silverbars.us (and like the dies, they don't seem to appear in any court documents). However, I found out today that NWTM had some domain names that it was actively using, that it lost after the bankruptcy.

Apparently, there was an NWTM employee who sold custom medals. At some point, either before or after he started working at NWTM, he registered some domains that NWTM used. It is unclear whether NWTM thought that NWTM owned the domains, or whether there was some sort of arrangement allowing NWTM to use them (which is very rare). In any case, these were domains that for many years let people see NWTM inventory, and displayed the contact information for NWTM, and had an NWTM copyright notice.

However, at some point well after the bankruptcy -- around July, 2017 -- the domains were sold to another company that produces medals, which now provides their own contact information on them. Therefore, anyone who had been going to these sites will likely start using this other company, rather than NWTM, for their medals.

Since the company that bought the domain names appears to have done nothing wrong, I am not going to mention the company or the specific domain names.

UPDATE March 20, 2018 7:20AM: I have found out that the employee owned the domains before working for NWTM, and rented them to NTWM. NWTM stopped paying at some point before the bankruptcy, so from the looks of it, it appears that the old management dropped the ball on this.

NWTM Designs With New Company?

March 19, 2018 10:40AM
A former NWTM employee (terminated at the end of December, 2017) recently sent out an E-mail, suggesting that she has access to NWTM designs with a new company.

It is unclear how this is happening. A Chapter 11 Reorganization Plan couldn't slip by under the radar. Could Chapter 11 Trustee Mark Calvert have decided to operate under a different name (and would that even be considered a new company?)? If it is part of NWTM, why not use the old E-mail address? Did NWTM get court approval to sell major assets that slipped past me? How else can a new company have access to NWTM designs, and a list of E-mail addresses to send to?

The E-mail is as follows (the copy I received did not include the headers or E-mail address it was sent from).

Good afternoon,
[Name] here with your custom coins! Happy New Year!
Long story short, Northwest Territorial Mint filed for bankruptcy in April 2016 and has since then not been able to work its way out, this is all public knowledge on the internet. Unfortunately, Northwest Territorial Mint shut down on 12/29, doors are closed and all systems are shut down; THE GREAT NEWS is your designs are still on file and you have the ability to continue to work with me under a new company that has all the same capabilities, quality and even faster turnaround times! I would be happy to continue working with you if you’d like, please call or email me at anytime if there is anything I can do for you. PLEASE BE SURE TO EMAIL ME AT THIS EMAIL ADDRESS, THE PREVIOUS EMAIL HAS BEEN SHUT DOWN AND DEACTIVATED.
Same contact # [Phone]
[Name] [Phone]
To be clear, I do not have any indication that this is related to any businesses that I have previously posted about.

UPDATE March 20, 2018 8:15AM: I have found out that a copy of this E-mail was sent to a group that had some medals made in 2015. The E-mail was sent "out of the blue" from their old contact at NWTM. I also received an anonymous tip that "Another company can use the NWTMINT dies if they are the ones from China. As long as the owners are on board." If NWTM actually owns the Chinese dies, as has been claimed, the legality of doing that would be questionable.

Another Offer on the Table

March 19, 2018 9:25AM
I have heard that there is another offer on the table, for the Medallic name and the historic dies. This offer was made about a month ago, along with a deposit. The company would resurrect the Medallic Art Name, creating new medals building on the peak days of creativity and high quality design (while of course not infringing on intellectual property rights).

I expect that the details of the offer should become public within the next few weeks.

Trustee Objects to Rodger May Bid

March 19, 2018 9:00AM
The Chapter 11 Trustee, Mark Calvert, filed a declaration last week. In it, he states "I can not entertain Mr. May as a viable bidder. At the hearing on March 16th I intend to renew my request that the Court approve the sale of the assets to Medalcraft Mint, Inc." Mr. May's attorney wrote "We no longer trust this process to be fair."

There is some irony here. The Trustee's attorney, Mr. Gearin, E-mailed Rodger May's attorney after the March 9 hearing, stating "the Trustee expressed his concerns regarding Mr. May's ability to protect customer interests in light of the fact that Mr. May does not have experience in the minting business." The irony is that the Trustee (and his accounting company), as we all know, had less experience in minting or bullion (so little, in fact, they weighed precious metal using bathroom (avoirdupois) scales -- something I'm sure Mr. May would never have done, as he is involved in mining companies).

Mr. Gearin also stated concern that NWTM owner Ross Hansen might be involved, saying "the Trustee will not be party to allowing customers and creditors to be mistreated again as they have been in prior business enterprises run by Mr. Hansen." It is quite a relief to know that Mr. Calvert is so strongly aligned with creditors, although I'm not sure how creditors could be harmed by a higher offer (even if the resulting business was unsuccessful). And while it is noble of him to be aligned with customers, he has a fiduciary duty to creditors, and no obligation to customers (that are not creditors) as far as I know. It was disclosed that Mr. Hansen did bring the auction to Mr. May's attention, but Mr. Hansen's role would "never be more than that of a consultant".

In order for the Trustee to entertain offers by Mr. May, he expects to know things like how Mr. May will ensure timely orders and and what management team will be involved (which Mr. May provided, but not to the Trustee's satisfaction). This seems quite ironic for a dead company -- one that died under Mr. Calvert's watch. I urge you to download the declaration and read "Responses to Questions" (pp 40-41) to make your own opinion on whether Mr. May's responses suggest that his bids should be accepted or not.

Perhaps the Trustee is mistaking this sale for a plan of reorganization (where creditors could benefit after the sale), and not an asset sale (where the benefit to creditors is normally limited to the cash at closing)? Or maybe I am simply missing something (yes, it does happen!). It's nice to ensure future customers will be treated well (and very important to ensure that dies are not mis-used), but I'm not sure why a higher offer would trump a lower offer based on the future expectations of the company (which again brings irony: Calvert seemed convinced he would be able to make NWTM succeed, but with hindsight we now know the outcome).

There seems to be no question that Medalcraft is better suited to quickly take over the Medallic assets, and has the least risk of the assets going to waste somehow. However, it is also important to make sure that Mr. Calvert isn't turning down a better offer for reasons that do not relate to the interested parties.

February Financial Report

March 17, 2018 11:10AM
The Trustee has filed the February, 2018 monthly financial report.

In it, it shows that the skeleton crew was reduced from 22 employees to 10 employees.

The "Significant Events and Case Progress" section, which usually is the most information (a narrative of what went on during the month) has no new information from what I could tell. There is what appears to be a line regarding either the Medallic sale to Medalcraft or the sale of older dies to the ANA, but I cannot fully comprehend it ("The Trustee also has confirmed for the dies available for sale which is anticipated to be confirmed in March and April.").

How Did Rodger May Get Involved?

March 16, 2018 8:35AM
Rodger May provided a higher cash bid for the Medallic assets, outbidding the Medalcraft "Stalking Horse" bid.

According to a filing I will be discussing in depth later today, Rodger May hopes to buy the Medallic assets to run a business (e.g. providing medals to customers), with one of his partners taking the lead role. Mr. May's attorney states that Mr. May found out about the current auction from Ross Hansen, but that his partner originally tried contacting Chapter 11 Trustee Mark Calvert in 2017 (the implication being that Ross Hansen was not involved in the original inquiry).

Further, Mr. May's attorney states "Mr. Hansen's role in the company going forward has not been determined, but it would never be more than that of a consultant." Traditionally, a consultant provides advice, but cannot make any actual decisions on their own. For example, a consultant might say "Hiring Mr. Jones would benefit the company, and $55K/year is a reasonable salary" but someone else would need to actually make the decision to hire Mr. Jones and how much to offer him for a salary.

The Trustee's attorney stated that Ross had contacted ex-NWTM employees and stated that he is "back in business" and representing that he would be "running the mint within the week."

Trustee Reportedly Ignored an Offer

March 16, 2018 8:20AM
In a filing I will be discussing in depth later today, on page 40 an attorney for Rodger May (who recently placed a bid for the Medallic assets), asserts "The Trustee refused to return communications from Fred Holabird in 2017. Mr. Holabird is a shareholder, as well as manager, of Gold Leaf Placer, LLC -- Mr. May's gold placer mining company that owns the leases in Nome, Alaska."

The Trustee's attorney responded that "The Trustee has no recollection of Mr. Holabird or any communication with him in which he expressed interest in purchasing the estate's assets."

He said, she said, I guess.

NWTM Asset Sale Approved

March 15, 2018 6:10PM
Yesterday, Judge Alston approved the sale of the NWTM industrial assets, for $1.95M, to Industrial Assets Corp. (BidItUp) and Maynards Industries USA LLC. They are buying "(a) all the machinery and equipment, autos and trucks as specifically set forth on Exhibit “A”, attached hereto, (b) related tooling, attachments, parts, accessories, manuals, and (c) office furniture, in, around and/or about the Premises) located at 80 East Airpark Vista Boulevard, Dayton, NV 89403 and 1718 Velp Avenue, Building #D, Green Bay, WI 54303 (“the Premises”)." It appears that they were authorized to start removing items as of the moment the order was entered (yesterday around 1:15PM Pacific time).

One catch is that they are buying 1 "Group of (70) sections of heavy duty adjustable shelf units w/(21) sections of die bins." The photo appears to show the shelving that the Medallic dies are located in. It is not clear where those dies will go, or even if the purchaser is aware that they need to be saved.

$22M Offer Turned Down?

March 13, 2018 4:55PM
As with much of what I write (or wish to write), it is often difficult with zero information from the Trustee, and a lot of the best information hiding in hearings (obtaining the audio requires having someone drive to the courthouse, and transcripts usually are very costly).

In this case, I have heard from a reliable source that "legitimate offers as high as $22 million for the assets of NWTM have been turned down by the management of the company and the Trustee."

There could be good reasons for this, but it may be time for someone to ask Mark Calvert "Hey, what offers have you received, and why did you turn them down?"

UPDATE March 13, 2018 8:50PM: I have been unable to confirm that such an offer existed, and have heard from some other sources that this offer just does not seem like it was realistic. I will have to assume that there was no such offer, unless I get more information.

Trustee Untrustworthy?

March 13, 2018 10:05AM
As creditors know, Chapter 11 Trustee Mark Calvert has had almost no communications with creditors.

