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Is Bullion Direct/Nucleo Exchange joining Tulving? This doens't look good. - Page 13
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Thread: Is Bullion Direct/Nucleo Exchange joining Tulving? This doens't look good.

  1. #121
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    CFTC Investigation

    April 19, 2016 7:25AM EST

    I have heard reports that some CFTC attorneys have called some Bullion Direct creditors.
    It is not at all surprising that the CFTC is pursuing this. Hopefully, however, they will conduct a full investigation, and restore the damage they did to their reputation with their poor investigation of The Tulving Company. This phone call is certainly a good step. With The Tulving Company, I am not aware of them talking with customers, who certainly would have let them know that The Tulving Company had indeed been around for about 20 year and was not a fly-by-night operation.



    Reorganization Plan

    April 19, 2016 6:40PM EST

    Bullion Direct has filed a Plan of Reorganization.
    It is strongly recommended that creditors at least look through it.

    It lists 6 classes of creditors: http://about.ag/pics/bk/bd/160.pdf



    Disclosures

    April 19, 2016 8:20PM EST

    Bullion Direct has filed a Disclosure Statement. Some information I found interesting includes: (full document can be found here)
    However, it is also possible that BullionDirect suffered additional losses due to outright theft by McAllister and other insiders. While current management has not uncovered evidence of theft, McAllister and other insiders had ample opportunity to embezzle assets and conceal this embezzlement in subsequent years.

    During 2007 ... management hired additional staff and hired consultants to assist the accounting staff in producing accurate financial information. Those efforts failed, and during Fiscal Year ending June 30, 2009, BDI management hired Randy Russell, a consultant, to help BDI create an accurate financial information system. After spending upwards of two million dollars on a new, comprehensive accounting software, the company still could not integrate the data contained in the website database system with the accounting system.

    Footnote: Mayfield had served as BDI’s controller until 2009, but left and joined Randy Russell in a tax consulting firm. (I add this as interesting because she was on the payroll as late as about May, 2012 -- footnotes are usually considered even more reliable than the rest of the text).

    The returns showed that by June 30, 2002, the end of BullionDirect, Inc.’s third fiscal year, the company had amassed $829,000 of operating losses on only $4.5 million in trades. Unfulfilled orders had already amounted to $722,000.

    From the beginning of the company, the various terms of service agreements posted to the website were interpreted by BDI management as allowing BDI to act as “owner” of the stored metals and to “book,” but not complete, transactions. The unfulfilled transactions were referred to as “obligations”.

    Equity Trust Company, a precious metals IRA account manager, sent quarterly reports to BDI customers with precious metal funded IRAs, which tended to reinforce the belief of the customer that the purchased precious metals were being held in the vault used by BDI, but, had the vault contents been inspected by Equity Trust, the much smaller amount of inventory would presumably have been noted. It does not appear that Equity Trust ever examined, audited or inspected the vault. Equity Trust has denied any liability resulting from its erroneous and misleading reports.

    Management appeared to realize that not enough individuals wanted to sell its precious metals on-line, thus the company increased its volume of sales of bullion it did not own. The company monitored the current price of bullion and offered sales of that bullion on its website at prices slightly discounted from the current market price, the policy being that they would immediately purchase the item to be sold at current market price. BullionDirect continued to lose money throughout this period.

    Realizing the magnitude of its problem from the 2010 tax return, management tried to make BDI a possible merger partner or target for acquisition.

    BDI hired consultants, primarily, Randy Russell, to create an accounting system that would integrate the website database. This $4,000,000+ effort was not successful. In addition, Randy Russell advised BDI management to invest in other transactions, including one for over $400,000 in one of Russell’s own companies, NBFog, Inc. That company has yet to generate any return and is the target of litigation by other investors. BDI’s claims against NBFog, Russell and others are under investigation.

    bank statements stopped being reconciled as of September 30, 2011.

    In addition the CRO and counsel have cooperated with every state, local and federal agency that has been examining the operations of BullionDirect, including several state attorneys-general.

    Administrative Expenses (taking priority over everything else) through April 19, 2016 include:
    Unique Strategies Group (Bensimon) $221,500 (including $100K success fee reduced to $50K)
    Martinec Winn & Vickers, PC $184,800
    Dykema Cox & Smith $ 60,000
    TOTAL: $466,300

    Debtor does not believe that any amount would be available to pay unsecured creditors under a Chapter 7 liquidation. ($695K estimated at fire-sale prices).
    On or after the petition date, the Debtor was the subject of inquiries or investigations by multiple attorneys general, the Travis County District Attorney and the Austin Police Department. In addition, investigations were begun by the Federal Bureau of Investigation, the Internal Revenue Service, and the Commodities Futures Trading Commission.

    Given the state of BDI’s records and the legal burden of individuals asserting title to specific items, it would be virtually impossible to track or trace the ownership of the coins and bars in the vault.
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  2. #122
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    It's been almost two years now!!!


    No Criminal Charges Yet


    June 16, 2017 8:30AM EST from about.ag

    So far, it appears that no criminal charges have been filed related to Bullion Direct.
    Given that a man in an Austin suburb was recently charged with theft over not delivering a single $9.7K silver order, one would think that not delivering thousands of orders and stored metal totaling $25M would be thoroughly investigated.

    Nobody has suggested that what happened was not fraud. Bullion Direct even stated "Many [employees, officers, lawyers, accountants, and vendors] knew or should have known that the Debtor was acting in a massively fraudulent matter." Wow. That's a $25M theft from thousands of people (there are 7,500-or-so entries in the creditor list, although that does include some duplicates).

