Thursday, June 30

Lear Capital – Scamming Investors & Facing Lawsuits

 

Source: Lear Capital – Scamming Investors & Facing Lawsuits

Discovered on: 2021-09-22 23:05:54

Lear Capital is a California-based precious metals dealer. You might have heard of them through their ads about how Americans are going to crash. Or, maybe someone from Lear has contacted you to purchase gold and silver coins from them. 

In any case, stay away from this firm because multiple government authorities are suing them at the moment for scamming elderly and uninformed investors. 

According to the various lawsuits, Lear doesn’t inform customers that it charges 33% transaction fees until they have bought from them. Also, there are a ton of reviews online where consumers have shared the poor experiences they had with this firm. 

That’s why the Los Angeles City Attorney filed a lawsuit against this company in 2019 while the New York Attorney General filed a case in July 2021. 

Lear Capital has scammed thousands of US citizens through false claims and predatory practices. Avoid them. 

Deceptive Practices & Unfair Treatment: Los Angeles City Attorney Sues Lear Capital for Preying on Elderly

The case of Teresa Evans is not an isolated case. Various people and authorities including the AG of New York have filed lawsuits against Lear Capital for defrauding clients. 

Mike Fueuer, City Attorney of Los Angeles announced in 2019 that his office had filed a lawsuit against Lear Capital Inc for unfair and deceptive business practices. 

The lawsuit alleges that Lear’s practices harmed the elderly and inexperienced customers. It shared the case of Mr. William Hough who lost nearly $300,000 as Lear charged him 33% transaction fee which he had no idea of. 

Apparently, Lear Capital misleads consumers over the phone and doesn’t provide anything in writing. 

A snippet of the media coverage this lawsuit received

The lawsuit states that Lear Capital has conducted $3 billion in “trusted transactions” which mainly includes selling gold and silver coins. They earn revenue from their transaction fee but they don’t act in good faith. Lear misleads customers about the fees its charges which can go as high as 33%. Note that most dealers charge a fraction of this percentage. 

Moreover, most legitimate dealers allow customers to review the terms of their potential purchases in writing before asking for payment. But Lear only communicates with its customers over the phone before finalizing the purchase. This allows the precious metals dealer to avoid leaving a paper trail of the misleading representations it makes to its clients.

One of those misleading representations is to make clients believe that Lear will charge them a small fee. In most cases, the customers trust the oral representations of the firm only to find that they were a lie. Typically, Lear doesn’t give any documentation to its clients until they have paid for the coins. 

The City Attorney’s lawsuit points out that experienced investors might not fall victim to these fraudulent tactics but elderly and inexperienced investors do. 

Moreover, when the defrauded customers contact Lear Capital and demand an explanation, the company ignores them. If they somehow reach a representative, he tells them that they can’t do anything about it because “every sale is final” and they agreed to the terms of the agreement. 

Lear Capital’s representatives tell the disgruntled clients to take responsibility for their actions and, “tough luck and better luck next time”. 

Here’s the official document of the City Attorney’s lawsuit.

Official Document of the Lear Capital Lawsuit:

NY Attorney General Letitia James Sues Lear for Defrauding Clients:

New York Attorney General Letitia James filed a lawsuit against Lear Capital in July 2021 for deceiving around a thousand New Yorkers. Similar to the case of the Los Angeles City Attorney, AG James stated that Lear had collected about $10 million in unlawful profits by charging upto 33% in hidden commissions. 

The AG stated that Lear Capital’s business model depended on cheating nearly 1,000 New York residents who didn’t want to lose their retirement savings. Her lawsuit also states that Lear hasn’t registered as a telemarketer, commodity investment adviser and as a commodity broker-dealer as well.

NY AG’s court filing also included 13 affidavits from state residents. For example, a 78-year old New Yorker shared that he received phone calls from Lear in 2016. He told the company that he was only interested in investing in bullion and after receiving calls from Lear for over 2 years, he sent them 900 ounces of silver bullion and $20,000 cash. 

In exchange, they sent him 36 platinum bars. Then, Lear Capital persuaded him to liquidate the gold and silver present in his IRA and invest the amount in platinum bars through them. 

The Akon man sent Lear 640 ounces of silver bullion in exchange for additional platinum later that year. He eventually realized that he had paid around $42,300 in cash and silver bullion for around $28,000 worth of platinum. Moreover he sold gold and silver present in his IRA worth around $29,000 to purchase platinum worth around $19,640. 

AG’s lawsuit also shares how Lear scams unsuspecting investors. After having multiple unrecorded conversations, Lear Capital tells consumers who had agreed to buy coins that they needed to make a recording to verify terms of purchase. The company would then tell them to answer “yes” to every question on the recording and that it was only a formality.

Also, they would tell the consumers that if they answered otherwise, they would have to start over. 

The lawsuit says that the recording is how they trap investors. They bury a dangerous question among various innocent ones which is: “Do you understand that the ask to cost fee is 33%, yes or no?”

Kevin DeMeritt, the founder of Lear Capital, has coined the phrase “ask to cost fee”. The company points to this phrase as evidence of consent for their unethical fees. 