However, things are worse than that. He has failed to act in a number of cases where he should have. For example:

  • The bankruptcy schedules on May 10, 2016 stated "Debtor stored personal property for certain customers, Trustee has commenced a detailed storage inventory which will be provided to creditors when completed." No storage inventory was provided.
  • Calvert wrote that he confirmed that certain dies belonged to a specific customer, and asked for permission to return them. The Judge's order stated that "The Trustee may return the Coining Dies purchased by [customer]". A year and a half later, he had not returned them, requiring the customer to write to the Judge.
  • After a lot of debate between the Trustee and the landlord over what repairs NWTM needed to make to the Dayton facility, the Judge ordered the Trustee to "promptly" make many repairs (a list of 21 was provided). The landlord of the Dayton facility claimed on February 20, 2018 that there was "no progress in any repairs or other compliance with the Court’s September 1, 2017 Cure Order."
These are all things that either Mr. Calvert promised to do, or was ordered to do by the Judge, but never happened. How can you possibly be expected to trust someone like that?

The more serious problem here is for people like me that are acting as watchdogs that trust that the Trustee is doing what he says and is told to do. If the Trustee doesn't do things he says he will do, and doesn't do things he is told by the Judge to do, it's like dealing with a small child. I simply cannot trust Mr. Calvert (it has gone from "trust, but verify" to just "verify"). Now I have to go back and look at all the things that he promised to do, or was ordered to do, and see if I need to check if they really were done. I assume, for example, that all the storage customers that still had metal at NWTM (that wasn't stolen) got their metal -- but now I have to wonder if there are some who did not.

Tips Wanted...

March 12, 2018 2:35PM
I have heard quite a few rumors of potential and/or actual wrongdoing at NWTM in the months leading up to (and after) it shut down in December, 2017. I have also heard that a number of employees are afraid to speak up given threats (real, perceived, or otherwise).

If you would like to supply me information anonymously, you can do so on the anonymous tips page. My E-mail address is also there (I do not publish information given to me via E-mail unless you give me permission, and in the rare cases where I publish the names of my sources I never do so unless I have explicit permission).

Chinese Business

March 12, 2018 2:15PM
We know a lot about NWTM. But one little known aspect is the Chinese business: orders for medals (such as challenge coins) that NWTM would have a company in China (such as Yong Tuo Emblem Company and Kunshan Top Tree Decoration Company) create and package, at a significant cost savings over what it would take to create high quality product with NWTM employees. This involved millions of dollars of business annually, at a high profit margin (due to cheap labor costs). Ross Hansen claimed that there were $2M-$4M worth of dies in China. That figure could be exagerrated, and it may be nearly impossible to access the dies, but I have not seen those numbers disputed in court documents.

As far as I know, nearly no mention has been made in court documents regarding the Chinese business and dies. It is not mentioned in the recently filed budget.

Further, I have heard that an NWTM employee has bragged that nobody cares about the Chinese business, and that he will be able to take it over himself. Since the dies are "invisible" (nobody has gone or will go to China to investigate them, as far as I can tell), they could easily get transferred to a new owner "under the radar."

UPDATE March 12, 2018 4:45PM: Someone mentioned to me that the Chinese dies use a numbering format with a "Q" followed by a letter indicating the salesperson followed by 4 digits. This information, combined with the die numbers found in the inventory list, suggest somewhere in the order of 15,000 30,000 Chinese dies (2 dies per number; obverse and reverse). It appears that some of the dies are destroyed after a number of years if they are not used.

More on Die Values

March 12, 2018 8:50AM
Since Chapter 11 Trustee Mark Calvert has apparently not provided any information on the value of the dies, it's pretty much been up to me to figure that out (with a lot of help from a few other people) and disseminate that information.

Over the years, NWTM has acquired many dies not created by NWTM (e.g. through the acquisition of companies). The majority of the dies appear to be from the Balfour Company, which are relatively tiny dies for things like jewelry and pins, and therefore would not have much scrap value. There are also a lot of dies for tokens, which are also fairly small, and therefore would have little scrap value. Next comes the Medallic dies, which are large, heavy, and have historical value (such as the die for a coin that was given to the captain of the ship that picked up 700 Titanic survivors... a die that some NWTM employees are very familiar with). Finally there are the dies that NWTM themselves created, and ones that the Chinese companies created.

The photos I posted are of the Medallic Art dies. It seems that there are somewhere around 25,000-40,000 Medallic Art dies. I have not seen any estimate of how many NWTM dies there are (which is ironic, as those should have been the most likely to have been inventoried and/or referenced in court documents).

So what about the value? Much of the value is historic: the ability to hold a die used to create a famous medal, or the ability to restrike old coins for the companies that originally had them made. But the scrap value is an important reference point.

From what I have heard, a good guess would be that about 350,000 dies are small, and would have a scrap value of perhaps $.20 each, or roughly $70,000. Then there should be roughly 40,000 Medallic dies, weighing about 20 pounds each, with a total scrap value of roughly $150,000. Medallic had had around 15,000 copper die shells and 5,000 galvanos, with about 250,000 pounds of copper/lead, which would likely have a scrap value of over $500,000. That's a total of over $700,000 of scrap value, above and beyond any historical value or value for customer reorders.

Of course, we have no idea how many dies still exist, or who would get what dies.

UPDATE March 19, 2018 9:20AM: I have heard from another source that about 250,000 of the dies are essentially "junk" -- small dies, typically for jewelry, that have almost no scrap value. The source suggests that the total scrap value of all the dies and galvanos is under $100,000.

NWTM Budget Filed

March 10, 2018 7:30PM
NWTM has filed a budget with the court, for the next few months. Among other things, it shows:

  • NWTM has at least $87,000 of precious metals left that have not been returned to customers or sold.
  • NWTM is planning to receive $420,000 for "Older Dies" from the New York Numismatic Association.
  • NWTM has finished paying terminated employees ("Payroll Liability from last wk of 2017")
  • NWTM "skeleton crew" payroll is currently about $50,000/mo, and should go down to $30,000/mo by mid-April.

Medalcraft Outbid for Medallic Assets

March 8, 2018 8:20PM
I have heard that Medalcraft was outbid for the Medallic Art Company assets, and that Rodger May of Seattle has placed a higher bid.

How Much are 400,000 Dies Worth?

March 8, 2018 8:15PM
So we know that NWTM has somewhere in the neighborhood of 400,000 dies. So how much are these worth?

I have heard that these dies are made of steel (as is normal for coining dies these days), and are quite heavy. One person has told me that the dies alone are worth millions of dollars.

UPDATE March 9, 2018 10:45AM: I have heard from two sources, one that says that management said the dies were worth $50 each for scrap value, and another who believes $25 each is a conservative estimate of the scrap value. That would place the value of the dies in the neighborhood of $10M-$20M. However, Calvert hasn't provided details on where these dies are, which means that many of them could be the "Chinese dies", and it is unclear if NWTM actually owns those dies, and if so, if there would be any major challenges retrieving them. He also hasn't provided any information as to which dies have been sold, destroyed, given away, or will be sold with the NWTM assets or the Medallic assets.

NWT Mint President Running a Mint

March 8, 2018 7:35PM
It doesn't sound like news, right?

I have heard from two sources that the NWTM President, Paul Wagner, has formed a new company, Sierra Mint, LLC. The paperwork for the company was filed on February 16, 2018 per Washington State records. Greg Fullington, who was NWTM corporate counsel from 2013-2017 (kept on by Mark Calvert and perhaps terminated with everyone else at the end of 2017), is acting as corporate counsel for Sierra Mint. A registered trade name "Sierra Mint" was apparently filed on March 5, 2018. Paul Wagner was part of the skeleton crew, some of whom are still working with NWTM.

UPDATE March 8, 2018 7:35PM: Paul Wagner was hired by NWTM around January, 2013. His office was very close to Ross' office. He was also in a position to know what was going on before the bankruptcy. After the bankruptcy filing, Ross Hansen hoped to work with him to save the company, and gave him a business proposal. He was making around $170,000 a year at the time of the bankruptcy filing.

UPDATE 2 March 9, 2018 2:25PM: Ross Hansen stated at the 341 hearing that silver storage and lease statements were handled by the legal department, consisting of Amelia Swan and Greg Fullington, and that they left in October, 2015 (although Mr. Fullington reportedly worked at NWTM through 2017). In 2014, Mr. Fullington was aware of at least one order where the order was not shipped as of the "drop dead" date (the date at which the Consent Decree required NWTM to immediately refund money if the order had not yet been shipped), and Mr. Fullington was aware of at least one customer who felt that NWTM was "using [his] money as float" (again, 2014). After hearing of those orders, he became the Acting Chief Financial Officer of NWTM for nearly a year. He supervised Amelia Swan, who handled at least 50 serious customer complaints, many of which involved the "drop dead" date being reached with no immediate refund being given as required by the Consent Decree.

March 6 Hearing Audio

March 7, 2018 1:45PM
Thanks to a helpful reader, I now have the March 6, 2018 hearing audio online. And the infamously poor, but still useful, computer-generated transcript.

The hearing was about the ability of NWTM to sell dies (with actual ownership set for a separate hearing).

Calvert: "We have in excess of 400,000 dies"

March 6, 2018 6:35PM
According to an E-mail Chapter 11 Trustee Mark Calvert sent a customer, "Just to put this in perspective we have in excess of 400,000 dies."

So Ross Hansen was correct (see my recent "How Many Dies" post below). So where are these dies? Is Medalcraft going to get 400,000 dies for $750,000?

$350 to Get Dies Back?

March 6, 2018 6:45PM
About a year and a half ago, Judge Alston ordered that NWTM could return the dies for a customer. Apparently, they have still not done so.

The piece that is more newsworthy, though, is that Chapter 11 Trustee Mark Calvert told the customer that "Also there is a cost to research this and find your dies and ship them to you. Not sure what the cost is but my guess is that it is in excess of 250.00 maybe as high as 350. Are you prepared to pay this amount?"

The Trustee's attorney, Mike Gearin, told the customer that this was a mistake (apparently since it was already handled in a motion). This, of course, is horrendous: they have had a year and a half to ship the dies, but have not, with an imminent sale. However, the obvious implication here for other customers is that Calvert is going to try to gouge you if you request your dies back (treating this as a profit-making endeavor of some sort, rather than a return of property that does not belong to NWTM).

UPDATE March 7, 2018 9:30AM: In a recent agreement, NWTM and a customer agreed that the customer would pay $18,000 for 60 dies ($300 each). So it seems fairly clear that NWTM is willing to let customers "pay to play" to get their dies back. It is interesting that both the customer and NWTM still assert ownership of the dies.

February 9 Hearing Audio

March 5, 2018 5:55PM
I have obtained a copy of the audio to the February 9, 2018 hearing.

You can download the audio (4 hours, 30MB), and/or a very imperect computer-generated transcript. The transcript is barely readable (as it was computer generated; true transcriptions are quite costly), but can be useful if you are looking for something specific.

Oops!