Each of these Lear Capital lawsuits shows just how dangerous this firm is. These are proof of why you can’t trust this bullions dealer. 

How Lear Capital Scammed West Virginians

Lear Capital misled a client into signing a shady agreement and took 1/3rd of her investment as fees

Teresa Evans had filed a lawsuit against Lear Capital claiming that the company was running a fraudulent scheme to get West Virginians to invest in precious metals. She filed this complaint in Jackson Circuit Court.

In October 2015, Lear had called Teresa at her home and office to convince her into buying gold. They told her that the price of gold was increasing and it was a more stable investment than others. 

Teresa has pointed out that she had never invested in gold or other metals and didn’t know about the value of gold as an investment. She also didn’t understand the business of gold valuation, the jargon, and how it was sold and maintained. Teresa shared these concerns with the company representative named Koonce. 

She had told Koonce that Lear would have to explain everything related to gold and silver. Koonce promised to explain these things. 

Teresa points out that on October 26, 2015, Koonce sent her an email which explained the fee Lear Capital would charge for investing in gold through them. 

The company kept pursuing Teres and made her believe that she was going to lose money in stocks or through devaluation of the dollar. 

On March 23, 2016, Teresa trusted Lear’s representatives and signed a form making it her IRA administrator and permitted Scottrade to wire $300,000 from her IRA account to SDIRA. 

However, SDIRA transferred her money to Lear without her permission and didn’t provide her with any accounting information or documentation from March 2016 until October 2016. 

She requested Lear Capital to provide her with an accounting statement but they refused. So, she asked again in October and received an email with instructions on how she can log into her account. 

When Teresa logged into her account, she found that it had dropped in value by around $100,000. It was only valued at $200,000. 

The company told her that she was reading the statement wrong and Lear had taken all of the fees upfront. During this conversation, Teresa requested them to send her any documents that would explain why they had to take $100,000 from her account. 

She points out that Lear Capital never disclosed their fees. Lear’s legal counsel at the time, Jeremy Jason told her that they can’t help her because she had already signed the agreement. They also told Teresa that the agreement was iron-clad and can’t be breached. 

According to the agreement, she was bound to pay them one-third fee. 

Teresa shares that Lear knowingly established a shady scheme to defraud citizens in West Virginia by advertising on television and radio. 

Misleading a client into signing a shady agreement is already a sketchy thing to do. On top of that, the company took 1/3rd of her investment as “fees”. It’s a textbook case of fraud. 

Misleading Advertisements & Fear Mongering

The predatory practices of Kevin DeMeritt’s start from the television screen and the radio. Their advertisements are one of the most suspicious and manipulative ads you can imagine. 

In one advertisement, a Lear Capital representative warns the viewers that the US residents face a rapid and very destructive end with a “debt clock” ticking in the background. The advertisement says that it’s not a question of ‘if’ the Americans are going to have a crash but ‘when’. 

What the ad fails to mention is that Lear is not an SEC-registered investment advisor. Hence, it can’t give you financial advice. 

Their fear-mongering doesn’t stop here. Their ads also say that China is making its move right now and that it will burst the USA’s bond bubble and crash our dollar. Such manipulative advertisements aim at preying on the uninformed and elderly investors so they will call Lear Capital. 

You already know what happens when Lear talks to a client over the phone, they scam them. 

Lear’s Pricing is Horrible:

The coins on Lear Capital are overpriced as a $10 circulated Liberty gold coin weighin half an punch costs $753, excluding $24 shipping, with them. On eBay such coins sell for as low as $666 with free shipping. 

Typically, the prices Lear charges are 20% more than those on eBay. 

When you compare Lear’s prices for its coins with the spot price for gold, they are around 37% higher. Their prices for silver coins are 250% higher than the spot price for silver. A better investment option would be precious metals ETFs as they are closer to the metals’ spot prices. 

The only difference is that an investor in precious metals ETFs doesn’t have physical possession of the metal. On the other hand, purchasing from Lear allows you to purchase physical gold or silver coins but you must incur their storage costs. 

Unreliable Calculator:

They have a portfolio comparison calculator on the site that allows you to compare your portfolio with one that’s 100% allocated to the Dow to these options: 

  1.  20% gold, 80% Dow
  2. 10% gold, 10% silver, 80% Dow
  3.  20% silver, 80% Dow

But Lear doesn’t tell you that it uses the Dow without dividend reinvestment. Hence, their results show that the portfolios with precious metals outperform the Dow. 

If their calculator used the proper index that included dividend reinvestment, Dow would give way better results than the portfolios with precious metals. Also, their calculator uses a starting date between 1997 and 2007 to calculate the returns. The prices of gold during this period were very low. If you use a date before 1997 or after 2007, even the Dow without dividend investments would give you better results. 

Clearly, Lear is trying to mislead clients into thinking gold and silver are better investment options than all others. 

Is Lear Capital Legit? A Detailed Look

Lear Capital is based in Los Angeles, California. Their address is 1990 S Bundy Dr #650, Los Angeles, CA 90025, US and their office opens from 7 AM to 6 PM on weekdays. 