March 3, 2018 8:35AM
Yesterday, Chapter 11 Trustee Mark Calvert filed a simple motion requesting that the Medalcraft Asset Purchase Agreement (APA) be changed slightly. As a reminder, Medalcraft is the stalking horse bidder for the mostly-Medallic assets, whereas the mostly-NWTM equipment is being auctioned separately.

One of the changes is that "The third sentence of section 7.8 commencing with the word "Notwithstanding" and ending with the word "(Trust)" is deleted."

It looks innocuous. So what was removed? It removed "Notwithstanding the foregoing, Gary Anderson, Investment Trustee for RNO Financial/Eureka House of Metals (Trust) may assign all or a portion of its rights and obligations under this Agreement to any subsidiary of Gary Anderson, Investment Trustee for RNO Financial/Eureka House of Metals (Trust)." Major Oops!

From the looks of it, the attorneys (who get paid up to $900/hour) created an APA for Gary Anderson (who was supposedly buying the entire company, not just the Medallic portion, as a going concern). When Medalcraft made an offer, the attorneys then modified that APA to remove NWTM assets and have Medalcraft as the buyer, but forgot to remove the section specifically giving Gary Anderson rights to assign the contract to himself. I'm sure a court would not have allowed that, understanding that it was an error, but imagine the nightmare if the Medallic assets were sold to Medalcraft and Gary Anderson got to assign all the assets to himself?

I wonder if this will have any bearing on the class action lawsuit about the WARN Act. If Gary Anderson's name appears in a document used to "slice and dice" the NWTM assets into two categories after the company shut down, it certainly suggests that Gary Anderson may have entertained the thought of terminating employees and using the assets separately, or perhaps paring down the company to the most profitable pieces.

And yes, I'm sure the attorneys are billing to pay for their time to carefully create an amendment that doesn't mention Gary Anderson's name and clearly refer to the fact that they made a major blunder. Just like they and Calvert billed for their time fixing the major accounting errors they made with the assets being returned to customers.

Class Action Response

March 3, 2018 9:30AM
Chapter 11 Trustee Mark Calvert has responded to the class action lawsuit alleging that he violated the WARN act (which requires 60 days notice of mass layoffs in certain cases).

Responses to complaints in lawsuits usually do not have much useful information in them. A few pieces of information that were in there, however, include:

"Trustee denies that Defendant employed 100 or more employees (exclusive of part-time employees) 60 days prior to December 29, 2017."
"Plaintiff’s claims are barred in whole or in part by the “faltering company” exception to the WARN Act. See 29 U.S.C. § 2102(b)(1)."
"Plaintiff’s claims are barred in whole or in part by the “unforeseeable business circumstances” exception to the WARN Act. See 29 U.S.C. § 2102(b)(2)."

It will be interesting to see how NWTM did not employ 100 or more employees 60 days prior to December 29, since Mark Calvert certified (p46) under penalty of perjury that NWTM had 116 full time employees as of October 31, 2017, and that only 4 employees were added/terminated that month.

The "faltering company" exception is the one that it was expected that Calvert would use as a defense. In general, it allows companies that are looking to secure financing to forego the full 60 day notice, if providing notice would have "precluded the employer from obtaining the needed capital or business". According to this source, "courts have held that it is not available in the event of a proposed sale of the company in question". The law also states "the employer must give as much notice as is practicable."

UPDATE March 4, 2018 7:40AM: Another reference point on the number of employees is that there were 113 employees when Gary Anderson (the first potential buyer with empty pockets) threw the pizza party, 19 days before Calvert decided to shut down the company. Also, for the curious, the "100 employees" that the WARN Act refers to is the number of employees at the company (not the number of employees that are laid off).

How Many Dies?

March 2, 2018 4:50PM
I have been wondering how many dies NWTM owns, owned, is holding, and was holding.

The official bankruptcy inventory that Chapter 11 Trustee Mark Calvert filed on May 10, 2016 references about 700 individual dies (some are coins referencing the die code, others may be actual dies), with a total of about 550 unique dies. The die codes are in a format "M 26 99" (a letter from A to M, followed by 2 1-2 digit numbers). This allows for roughly 30,000 dies (but likely less) coded this way (there were also a handful of dies using a dated coding system, such as "2005-186").

Ross Hansen on May 27, 2016 testified that 15,000 Medallic dies were shipped to Tomball, but the Trustee disputes that there were any Medallic dies in Tomball.

In 2009, a security agreement (p84) refers to "210 Shelves of Dies" and "2 Cabinets of Coining Dies". If the shelves held 100 dies each (this article says that a "drawer" can contain 100 small dies), that would be roughly 20,000 dies.

At the May 27, 2016 hearing, Ross Hansen also testified that Medallic had 400,000 coining dies. Mr. Hansen had previously stated that there were about 400,000 dies in Dayton in the Creditors' Meeting (341 Meeting) on May 11, 2016 (per the questioning, that should have referred to NWTM dies, but was likely referring to Medallic dies).

An image shows what appears to be 10,000s of larger dies stored on shelves (which is separate from the ones in drawers).

Ross Hansen also stated at the May 11, 2016 Creditors' Meeting that there were about $2M-$4M of dies in China, stating that there are "tens of thousands of dies" at the two companies in China.

I have not seen any court documents where Mr. Calvert has clearly stated how many dies there are (or claimed that some were missing or lost). Some dies may have been included in the Graco/Tomball sale. But what has happened to the 10,000s of dies in China, and the estimated 20,000-400,000 dies in possession of NWTM? How can creditors determine if $700,000 is a reasonable offer if they have no clue how many dies NWTM has?



UPDATE March 4, 2018 7:35AM: I have heard that the dies in the "M 26 99" format are dies that were created by NWTM (cabinet-drawer-item), whereas the dies in the "2005-186" format are dies that came from Medallic.

Monthly Financial Report

March 2, 2018 4:10PM
Yesterday, Mark Calvert filed the January, 2018 Monthly Financial Report.

On page 47 ("Significant Events and Case Progress"), which is usually where the most important information is found, there is little new information. The last paragraph sums it up: While the Trustee believed in the potential of the company, the deterioration in the monthly sales while in bankruptcy resulted in insufficient cash flow to remain a going concern. The Trustee did not want to close the business he was forced to do so based upon the performance of the business, no going concern buyer and inability to obtain additional advances on the DIP Financing facility.

Die Ownership Fight Update

Look for 'not shipped, archived' on receipt

March 2, 2018 2:05PM
In May, 2016, a creditor filed a motion with the court to compel the Trustee to return his dies. His basis was just that 'The invoices ... clearly and unambiguously stipulate: "Not shipped, archived @NWTM facility."' The Trustee later filed a motion to return the dies to the customer, stating that the customer included "proof of ownership" and that the "dies were purchased by [customer] and are not property of the estate." At the Trustee's request, the Judge ordered that "To the extent that the Trustee determines that there are additional coining dies that are not owned by the Debtor, the Trustee may, without further order of the Court, return them to any individuals or entities establishing an ownership interest in such coining dies;" Therefore, the Trustee seems to have set a precedent that anyone with "not shipped, archived at NWT Mint", "NOT SHIPPED, TO BE ARCHIVED @NWTM FACILITY" or similar text on the invoice is the owner of their dies, and should receive them.

Die Ownership Fight

March 2, 2018 11:05AM
Chapter 11 Trustee Mark Calvert is seeking court approval to sell dies along with other assets of NWTM. Calvert claims that customers do not have an intrinsic Intellectual Property interest in the dies, and that even if they do, they hold no such interest in the dies themselves. In other words, NWTM could sell the dies just as they could a poster that they do not hold a copyright to.

This is a separate issue from the question of whether dies are owned by NWTM or the customer. The answer to that question seems to vary customer-to-customer, as some customers paid extra to own the dies, while most or all paid for the creation of the dies. The NWTM/Medallic websites have stated that the dies belong to NWTM, so presumably only customers who were somehow promised ownership of the dies would get to keep the physical dies.

The New York Numismatic Club counters with a different opinion on the copyrights. They point out that the copyright law changed in 1978, which in some cases may give rights to different parties. They suggest that it may be the artists, not NWTM, that own any copyright rights in the artwork in some of the dies (and points out that NWTM has not made an attempt to contact the artists, or their heirs in the case of artists who have died since creating the works, and therefore not giving them the opportunity to object to the sale). It also points out that NWTM promised that the dies would stay in the United States (making it less likely that they would be lost or counterfeited).

February 9 Hearing

February 28, 2018 1:15PM
I had someone request a transcript of the February 28, 2018 hearing.

Unfortunately, I do not have a copy of a transcript for the hearing, or audio for it. My understanding is that the Western District of Washington requires audio CDs to be picked up in person. Transcripts can be ordered, but are usually very costly if ordered within 3 months (after that, if someone has ordered a transcript, it can be obtained through PACER, much less expensively). This is especially problematic with this hearing, which I heard lasted more than 4 hours -- which means that it would be time consuming to listen to the audio, and more expensive than most transcripts.

If I do get a copy of the audio and/or transcript, I will be sure to post it here if possible.

UPDATE March 5, 2018 4:55PM: I have received a copy. You can download it here, or a very imperfect computer-generated transcript.

Inventory Error?

February 25, 2018 6:45PM
An eagle-eyed reader took a fresh look at the inventory that Mark Calvert filed in May, 2016 in the bankruptcy schedules. In it, he noticed:

Aub WarehouseFinished Goods2.75 High Relief Copper Medallion, Fully Gold Plated (3-5 Mil) - KavliFoundation Nanoscience Award Average Cost$666.00
Aub WarehouseFinished Goods2.75 High Relief Copper Medallion, Fully Gold Plated (3-5 Mil) - KavliFoundation Astrophysics Award Average Cost$666.00
Aub WarehouseFinished Goods2.75 High Relief Copper Medallion, Fully Gold Plated (3-5 Mil) - KavliFoundation Neuroscience Award Average Cost$666.00
Aub WarehouseFinished Goods2.75 High Relief Approximately 12 Troy Ounces .999 Gold Medallion - KavliFoundation Neuroscience Award Average Cost $1,020.00
Aub WarehouseFinished Goods2.75 High Relief Approximately 12 Troy Ounces .999 Gold Medallion - KavliFoundation Nanoscience Award Average Cost $1,020.00
Aub WarehouseFinished Goods2.75 High Relief Approximately 12 Troy Ounces .999 Gold Medallion - KavliFoundation Astrophysics Award Average Cost $1,020.00

The last 3 entries are for gold medals worth about $15,000 each. However, they show up as being valued at $1,020 each. The first three are for copper medals, with a melt value of nearly nothing.

My guess is that the $1,020 (and $666) is what NWTM was paid in addition to the gold (and copper), with the metal customer supplied. However, this raises the questions: were these medals in inventory (and if so, who owned them)? And if they were owned by NWTM, why were they valued at about 7% of their actual value? And if owned by the customer, how could the medals have any value as inventory?

UPDATE February 26, 2018 8:30AM: I am now guessing that the inventory was referring to the dies, not actual gold medals. That would explain why there was one of each type of prize listed. This doesn't fully make sense, of course, as Kavli has pointed out that the dies belong to them (the NWTM invoice stated "dies will become the property of Kavli Foundation upon full payment of the project"). If these were the actual Kavli medals, they would have been made with Kavli's missing gold, and would be the property of Kavli and would have been returned to them (which appears not to be the case). The latest information suggests these were actual medals, likely samples (note that it is likely there would be 4 dies: 3 unique for one side, and one common to all three medals).

UPDATE March 2, 2018 1:55PM: Docket 728 helps answer this question. In it, the Judge orders that the Trustee "may return the four (4) Coining Dies purchased by the Kavli Foundation". Therefore, I see no other possibility than the 6 inventory entries above representing actual coins that are or were in possession of NWTM.

More About the Anonymous Letter

February 25, 2018 11:10AM
I have heard from a number of people regarding the anonymous letter that was apparently from an NWTM employee.

One person suggested that it was actually written by Ross Hansen. I have to admit, that thought did cross my mind when I first read the letter. However, I do not believe that he would write such a letter: if it could be proven that he wrote it, I imagine it could be very damaging to the criminal investigation.

The consensus from employees seems to be that the letter could have been written by an employee, but it differs from what the known employees experienced. I sense that the employees are trying to get the idea across that while it is possible much of the information in the letter is true, some is not, and they cannot confirm most of the allegations, and therefore the letter should be taken with a grain of salt.

Several employees have pointed out that NWTM did continue to make new products after the bankruptcy (perhaps not as many as before, but it was making products). This conflicts with the anonymous letter, which stated "under Mr. Calvert there has not been one new product added to the inventory." I often get anonymous information, and to me, when one piece of information from an anonymous source appears untrue, it always casts doubt on the rest.

So my hope is that whoever wrote the letter will contact me (via the anonymous tips page or the E-mail address above) with more details. For example, any information on bullion sold in February, 2017 would be helpful.

New Tips?

February 24, 2018 11:00AM
Remember, I have a page where anyone can leave anonymous tips.

If you have any information about accounting issues, know of any accounting statements that aren't public but should be, or have any other information about any problems at NWTM, I would be happy to hear from you. You can attach files if desired. You can also E-mail me (address above at 'Contact').

$1M Accounting Error?

February 24, 2018 10:50AM
In the letter from the anonymous employee, I paid particular attention to this: "[The room that held NWTM's gold and silver online coins and some bullion products] was completely liquidated last February".

So I looked at the accounting records (those are the monthly balance sheets and income statements; details on cash receipts can be found in the monthly financial statements at the NWT Documents page). I didn't see anything that pointed to large sales of bullion in February 2017. The inventory went down $1M, but that's due to something else. The monthly financial reports show a number of payments from A-Mark Precious Metals (a bullion wholesaler), but nothing suggesting a large single purchase, aside from "Core Operating Sales" about $300K higher than normal.

But I did discover something very interesting: what appears to be a $1M accounting error. Specifically, the value of the inventory went down from $3.1M to $2.1M ($942,332). In the same month, an "Inventory Brass-Copper Adjustment" of -$938,844 appeared as a loss related to restructuring.

Apparently, there was a lot of inventory that was listed as copper, but was actually brass. Brass is a copper-zinc alloy, which one NWTM page shows as sometimes being 75% copper, 20% zinc, and 5% tin. In February, 2017, copper was about $2.75/pound, zinc was about $1.30/pound, and tin about $9.00/pound. Let's assume that the brass inventory was really a base metal and worthless. $938,844 of copper in February, 2017 would have been about 340,000 pounds, or 5,400,000 ounces. If it was truly brass, which is normally at least 50% copper, we would be dealing with over 20 million ounces of metal that was mis-classified.

What makes this even odder is that the original inventory (docket 222-3) only had about $50K of inventory with "copper" in the description. It also had about $375,000 of inventory listed with "brass" in the description.

Maybe I'm wrong, and something else caused this. But what else could cause a $942,332 reduction in inventory, while also accounting for an "Inventory Brass-Copper Adjustment" of -$938,844?

Anonymous Employee Speaks Out

"Mr. Calvert is a Dishonest Bully"

February 24, 2018 10:15AM
Yesterday, someone claiming to be an ex-employee of NWTM filed a letter with the court anonymously.

The employee wrote anonymously for fear that he would be sued by Mr. Calvert. It states that before the bankruptcy, NWTM would produce hundreds of new, innovative products each year, but that after the bankruptcy not a single new product was added to the inventory. It alleges that Mr. Calvert told employees that they were all guilty of running a Ponzi scheme, and that he bragged that he "fixed it" so that NWTM owner Mr. Hansen would go to jail, and that as Trustee he could order the FBI to arrest employees.

The letter goes on to allege that Mr. Calvert sold metal that "obviously belonged to [NWTM] customers," and that some coin dealers left with boxes of metal "with little or no accounting." The author claims that a room full of gold and silver coins was liquidated last February, and sold at a deep discount. This piece is especially interesting, as I do not recall seeing any mention in court documents of what ever happened to the NWTM-owned precious metals. And given that Mr. Calvert shut down the bullion portion of the business immediately, the sale of what bullion was present would be outside of normal business operations, which often requires court approval. The balance sheet shows that "Inventory" went down from $3.1M to $2.1M between February and March of 2017 (the accounting does not distinguish between regular inventory and bullion). I'll write about that in a separate post.

The author of the letter also states that he believes Mr. Calvert never intended to save the company, just to stay long enough to burn through the money. That is an opinion, of course, but one that a number of employees have shared with me.

Finally, the author alleges that Mr. Calvert has thrown away many of the recent accounting records.

Please note: It is important to remember that these allegations were written anonymously, and certainly cannot be assumed to be true. However, given the recent concerns over accounting (and the gross accounting errors I previously discovered), some of these allegations should not be easily dismissed. UPDATE February 25, 2018 11:15AM: NWTM employees have expressed concern that at least some of the information contained in the letter may not be true. Please see my post above ("More About the Anonymous Letter") for further details.

Creditors Speak Out

February 13, 2018 2:05PM
Two members of the Unsecured Creditors' Committee (UCC), one current and one former member, filed documents (separately) with the court last week, speaking out against Trustee Mark Calvert and the attorneys in the case.

This saga starts with a mysterious letter that a creditor referenced in an objection to the expense applications in September, 2017, asking the court to publish the letter and offer any comment or clarification. The Judge asked about the letter at the hearing, and Mr. Gearin (the Trustee's attorney) pooh-pooh'ed it, saying that it was just a letter drafted by NWT Mint owner Ross Hansen's attorneys, and that the UCC wanted to go ahead with a plan concocted by Ross Hansen and remove the Trustee. And that "I don't think it went anywhere." Then Mr. Northrup, the attorney who is paid to represent the UCC, said that Ross Hansen would "fill the atmosphere with allegations and claims about this case" and "this letter I think was an attempt by [Ross Hansen] through [a co-chair of the UCC, who submitted the letter to Mr. Northrup] to get an alternate plan for the case to the committee so the committee could support it."

After the Judge heard those answers from Mr. Gearin and Mr. Northrup (see the full explanations in the hearing transcript), he was satisfied. But what the attorneys neglected to say is that the co-chair of the UCC sent that letter to Mr. Northrup, requesting that he seek removal of the Trustee, and if Mr. Northrup refused, he was to file the letter with the court. The letter did not include any alternative plans that may have been "concocted by Ross Hansen". Of course, Mr. Northrup and Mr. Gearin likely have a different version of the story, but will it reconcile with what they told Judge Alston? And why did Mr. Northrup never file the letter, and how did Mr. Gearin get a copy?

Then, in a separate document filed with the court, a member of the UCC requested the ability to be able to file confidential documents provided by Chapter 11 Trustee Mark Calvert, including inventory and accounting sheets. The purpose was related to matters of accounting and accountability with respect to the immediate needs of the creditors. Reading between the lines, the implication is that the UCC member is aware of accounting issues that creditors should know about. At the hearing on February 9, however, the Judge reportedly said that he could not waive the confidentiality agreement, as it is a private contract. Given the serious accounting errors I discovered from public documents (regarding the precious metals inventory -- see my "Accounting Nightmare" posts of August 23-26, 2016), I would not be shocked if there were other serious accounting problems.

Trustee Missing Metal?

February 13, 2018 7:35AM
I had someone ask me for a copy of the inventory of customer-owned precious metals. Such a simple question: Chapter 11 Trustee Mark Calvert was required to file a list of the NWTM-owned inventory (Schedule A/B Part 5), a list of customer-owned inventory (Form 207 Part 11). Between those two inventories, all precious metals physically located at NWTM as of the bankruptcy should be accounted for.

In the words of Judge Alston: "And yet."

At the Creditors' Meeting on May 11, 2016, the Trustee stated "All of the customer inventory that we've identified, we have in a specific list, by location. Here it is." (it is unclear who he showed it to). In the Trustee's recent status report, he touted "The Trustee and his staff conducted a detailed and comprehensive physical inventory of all precious metal held by the company." So it *should* be simple.

Calvert wrote in the bankruptcy schedules "Debtor stored personal property for certain customers, Trustee has commenced a detailed storage inventory which will be provided to creditors when completed." To my knowledge, this was never provided to creditors. The closest was on June 28, 2016, when the Trustee filed a motion to return stored metal that was marked as belonging to a specific customer. He included Exhibit A ("Customer Owned Inventory to Return, June 2016"). But this is not a list of all precious metals not listed in the NWTM-owned inventory. The big clue here is the date, showing that this was prepared after the original customer-owned inventory (finished May, 2016). And it is in a very different format than the NWTM-owned inventory (e.g. showing ounces of metal instead of value, showing details of metal rather than a generic description).