The contact number of their office is 800-576-9355. While the company has been operating since 1997, it has attracted a lot of controversy, complaints and lawsuits. 

If you’re wondering who owns Lear Capital, the answer is Kevin Demeritt. He is the founder and chairman of this firm while the CEO of this company is John Ohanesian. They offer bullion and premium rare coins in gold and silver. 

You can buy physical precious metals from this firm and they will ship it to your address. Additionally, they offer storage options if you want to open a precious metals IRA. 

The company offers several investment resources including market insights, custom coin search, and comparative data. However, there’s a disclaimer on the website which says none of the information present there is investment advice and are only opinions. They don’t offer any financial advice to their clients. 

It’s the first of the many issues present with this precious metals dealer. 

As you’ll read further, you’ll find out about the latest Lear Capital lawsuit along with the recent ones and learn about the numerous complaints they have received due to their shady practices. 

There are many reasons why I don’t recommend dealing with this company and you’ll see why: 

Lear Capital Lawsuits: 

This Los Angeles-based bullions dealer has attracted a ton of negative attention because of its lawsuits. But there are many other lawsuits that didn’t make the news because the plaintiffs were common people. 

Most of these people filed cases of fraud against LC. I’m sharing their brief details below to help you understand just how many people have suffered because of this firm: 

Patterson vs Lear Capital:

Patterson had filed a lawsuit against Lear Capital in September 2020 for misleading him into signing the purchase order. He alleged that the employees had made false promises to him and assured him that the terms they discussed over the phone and email would be final. 

Patterson had used $377, 375 of his retirement savings to purchase Lear’s gold and silver coins. Later, he exchanged them for platinum bars at an approximate value of $197,000. 

Before these transactions, he had signed their Shipping and Transaction Agreement. He alleged that the company pressured him into signing the agreement online while he was on the phone with an employee. They didn’t allow him to ask any questions about the agreement and misrepresented the nature of the agreement. They told him that it was simply a shipping agreement and only a formaily while in reality, it was the final purchase contract. 

People of the State of New York vs Lear Capital:

This Lear Capital lawsuit was filed on July 14, 2021 for 370 fraud. SSuch cases are based on fraud related to personal property that doesn’t fall in other categories of lawsuits. 

The plaintiff in this case were the people of the State of New York and the defendant was Lear. On 30 July, 2021, the court granted the motion to remand to state court. 

Trautwein vs Lear Capital

This is another case of fraud. Gary Trautwein had filed a case of fraud against this precious coins dealer in May 2019. The company had settled the matter out of court. 

Ireland vs Lear Capital

Evelyn Ireland had filed a lawsuit against Lear Capital for misrepresenting the value of the precious coins they had sold to her. She filed this case in the United States District Court District of Minnesota. 

Evelyn seeked damages from the coin dealer. 

Scammed a Client and Misled Them Again to Avoid Liability (Client Review)

Lear Capital has taken around 40% of this person’s investment. They found out about this when they checked their deposit. When they called their agent to discuss this matter he told them that the account was in rare collectible coins and the dollar amount only showed the spot price. 

The company rep also told them that their investment was safer this way because the government couldn’t confiscate them. A few months later, the reviewer received a notification about a class action arbitration settlement against Lear Capital.

The reviewer believed that the company agent still had their best interests in mind. They were mistaken. 

The documents of the arbitration settlement mentioned three groups that would be ineligible for the compensation. But the reviewer didn’t fall into anyone of those groups so they didn’t send in any documents. 

Later, while making a withdrawal from their account they remembered that the arbitration documentation mentioned how Lear took around 40% of its clients’ deposits. They read the documentation again to realize that there were actually four groups who wouldn’t get compensation.

The fourth group was people who didn’t apply for the eligibility claim. Lear had kept their notification document deceptive so most eligible investors wouldn’t get any compensation from the settlement. 

This review is one of the many complaints people have shared against Lear Capital. I found numerous negative reviews and I’ve shared some of them here to help you understand what their customers are saying: 

Lear Capital Reviews and Complaints You Should Read:

Lear Capital Review: Conclusion

If the Los Angeles City Attorney AND the New York Attorney General are suing this bullions dealer, you know something’s wrong with the company. 

This company has scammed thousands of consumers all over the US through its deceptive ads and deceitful practices. They lie to their clients and don’t give anything in writing until the customer has purchased coins from them. 

Kevin DeMeritt is running a vicious scam and you should be wary of it. If you or someone you know has been contacted by this firm, blacklist their number and email. There are tons of ethical gold and silver coins dealers in Los Angeles and the US. Don’t go with the one that takes away 1/3rd of your investment. 

Please share this review with anyone who’s interested in doing business with them. The more people know, the better. 

2.5Expert Score

Avoid Lear Capital

Lear Capital is facing multiple lawsuits from government bodies and consumers for defrauding clients. This company preys on the elderly and the uninformed. Beware of their operations and avoid them at all costs!

Cons

  • Facing a lawsuit from LA City Attorney for scamming clients
  • Facing a lawsuit from NY Attorney General for defrauding New Yorkers
  • Targets elderly and inexperienced investors
  • Charges 33% transaction fee without informing the client

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