The problem is the missing metal: metal that should have appeared on one of the two lists, but did not. On August 7, 2017, Calvert filed a new motion to return customer metal. It identifies:

  • 2 100oz Pan American silver bars that "were located during the initial inventory conducted by the Trustee, but were omitted from the Initial Stored Inventory Motion as the Trustee attempted to make contact with [the customer]." This shows that the Trustee knowingly had precious metals that were not in either the NWTM-owned inventory or the published customer-owned inventory.
  • 500 1oz ASE's (a monster box), that "Subsequent to the initial inventory, the Trustee discovered a “monster box”..." So this is a monster box of ASEs that was missing from the original inventory.
  • A set of ingots, that was "inventoried and secured" after being told that the area it was in belonged to Ross Hansen. Later, after Ross Hansen testified that he was broke, NWTM revisited these items. They appear to never have made it to a published inventory.
  • 2 100oz silver bars which were "located during the Trustee's initial inventory" along with a receipt. No such bars appear to be in the original inventory.
So it shows that there were at least 4 100oz silver bars that the Trustee knew about, but appear to have never listed on an inventory filed with the court. It also shows that there were some items the Trustee believed were owned by Ross Hansen that appear to have never been included in an inventory filed with the court. And it shows what appears to be a monster box of silver eagles that they missed in the original inventory. That's around 1,000oz of silver, all told. That we know about.

So this begs the questions: How much other metal was not listed in the inventories? And why did Calvert hide the customer-owned inventory?

Hearing Today

February 9, 2018 8:35AM
There will be a hearing today at 9:30AM PST (12:30PM EST) on the highly contested motion to auction/sell NWTM's assets.

The complaints range from a number of creditors who filed invalid complaints (in response to getting notice of this motion in the mail, they wrote the same letter they would have written in response to *any* court letter, about being upset about the bankruptcy), to Ross Hansen objecting that some of the property belongs to Medallic Art Limited Partnership. There are also several creditors who are objecting to their dies being purchased by another company (NWTM's policy seems to be that NWTM owns the dies, although there appear to be a number of cases where customers either paid extra to own the dies or were promised that the dies belonged to them). And there is more. So this should be a very, very interesting hearing.

Trustee to Liquidate for $2.6M

February 9, 2018 8:25AM
The Trustee has just filed a motion saying that he has accepted "stalking horse" bids from two companies for two sets of assets. A stalking horse bid means that the company making the offer must pay that amount, unless there is a higher bidder (and in exchange for guaranteeing a sale, the stalking horse bidder may get a small amount of money if they are outbid).

In this case, Industrial Assets Corp. and Maynards Industries USA LLC would be purchasing the majority of the NWTM assets for $1.95M. Medalcraft Mint, Inc. would buy the Medallic name, website, customer lists, dies, and related items for $700K. The companies would provide a combined deposit of $295,000.

Compendium of Significant Event Reports

February 7, 2018 1:20PM
Given what has been going on, I felt it would be useful to put together the monthly "Significant Event" and "Case Progress" reports from the financial statements. The monthly financial statements are all available here, but most people don't go looking through the NWTM documents section of my site.

To make it easier, you can download the compilation of "Significant Event" and "Case Progress" reports.

December Financial Report

February 7, 2018 12:20PM
The December Financial Report was just released.

It shows (p44) that as of December 1, 2017 there were 114 full time employees, with no part time employees. It shows that at the end of the month, there were 18 full time employees left (the "skeleton crew").

The "Significant Events" page (p45) states that Chapter 11 Trustee Mark Calvert decided to shut down the company on December 26, 2017. That was the first business day in the week that employees were asked to take off (originally with pay, then using vacation time). Mr. Calvert expects to "close down" the company by the end of February.

Mr. Calvert states "While the Trustee believed in the potential of the company, the deterioration in the monthly sales while in bankruptcy resulted in insufficient cash flow to remain a going concern." Monthly sales clearly fell within 2-3 months after the bankruptcy. They started at $1.6M-$1.7M in April-May, 2016. However, June-July, 2016 sales averaged $1.06M (the 2nd half of 2016 averaged a similar $1.08M), while sales for 2017 averaged $966K (including the partial December month), just 10.6% less than the 2nd half of 2016.

I'm not an accountant, but I have trouble understanding that explanation, given that the monthly sales deteriorated within the first 3 months after the bankruptcy. If it was doomed to failure (losing money every month), why was there so much optimism in the report filed with the expense applications a few months back?

More About Christmas Week

February 2, 2018 2:25PM
The week of Christmas -- December 25, 2017 through December 29, 2017 -- was the last week that NWTM employees (except for a skeleton crew) were paid for (or will be paid for -- some are still waiting for their final paycheck). I am still trying to piece things together, but there is a lot more to that week than I had at first realized.

It goes back to sometime around December 7 to December 15, when someone in management told NWTM employees that they would get Christmas week off with pay (reports are conflicting as to who said it; I have heard the comment attributed to 3 different people). That appears to have led to the December 21, 2017 meeting Mark Calvert had in Dayton, NV. He explained that the court would not allow him to pay employees for time off without using vacation time (which certainly makes sense). He said that anyone with accrued vacation time would take the week off, and get paid using vacation time (those without enough accrued vacation time would not get paid, unless their supervisor authorized them to work that week).

It was clear that Calvert was not saying that the company would shut down before the end of the year: he reportedly ended the meeting by saying that the first day back to work would be January 2nd, and told employees that New Years' Day would be a paid holiday.

So unbeknownst to me at the time, there was just a skeleton crew working from December 26 through December 29, with most employees at home using vacation time. The first letter was apparently given to the few employees present at the Dayton office on December 28. So it sounds like many employees did not get written notice of the closing until after the company was shut down. The second letter was mailed, dated December 29, received by employees in early 2018, after the business was shut down. Interestingly, it added a phone number for a contact, which the first letter omitted (a phone number appears to be required in a WARN Act notice).

Confusing things is that NWTM is still running, despite letters said they were forced to "close the company". Confusing things even further is when people were terminated. The first letter says December 31. The second letter says December 29. One employee reportedly was told to file for unemployment retroactively to December 26. But if the employees were terminated during a week where they were instructed not to work, wouldn't the date of termination effectively be their last day of work (December 22)?

Diane's Request Denied

February 1, 2018 4:10PM
On December 8, I reported that Diane Erdmann (long-time girlfriend of NWTM owner Ross Hansen) filed a motion to receive items that had been seized from her home shortly after the bankruptcy filing.

The Judge has denied her request.

Class Action Filed re: WARN Act

February 1, 2018 1:05PM
A class action lawsuit (adversary proceeding) was filed against NWTM yesterday by an employee, on behalf of all NWTM employees.

The lawsuit alleges that NWTM violated the WARN Act in firing employees at the end of December.

NWTM Professional Expenses - Now Searchable

February 1, 2018 9:50AM
I have gone through the 4 expense reports filed back in September, 2017, extracted the data, and combined them into a webpage at http://about.ag/NWTExpenses1.htm (warning: this is a very large (2MB) webpage).

It is not 100% accurate, due to the many issues in converting 4 different types of expense reports (some of which the text cannot be directly extracted) into a single document. However, it should be useful for a number of purposes.

NWTM Bankruptcy Professionals

February 1, 2018 8:40AM
I am in the process of going through the expense reports. I discovered that there are at least 71 professionals that have been paid for working on this case so far (many have only done a small amount of work, such as answering a question in an area that they are an expert at). I have included their position when it was clearly reported in the expense reports. Note that Mark Calvert is listed twice (one in his role as Trustee at $400/hr, one as an account for his company Cascade Capital at $350/hr). Also note that some hourly rates may have changed (e.g. due to raises). This does not include CEO Bill Atalla, whose hourly rate was roughly $200/hr (including the $100K severance).

UPDATE: To clarify: Mark Calvert presumably only bills for one of those roles for any work he does (e.g. if he does accounting work, he would bill through Cascade Capital, for typical Trustee duties he would bill as himself as Trustee). Mr. Atalla is presumably owed the $100K severance due to the contract that he and NWTM signed, that the court approved.

CompanyNamePositionHourly Rate
K&L GatesJ. D. Almquist$900.00
K&L GatesD.B. Greenswag$870.00
K&L GatesJ. Scheuermann$815.00
K&L GatesS.H. Coonrod$705.00
K&L GatesM. S. Kelley$650.00
K&L GatesJ. Mobley$610.00
K&L GatesL. L. McClellan$595.00
K&L GatesN. G. Spiliotis$545.00
K&L GatesR. M. Tausend$540.00
K&L GatesM.J. Gearin$525.00
K&L GatesJ.C. Bjorkman$520.00
MNG&DGeoffrey Groshong$520.00
K&L GatesS. Megally$515.00
K&L GatesR.G. Masters$495.00
MNG&DMark D. Northrup$490.00
MNG&DTeresa H Pearson$475.00
K&L GatesC.M. Wyant$460.00
K&L GatesP. E. Soskin$450.00
K&L GatesP. K. Jacobson$450.00
MNG&DJohn Knapp$450.00
K&L GatesD.C. Neu$430.00
K&L GatesM.S. Filipini$425.00
IndividualMark CalvertTrustee$400.00
K&L GatesL.E. Steidl$395.00
K&L GatesS.R. Phillips$390.00
K&L GatesD. P. Hurley$385.00
K&L GatesC. C. Smith$380.00
K&L GatesS.E. Selin$350.00
Cascade CapitalMark CalvertPrincipal$350.00
Cascade CapitalCharles GreenSenior$350.00
K&L GatesJ. H. Kim$345.00
K&L GatesB. T. Peterson$335.00
K&L GatesR. W. Edmondson$325.00
K&L GatesR. J. Groshong$315.00
K&L GatesD. C. Wolf$300.00
Cascade CapitalChristine UlwinSenior Staff$300.00
Cascade CapitalTod McDonaldSenior Manager$300.00
K&L GatesL. L. Short$290.00
K&L GatesA. E. Gammell$280.00
K&L GatesS.M. Freburg$275.00
K&L GatesT. S. Miller$270.00
K&L GatesJ. M. Connor$270.00
K&L GatesK. Drake$265.00
K&L GatesM. K. Pinch$265.00
K&L GatesK. I. Stockert$265.00
K&L GatesW.J. Miller$265.00
K&L GatesM. C. Perez-Vargas$260.00
K&L GatesM. P. Clark$260.00
MNG&DEmily R Krisher$260.00
K&L GatesK. N. Tibbert$257.14
K&L GatesC. M. Kuffel$235.00
K&L GatesS. A. Smith$235.00
K&L GatesE. R. Whittington$225.00
K&L GatesR. A. Duncan$225.00
K&L GatesD. A. Evans$205.00
K&L GatesD. A. Lentz$205.00
K&L GatesA.M. Graf$200.00
K&L GatesE. Mather$200.00
K&L GatesL. A. Diersen$195.00
MNG&DKalen N Daniels$190.00
K&L GatesT. M. Gracey$180.00
K&L GatesK. P. Wing$180.00
K&L GatesT. S. Milne$175.00
K&L GatesT. Hughes$135.00
K&L GatesG. Hein$125.00
Cascade CapitalJody CanadyAccountant$120.00
Cascade CapitalMajorie ChappelStaff$100.00
Cascade CapitalJessica GilmoreStaff$100.00
K&L GatesK. R. Slavik$95.00
K&L GatesM. H. Hoefer$90.00
K&L GatesM. Bassetti$90.00
K&L GatesV.I. Komar$90.00

How Did NWTM Fail?

January 31, 2018 4:15PM
On April 1, 2016, when NWTM filed for bankruptcy, we knew that it was in really bad shape.

But we quickly found out that while the bullion operations had been doomed to fail for many years, the custom minting operations were vibrant. That's what was going to help make creditors whole. So what happened?

There are a number of possibilities, and it is impossible to pinpoint which one(s) were responsible. Some obvious possibilities include: the bankruptcy spooked potential buyers ("bankruptcy headwinds"), the company was mismanaged, or that an outsider (or even insider) intentionally interfered with operations. I'll be looking into this a bit to see if I can narrow down what happened.

Violation of WARN Act?

January 29, 2018 4:15PM
[I need to add my note as I occasionally do: I have no formal legal training, so everything I write is intended as information only, not legal advice. If you were (or are) an NWTM employee, feel free to use this information, but please do not rely on it to make any legal decisions!]

The WARN Act requires employers with over 100 employees to give employees 60 days notice of plant closings and mass layoffs in most cases.

In August, 2016 Chapter 11 Trustee Mark Calvert's company Cascade Capital performed a liquidation analysis (see Doc 1229 p34) of a conversion to Chapter 7 that specifically set aside $1,011,377 in administrative Chapter 7 claims for "WARN Act" (of which 77% would be paid from money available after liquidating the company). It stated "The 'WARN' Act would apply in this case requiring the Trustee to pay two months in additional salary to all employees at the Dayton facility." So clearly Mr. Calvert is aware of the WARN Act. Heck, he should be: he billed over $4,000 for legal research on the WARN Act! Presumably the 2016 liquidation analysis was on the assumption that a non-liquidation buyer was sought.

So what changed that did not require 60 days notice? According to NOLO, the law covers employers with over 100 employees. There were 114 full time employees at the end of November, 2017 according to the November Financial Report. WARN covers a plant closing or mass layoff, which this should be if it would have been in the 2016 analysis.

Exceptions to WARN include No Notice (temporary employees or strikes, neither of which apply here) or Shorter Notice (natural disasters, faltering company, or unforeseeable business circumstances). The business circumstances were definitely foreseeable (e.g. the September, 2017 financial report and the October, 2017 financial report both stated "If the tight cash flow issues cannot be resolved, the Trustee will need to close the business"). That leaves a faltering company (which applies to plant closings, not mass layoffs): NOLO says "If a company is struggling financially, it can give less notice." But to use that, the company has to be "actively seeking business or money ... that it reasonably believed, in good faith, that giving 60 days’ notice would have precluded it from obtaining the necessary business or money." But why would that not have applied in 2016, but apply now? Would warning employees of a potential layoff have prevented the GoFundMe campaign from collecting the $500,000 deposit?

There is also an rare exception (see 54 FR 16042) that allows liquidating bankruptcy fiduciaries to be exempt from WARN, but that doesn't seem to apply here (it only applies to those liquidating a company, not operating a company, which the Trustee was trying to do).

Were Employees Paid for Final Week?

January 29, 2018 1:40PM
I strive to find the truth, and try to be very careful to report the truth, making it clear when I am unsure as to what is true, regardless of how I feel about the facts.

I received an anonymous tip today suggesting (stating) that some of the information I had previously reported (on January 17, 2018) may have been in error. Specifically, it stated "The employees did receive funds for Christmas week, and the employees were informed when it was coming. Also HR did not send anyone to Cascade Capital, but did allow people to contact Mark Calvert to ask questions."

I heard from three sources (two known reliable sources and one anonymous source) that NWT Mint employees did not get paid for the final week (12/25 through 12/29) on January 12, 2018 as they should have. The part about being referred to Cascade Capital may have come from a high level NWTM employee not in HR, but I was given the name of a Cascade Capital employee (not Mark Calvert) that an employee had been referred to.

If anyone has any information that can confirm or deny whether (and/or when) employees got paid for the last week (12/25 through 12/29), and/or whether they were informed when they would get paid for that week, I would appreciate it (the anonymous tips page also has a link to E-mail me directly if you like).

UPDATE 1: The letters given to employees on December 28 and December 29 stated that employees would be paid for the final week "consistent with NWTM's normal payroll procedures". Unless employees were paid January 12, that appears to have been a lie. Further, Nevada law states "Whenever an employer discharges an employee, the wages and compensation earned and unpaid at the time of such discharge shall become due and payable immediately." That compares with an employee who quits, who must be paid within 7 days, so presumably employees should absolutely have been paid by January 5th for NWT Mint to be compliant with the law.

UPDATE 2: I heard from an employee who did receive payment for the final week, several weeks after the January 12 payroll.

UPDATE 3: I heard from a second employee who said that he was told that he could use his vacation time for the last week and get paid for it, but did not.

UPDATE 4: The general consensus is that: [1] All NWTM employees did or will get paid (not all have been paid as I write this), [2] It looks like none got paid in the time required by law, [3] It seems that most/all got paid AFTER the normal pay period when NWTM told them they would get paid, [4] It seems that vacation time used in the final week likely was treated the same as regular pay (e.g. employees have been or soon will be paid).

The GoFundMe Campaign to Buy NWT Mint

January 28, 2018 7:10PM
I had mentioned in a December 30, 2017 post that there was a GoFundMe campaign by the company that was planning to buy NWT Mint for $10M. Here is a (slightly redacted) screenshot:


I'm not quite sure how NWT Mint would become a museum, not to mention a Public Benefit Trust Museum. Or who would pay $10M for NWT Mint to turn it into a museum. Or why someone with the means to pay $9,500,000 to turn a company into a museum would turn to GoFundMe for the last $500,000 to buy it.

Trustee to Sell Assets

January 28, 2018 6:45PM
Chapter 11 Trustee Mark Calvert has requested the Court's approval to sell the NWT Mint assets at auction.

There have been quite a few objections, including both typical objections as well as a few letters from creditors since this motion was mailed to creditors (who often do not understand the purpose of motions).

One interesting objection is from NWT Mint's owner, Ross Hansen, who put together a group of investors that tried to buy the assets for $1M, which would have allowed the re-employment of some employees and continuation of the company. Hansen makes it sound like Calvert was unwilling to give serious consideration to the offer, and was unwilling to let the investors inspect the premises.

Little News

January 17, 2018 8:40PM
I haven't heard anything official regarding NWT Mint since my last updates.

Unofficially, I have heard that the second potential buyer did not come up with money either.

I have also heard that employees that were laid off have not been paid for their final days of employment. Employees were apparently told that they would get paid for their vacation time, but then later told they would not. Apparently human resources at NWT Mint referred people to Cascade Capital (Chapter 11 Trustee Mark Calvert's company) for answers regarding payment and unemployment. Employees have apparently been instructed to file unemployment claims going back to December 26, several days before the employees were informed that they would be laid off.

If NWT Mint were not already in bankruptcy, they are definitely at a point where I would warn people about financial problems, and not to do business with them. That is quite shocking in a bankruptcy, especially where the Trustee filed very bullish comments just a few months earlier.

News Articles

January 7, 2018 2:45PM
There was an article on Wednesday (January 3, 2018) in the Puget Sound Business Journal discussing the NWT Mint Closure.

There was also a short article on Friday (January 5, 2018) in Nevada Appeal about Medallic (a/k/a NWT Mint) and the potential buyer.

Latest Update on Sale of Company

January 4, 2018 11:40AM
CEO Bill Atalla wrote to me this morning, and said (quoted with permission):

"We met yesterday with our new and qualified buyer. We successfully concluded a purchase agreement. We identified the critical payment milestones which are near term. As those dates are met, I will share with confidence and transparency the details of this transaction. We are talking days not weeks. This could be the partner and funding the great employees of the Mint truly deserve."

More About the Buyer and Closure

January 3, 2018 8:30AM
In Docket 1330, an E-mail from Mark Calvert was added as an attachment. It states (italics indicate a change I made for privacy reasons):

We have been in contract with a buyer for about 7 week.
The signed offer in the APA is for 10 million and a nonrefundable deposit of 500k
He has great plans for the company....but...
The long and short is that the buyer has not been able to fund the purchase price
We have been experiencing smaller monthly operating losses until December
In December we will have a large loss December...

Last week I had a face to face meeting with the buyer and two of his associates in Dayton. And while you could have asked a few more questions and confirmed his honesty maybe better than me, I concluded he was honest and truly anticipated receiving his funds of [over $10 million] in the next few days... But, he has been telling me this since November... and it has not happened as of yet... Of the [over $10 million] 10 million was allocated to the purchase of the business.
The fact of the matter is I can not wait any longer....with the loss in December I do not have sufficient working capital to remain a going concern. I do not have enough cash to pay your taxes or the rent. Thus I have drafted an letter to all employees we are closing the business effective 12/29/2017. So... it may still happen the buyer may get his money.... but..... I am forced to close the business. ...
We have a few bottom feeder buyers that have been kicking around and waiting to buy assets that we are in discussion with.. We will likely accept one of their offer for the heart of the company, the Medallic name, archives, dies, Wisconsin operations and customer base... The offer might be submitted to the court later this week. The offer is more of a liquidation offer than a going concern offer. The balance of the equipment will likely be auctioned off.
Mike Gearin has reached out to Martin Smith on the conversion of the case to a Chapter 7
I am sorry, the buyer did not come through for the employees and the estate...
So, that is the status... Please feel free to call with any questions. Mark

Truth to Come from CEO

January 1, 2018 8:30PM
CEO Bill Atalla E-mailed me today, writing (and giving me permission to quote): "I appreciate your ongoing reporting. I’m sure I can add more factual content while deleting speculation and eliminating employee’s (mostly former) uninformed opinions. I know you are much like me in that dealing in the truth is the backbone of individuals with integrity. Let’s bring about.ag back in line with what is really happening at the Mint. After all, there are over 100 families future at stake. They deserve accurate and respectful reporting."

As many of you know, the truth goes to the core of what I do with the about.ag website. With the bankruptcies, I do report speculation or unverifiable information when I feel it is in the best interest of my readers. I expect to speak with Bill by the end of the week for an update on what is going on, and will be sure to report what I find out here.

January 8?

January 1, 2018 3:30PM
I've been hearing more and more about January 8, 2018, but I am not quite sure of the significance.

I heard a report that there was supposed to be a company meeting on January 8. It is unclear if that was scheduled before or after NWT Mint closed.

I have also heard a report that there is a chance that a buyer could emerge, if they can come up with money by January 8. This seems to coincide with an anonymous tip that I received suggesting that something positive might transpire by around January 8.

So while NWT Mint is officially closed, the scuttlebutt is that there is something still in the works that, if things go well, might allow NWT Mint to keep running. It sounds like a long shot, but there is at least this bit of hope (for creditors, NWT Mint employees, and future potential customers of NWT Mint).

From "Very Bullish" to "Closed" in 87 Days

December 30, 2017 9:30AM
On October 3, 2017, Chapter 11 Trustee Mark Calvert filed a document titled "TRUSTEE’S REPORT OF INVESTIGATION AND STATUS REPORT."

Calvert himself wrote "The Trustee and his professionals have devoted every effort to ... recovering as much as possible for the benefit of creditors." He also wrote "The enterprise value ... is approximately $14 million" and "This increase in sales activity provides room for optimism regarding the prospects of the business." and "The Trustee anticipates that the sale of the Company as a going concern or reorganization ... will eventually provide the resources for payment of distributions to creditors." He ends with "The Trustee remains optimistic that the company will grow and will achieve its full potential and if so, will provide a deserved recovery for creditors."

More importantly, Calvert also included CEO Bill Atalla's views of the progress and potential of the company. Atalla forecast that by the end of 2018, NWT Mint would have a value of $20M, and a $60M valuation in 5 years. Atalla wrote "We are on the rise with sales moving in the right direction" and "The outlook for this company is realistically bright" and "I face only a handful of hurdles at this time" and "I am very bullish about Medallic Art."

Less than 4 weeks after his "Very bullish" comment, Mr. Atalla started cozying up to a company that would soon present an offer to buy NWT Mint. Two months later, that company would fail to produce the $10M or so, even after making a brief attempt to raise funds through a short-lived GoFundMe campaign.

And now NWT Mint is closed, less than 3 months after incredible optimism. I now hold Judge Alston in higher regard, as he was the one who wrote that he was "deeply unhappy" with the report.

NWT Mint Closed

December 29, 2017 4:45PM
I have heard from several NWT Mint employees, several who got letters, several who have not. So sadly, it appears that at least some NWT Mint employees may be hearing this here first.

Unfortunately, the news is true. I have received a copy of the letter from two sources, signed by Chapter 11 Trustee Mark Calvert. It appears that only a "skeleton crew" will remain. The Mint is being closed because the buyer (reportedly Gary Anderson of Eureka House of Metals, who tried funding the purchase via GoFundMe) could not come up with the money, and other funding could not be obtained.

It states "Thus, effective December 31, 2017, we were forced to close the Company due to the lack of adequate cash to remain a going concern." According to the letter, this likely outcome was discussed at a company meeting on December 21, 2017 in Dayton (although I have heard anonymously that at the meeting employees were told their job would be secure). Most of the two-page letter is information relevant primarily to employees.

December 29, 2017 5:50PM UPDATE: I have heard from another employee who was unaware of this letter. If you have not received it, it may be wise to contact your boss.

NWT Mint to Close?

December 29, 2017 2:15PM
I have heard a report (which I have not yet been able to confirm) that a letter went out to NWT Mint employees that the company is officially closed today, unless funding or a buyer comes forward.

If true, this would likely mean that the bankruptcy would convert to Chapter 7 (which Chapter 11 Trustee Mark Calvert has said would provide no expected return to creditors).

If anyone has more information, feel free to use the anonymous tips page.

Contact Info

December 28, 2017 1:00PM
I had an NWTM creditor ask anonymously: "Can you please list pertinent phone numbers of Calvert, judge, lawyers, etc regarding NWTM. I would like to call these folks and chat about my loss." Since I do not have a way to respond directly, I will include the information here.

Chapter 11 Trustee Mark Calvert's number is (206) 909-3636. The primary attorney for Mr. Calvert is Michael Gearin, whose number is 206.370.6666. The Court has a page with the contact information for Judge Christopher M. Alston.

... and the bad news

December 22, 2017 3:30PM
In October, Chapter 11 Trustee Mark Calvert said that if the business is sold, creditors "should not expect a high percentage of recovery on their claims" and that if liquidated (either selling at liquidation value, or via auction) there would be "very little return to creditors."

Now, in the November, 2017 financial report, he says that if the business is sold the recovery for general unsecured creditors will be "limited if any" and if liquidated would provide "no expected return to ... the general unsecured creditors."

At this point, it would be advisable to look into the possibility of deducting this as a tax loss if you have not done so yet. Specifically, it could likely be deducted as either a capital loss (like a stock going down to $0), or a theft/casualty loss (which has a high audit potential, but often provides a higher tax benefit). I have a page at http://about.ag/TulvingTax.htm that I wrote regarding tax losses for the Tulving Company situation, which is similar in many ways.

The Tulving Company bankruptcy also came to an abrupt halt a few weeks ago, and one of the creditors pointed out that 2017 is the last year to take a casualty loss. So if you do not take it this year as a theft loss, it may only be possible to take it as a capital loss. As a reminder, theft losses like this are not always straightforward (but always worth taking, as it usually provides at least some type of recovery).

Link to Hearing Transcript

December 14, 2017 2:15PM
On Tuesday, I reported on a hearing that was held on October 6, 2017, where the Judge had some fairly negative comments about the Chapter 11 Trustee Mark Calvert.

I said that I would try to post a copy of the transcript; you can find it here.

Judge: I am Deeply Unhappy with [Calvert's] Report

December 12, 2017 2:15PM
On October 6, 2017, there was a hearing regarding the expenses of the bankruptcy professionals. It provides some new (pseudo-)transparency into the case (it isn't really transparent, since the hearings are much harder/costlier to access than standard court documents, but lets us know how the Judge feels).

Apparently, the Judge had requested that the professionals file their fee applications, because he was concerned about the potential expenses. Just prior to the hearing, Chapter 11 Trustee Mark Calvert filed a status report. What was not known is that this wasn't something that was required: he apparently filed it to help justify the expenses.

The Judge pointed out that the fee applications (for roughly $4M) did not include projected fees, which is required by local rules. You would think if you made $525/hour you would remember the local bankruptcy rules for your state.

It was also pointed out that the chair of the Creditors' Committee had been sharing information with Ross Hansen througout the course of the case, and subsequently resigned. This is information creditors need to know, and shouldn't be hidden in a hearing.

The Judge pointed out that there are many Cascade Capital expenses (Cascade is the company of the Trustee) that are really bankruptcy administrative expenses, not accounting. That's an issue because the expenses of the Trustee -- who should be doing that work -- get capped, whereas the other professionals do not have a mandated cap on their expenses. He also pointed out $20K spent on data entry, with no explanation of why it was necessary. The Judge was also concerned that the cap on the Trustee's expenses was not mentioned, and it looked like he was going to try to include $900K of metal returned to customers as distributions (which would increase his cap).

Then there is the expense application of the law firm used by the Trustee, K & L Gates. The Judge said "So, you’re going to need to tell me why you should be paid for pursuing what I thought what was a doctored and phony dispute... you sought to settle a phony dispute and then presented a sweetheart settlement deal and I have denied them both."

The worst was the status report. The Judge stated "You can’t really think that this is an objective report. It is, it is filled with allegations, many of which are very severe, unproven. It contains allegations that you’ve litigated that were not proven. I ruled against you. It contains representations that are not true. ... this is basically a personal attack on Ms. Erdmann and Mr. Ross Hansen. But the balance of it is explaining all your victories and all the great things you’ve done. But there’s zero balance, because you’ve had setbacks. I’ve made rulings against you. The rulings are not on the web site are they?"

The Judge said of the Trustee's status report "there’s a lot of ... patting yourself on the back about all the things that the Trustee has done," and "I was this close ... to saying yank the web site because you are putting improper and inappropriate things on there ... I told you that you were not to put anything on the web site other than just the facts, ma’am. This is not that. This is a vituperative attack on the one hand and on the other hand it is saying how great and how many victories you’ve had without any mention that you’ve had some setbacks ... It’s either, if I can’t trust you to do the web site, then I think the option is to not have a trustee to run the estate. Okay?"

So it seems pretty clear that while the Trustee is bashing Ross Hansen and Diane Erdmann, the Judge believes that the Trustee isn't exactly behaving very well himself.

[I am hoping to post a copy of the transcript online, if I can get permission from the person who kindly sent it to me.]

Diane Wants Her Metal Back

December 8, 2017 8:15PM
Diane Erdmann, de-facto wife of NWT Mint owner Ross Hansen, has requested the return of items seized from their home shortly after the bankruptcy (due to the defamation judgment).

The declation lists the items that were seized, valued at $95,000.

Trustee Wants to Sell NWT by End of Year

November 18, 2017 8:15AM
The Chapter 11 Trustee, Mark Calvert, has filed the October, 2017 Monthly Financial Report. The "Other Information" section of the financial reports typically has the most useful information. The financial reports have lots of numbers, but they are all post-bankruptcy numbers, which aren't nearly as important as pre-bankruptcy numbers.

According to the Trustee, NWT Mint has received a signed asset purchase and sale agreement. This likely means that they have a very serious buyer. The Trustee is expecting to verify the source of funding, and if successful, accept the offer and present it to the Court for approval. He expects to file a motion to approve the sale this month, with a closing by the end of next month.

It does not provide many clues as to how much money creditors might see from this, aside from "a limited recovery."

And I want to add a special "Thank You" to the person who has sent me copies of quite a few important court documents, including this one.

Potential Buyer

October 23, 2017 4:00PM
The Trustee filed the September, 2017 Monthly Financial Report. Exhibit 11 (p47) states:

"The Trustee is in discussions with a potential buyer for the estate and continues to entertain offers for the operating business. The terms are under discussion and we anticipate obtaining a term sheet in the next 30 days. The Trustee objective as of this point is to sell the company to maximize the recovery for the estate and for creditors. Any party with an interest in acquiring the business should contact the Trustee. Total filed claims are in excess of $70 million and the recovery will be limited such that creditors should not expect a high percentage of recovery on their claims. If the tight cash flow issues cannot be resolved, the Trustee will need to close the business and liquidate the assets on terms that will provide very little return to creditors."

Note that only about $40M of the claims are for customers.

Dick Bressler Files $9M Claim for $3M Investment

...Invokes RICO

October 23, 2017 3:40PM
Dick Bressler, who gave Ross Hansen $3,000,000.00 to purchase Medallic Art Company in 2009, and according to the NWT Mint Trustee received approximately $763,000 in distributions from Medallic, recently filed a claim for $9,000,000.00.

In March, 2017, Mr. Bressler signed a Settlement Agreement that would have allowed him a general unsecured $3M claim, with no other claim possible in the case, in exchange for supporting consolidation of NWT Mint and Medallic. The Trustee filed a motion for the court to authorize the settlement, and the Creditors' Committee supported it. However, the judge denied the motion (the consolidation had already been approved, the judge felt that Mr. Bressler did not have the ability to fight the motion, and the judge did not want it to appear that Mr. Bressler's testimony could be bought). The judge appeared to believe that the $3M claim was worth much more than whatever Mr. Bressler would be giving up.

Apparently, Mr. Bressler was upset at the judge. The judge pointed out that Mr. Bressler had not filed a claim, then saying "And the claims bar date has passed, so he's got no claims against the estate." So clearly, the judge thought that Mr. Bressler was not going to be able to have a claim. He was hoping to have a general unsecured claim for $3M, but when that was denied, he decided to put in a $9M claim, stating that NWT Mint violated the RICO act and therefore he is entitled to 3 times his damages.

Mr. Bressler's claim does not seem to state why he feels that his $9M claim should be allowed nearly a year after the bar date, and his negotiations for a $3M claim failed.

AG Gave Blessing to Illegal Activity

October 23, 2017 12:30PM
Please see my page on NWT Mint and the Attorney General for more details. The State of Washington has now stated that NWT Mint's multi-month delays, which had the blessing of the Attorney General due to the Consent Decree, were illegal. And we recently learned that NWT Mint was $35 million in debt in 2008 around the time the Consent Decree was signed. And that the AG ignored complaints that NWT Mint was violating the Consent Decree. You can't make this stuff up!

New Lawsuit Against NWTM and Ross Hansen

October 6, 2017 8:30AM
I have just found out that the State of Washington Department of Financial Institutions Securities Division sued NWT Mint and Ross Hansen in July, for violation of the Commodity Transactions Act of Washington. The lawsuit states "Any commodity transaction that takes longer than 28 days for delivery will fall under the Act unless an exemption applies." According to the State, it appears this provision of the law has been on the books since at least 1997.

The lawsuit by itself is fairly meaningless to creditors: it is asking NWTM and Hansen to stop doing this (it stopped over a year ago), and the State intends to fine each $10,000. However, it contains information that has the potential to shed more light on the situation, as well as where the Attorney General failed. Among other things, it states that between April, 2014 and September, 2014, 70% of the 2,430 orders NWTM took were shipped more than 10 weeks after payment cleared.

Attorney General Completely and Utterly Fooled

... AG Signed Consent Decree With NWT $35M In The Hole

October 4, 2017 3:25PM
[See my page on NWT Mint and the Attorney General for more details]

The Chapter 11 Trustee Mark Calvert yesterday filed a Report of Investigation and Status Report. Most information is already known, but the lengthy report is likely worth a read.

What is shocking, however, is that it confirms the incompetence of the Washington State Attorney General in 2008. In February, 2008, the Attorney General filed a complaint against NWT Mint and Ross Hansen, stating that "Consumers have ... waited months for their orders to arrive." A multi-month delay means one of two things: either the company is poorly managed, or it is engaging in financial shenanigans (e.g. delaying orders to keep the interest, trying to time the market, embezzling the money, etc.). But by September, 2008, the Attorney General and NWT Mint shook hands with a Consent Decree, letting NWT Mint continue their practices with certain restrictions and allowances.

We have known for a year or so that the Washington State Attorney General in recent years was incompetent. One of the AG's goals for 2015 was to "Proactively enforce state and federal consumer protection laws by investigating alleged unlawful activity and taking legal action when appropriate to compensate consumers and deter illegal activity and deceptive practices in the marketplace." In 2015, NWT Mint was running a $30 million Ponzi-like scheme. This is a company that the AG had already tried suing, and had a signed Consent Decree with, and the AG even received more complaints in 2015 about NWT Mint than any other Washington State company (except 3 household names bound to generate complaints: Amazon, Microsoft, and Expedia). Is "flying over the radar" a thing?

But things get worse. This report shows that at the end of December, 2008, about 3 months after the Consent Decree was filed, NWT Mint had assets of about $19M and liabilities of about $55M -- in other words, they owed customers $35,000,000 more than they had. They were insolvent. How can an Attorney General possibly sue a company for delaying millions of dollars of orders by months, and then sign a Consent Decree without even checking their finances?

The report also says:

  • The assets seized from Ross and Diane (by the defamation victim) included precious metal worth $149,000 and $6,000 in cash
  • The Trustee contacted about 50 potential purchasers for the business, assembled by his company. 8 of them signed confidentiality agreements, 4 toured the operations, and 3 made offers. All 3 offers focused on the liquidation value, and therefore were not acceptable to the Trustee.
  • Later, 2 more parties expressed interest in investing $4M-$5M for a 50% interest in the company, with the balance in a liquidation trust for creditors. Another investor expressed interest in paying $2M for a 20% share.
  • From 2008 to 2016, the company had about $1.2 billion of revenue
  • There were no physical inventories conducted from 2010 through 2016
  • There were no financial statements for fiscal years 2011-2016 [p18]
  • "The results of the analysis suggest that the company had total customer liabilities ranging from a low of $20 million to a high of $45 million over the period 2008 to 2016."
  • "the Company was insolvent from 2008 to 2016"
  • "it appears that the company had attributes of a “Ponzi” or “lapping” scheme from at least (though likely earlier) 2008 to 2016."

Video of Medallic Art and Mint

October 4, 2017 1:40PM
Here is a video of Medallic Art and Mint -- it is quite interesting, with many employees discussing their operations.

At Least 11 FBI Subpoenas

... and Diane Sold $695,000 of Metal

October 4, 2017 12:50PM
Chatper 11 Trustee Mark Calvert has filed a reply to the concerns of the Creditor's Committee regarding professional fees.

In it, he mentions that NWT Mint has responded "to at least eleven subpoenas from the FBI."

In response to the $174,552 that the Trustee and his company (Cascade) allocated to preparation of the reorganization plan and disclosure statement, which the Creditors' Committee was concerned about, he says that only about $82,500 really falls into that category. The other $92,052 would "more accurately captured in the Cascade billing statements as financial analysis in support of business operations" or "re-categorized as relating to business operations."

Calvert also mentions that Ross Hansen's long-time girlfriend Diane Erdmann has now sold approximately $695,000 of precious metals since her testifying that she had virtually no assets in June, 2016. Calvert writes "Based upon the amounts of metals liquidated and the other assets Ms. Erdmann alleges she owns, Erdmann’s net worth would have been in excess of $1 million as of April 2016."

McMeel Hearing

October 2, 2017 7:10PM
On September 22, 2017, the U.S. Trustee filed a motion requesting that the judge order the Clerk of the Court not to accept any further pleadings, papers or documents in violation of a Sanctions Order from last year against Jeffrey Mark McMeel.

The U.S. Trustee says that McMeel "filed numerous false and frivolous papers in bad faith, vexatiously, and for oppressive reasons, thereby participating in an abuse of process that interfered with the rights of individuals and government agencies, and further interfered with the administration of justice." McMeel is a creditor, and clearly not pleased with the way the case is being handled. His two most recent filings are Docket 1214 and Docket 1206. Also see 850 and 735. He also filed a motion that the judge referred to as "incomprehensible".

There will be a hearing about this issue on October 20, with anyone opposing needing to respond by October 13.

I have heard from 2 creditors that received a mailing about this today, asking me how to handle it. I need to be clear here that I do not feel that I can legally answer that question directly: I am not a lawyer, which means that while I can provide legal information (as anyone can), I cannot provide legal advice. But in the interest of saving creditors a combined $500,000 or so in legal fees, I feel an obligation to push this close to the edge. I can safely say that if I received a notice of a hearing in a bankruptcy regarding someone I did not know personally, that did not have my name anywhere on the document, I would almost certainly ignore it.

If you know McMeel and/or wish to help him, however, I would strongly recommend consulting with an attorney, who could help you write a written response to assist McNeel and/or provide alternative options.

If you are still concerned about what to do, and do not wish to pay an attorney, you could try calling the phone number on the document you received. If I were a creditor, however, I would not bother doing that.

Creditors' Committee Concerned About Expenses

October 1, 2017 2:10PM
On September 29, the Creditors' Committee filed a response to the fee applications. The professionals requested that the court defer ruling on applications, likely because the outcome of the case is unknown and because it is not clear at this point if and when money would be available to pay them. The Creditors' Committee supports waiting on a ruling on the $4.1 million in professional fees. This also would alleviate the need of going through all expenses carefully if it turns out later that there is no money to pay the professionals anyways.

What is interesting is that while not officially objecting to the fee applications, the Creditors' Committee pointed out some "areas of concern." Some of the concerns are dependent upon the outcome of the case (e.g. some expenses will have been worthwhile to creditors if a reorganization plan is filed, but not if the company is liquidated). It also covers $132,184 of expenses related to the FBI investigation of Mr. Hansen and Ms. Erdmann, and suggests that those costs would not likely provide any tangible return to creditors. It points out that "The amount of fees potentially recoverable in the Tracy advance fee deposit dispute are/were less than the amount of legal fees and costs it took to pursue (unsuccessfully) their recovery" -- in other words, more money was spent trying to recover some money than could have been collected. It also suggests that the cost of paying professionals $50 or more per hour to commute to their office should be general overhead of the company and not separately billed.

Diane Erdmann Pleads the Fifth

September 25, 2017 2:20PM
The Trustee just filed the August Monthly Financial Report.

In it, he says that he conducted a 2004 exam of Diane Erdmann on August 3, 2017. He states "At the deposition, Diane Erdman invoked her 5th amendment rights in connection with questioning regarding her liquidation of the precious metals and her prior sworn testimony." The Fifth Amendment states that no person "... shall be compelled in any criminal case to be a witness against himself," and is usually used in criminal proceedings so a defendant does not have to answer questions that could incriminate themselves.

To be clear, there is currently no criminal case against anyone involved in what happened at NWT Mint (but at least one criminal investigation is in the works).

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.

October 23, 2017 4:05PM EST UPDATE: The judge denied the motion for 3 reasons: [1] the consolidation had already been approved, [2] the judge felt that Mr. Bressler did not have the ability to fight the motion, and [3] the judge did not want it to appear that Mr. Bressler's testimony could be bought. The judge did not rule in favor of Mr. Bressler as I had assumed.

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
[See my page on NWT Mint and the Attorney General for more details]

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 Attorney General'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. A 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
[See my page on NWT Mint and the Attorney General for more details] 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 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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