    We're not talking about some hit-and-run type of robbery, with no evidence and long-gone suspects. The suspects are known, and have not fled. There is beyond ample evidence. Nobody claims that the $25M bankruptcy filing is imaginary; it is proof that $25M is owed customers who had placed orders with the company or stored metal there. The owner of The Tulving Company went to prison for a similar scheme. Bullion Direct even went much farther: beyond its unshipped catalog orders (the "Tulving" scheme), it also had $21M of metal it claimed to be storing for customers (including at least $6M in metal for IRA customers!), and even $220K of cash it was supposedly holding for IRA customers.

    It has been 2 years since I contacted Bullion Direct asking about the situation, and nearly that long since the bankruptcy filing. It does take a long time to investigate large crimes, so it may not be unusual that nothing has happened yet. The problem is that in most cases, investigators refuse to say when they have closed an investigation. So you have to keep open the possibility that the investigation died out a long time ago.

    This leads us to 3 possibilities. [1] The case is still open. This is the most obvious possibility. [2] The case was closed because they couldn't crack it (they couldn't figure out who was behind the fraud, couldn't find evidence, didn't have the resources, etc.). For a $25M crime, this is a massive stretch. [3] The case was closed because they determined no crime occurred. This, too, is a massive stretch (just one of several pieces is nearly identical to the Tulving case). My analysis is simplistic (e.g. it doesn't distinguish between the investigators and prosecutors, or the multiple investigators), but it should get the point across.

    Ultimately, I imagine the case must still be open, barring extreme incompetence.
    Last edited by valerb; 18th June 2017 at 06:42.
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  3. #123
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    E-mail re: Bullion Direct, Bullion Universe

    June 20, 2017 12:35PM EST from about.ag

    The Trustee of the BDI Litigation Trust sent out an E-mail today to Bullion Direct creditors, to clarify a few things.
    Basically, he is pointing out that [1] Bullion Universe (the name being used by Platform Direct, the new company that is offering customer-to-customer metals trading) is not in any way involved with claims against Bullion Direct, and [2] Bullion Direct creditors will benefit if Bullion Universe is profitable.

    Platform Universe is the company that was formed to buy some of the Bullion Direct assets. It is doing business as Bullion Universe. You should contact Bullion Universe with any questions about the new company (such as how to do business with them). The BDI Litigation Trust is responsible for creditor claims (e.g. sending any payments or handling a change of address).

    The E-mail also points out how the principals of Platform Universe will put an extra $100,000 into Platform Universe if it reaches 3,000 transactions within 6 months or 5,000 transactions within 1 year. Therefore, the Trustee states "it is in the best interest of the Trust and the former customers and other creditors of BDI that Platform Universe is both successful and profitable."
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  4. #124
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    Looks like the Bullion Direct Scam is continuing to run as planned unless someone finally puts an end to it.


    Update: Some Progress

    October 19, 2017 5:05PM EST

    On October 10, 2017, Gregory S. Milligan (the Trustee for the BullionDirect Litigation Trust) filed a motion that would allow the filing of certain court documents without having to send copies to creditors. This makes sense, as it is costly to send copies to creditors, and the Trustee gets dozens of unrelated calls/E-mails after each one.

    However, what the motion also does is supply us with some new information:

    "Along with reviewing the books and records of BDI itself, the Trustee and his team have obtained document production from third-parties such as the Debtor’s business partners, lawyers, and accountants. Both informal interviews and depositions under oath pursuant to Bankruptcy Rule 2004 have been conducted. Tolling agreements to preserve claims for future prosecution have been entered as appropriate. Negotiations over potential settlements have been commenced."

    That said, it appears that Bullion Universe a/k/a Platform Universe never got anywhere. Specifically, there still are no prices listed on any products after it has been "live" for about 6 months. So it appears that any litigation is the best source of recovery at this point.


    added from the previous announcement on June 20th listed above:

    The E-mail also points out how the principals of Platform Universe will put an extra $100,000 into Platform Universe if it reaches 3,000 transactions within 6 months or 5,000 transactions within 1 year. Therefore, the Trustee states "it is in the best interest of the Trust and the former customers and other creditors of BDI that Platform Universe is both successful and profitable."
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  5. #125
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    Oh no, just when I thought it couldn't get any better, they pull another one out of the hat. Yes they actually find someone that is a somewhat guilty party to some of this and take some of their money back and apply it to the piggy bank ashes. Now tell them they can provide a little help and get half of that money back instead of it staying in the ash pile to be divided. My question is, will anyone other than one of the trustee(s), lawyers, original owner or any of his family members profit from the ashes of Bullion Direct? In the attached: Dillion Gage to help - it's a settlement agreement and a way to get money back, maybe...

    Ummm, Elemetal having all these problems but still not bankrupt and Provident saying they are divorced from Elemetal, but now owned by some secret group of investors and then Dillon Gage comes into the picture somehow and now they are being drug into this fiasco with Bullion Direct. Kind of makes me wonder just what is next for Dillon Gage that we haven't found out yet, will that name appear on the NWTM bankruptcy page?



    Dillon Gage to Help Platform Universe

    October 26, 2017 12:35PM EST

    Yesterday, the Bullion Direct litigation trust filed a proposed settlement agreement with Dillon Gage. Dillon Gage had received $775K from Bullion Direct in the 90 days before its demise, which appears to have been in the normal course of business. Dillon Gage representatives "have consistently testified under oath that Dillon Gage believed that BDI was an ordinary retailer of precious metals and was unaware that BDI offering purported “depository” services as well."

    With the Settlement Agreement, Dillon Gage would pay the Bullion Direct litigation trust $324,500. Dillon Gage would also be obligated to provide support to Platform Universe (the company that started up earlier this year from the ashes of Bullion Direct). Dillon Gage can get up to half their money back, if Platform Universe becomes profitable (half the profits would go to Dillon Gage until the full $162,250 is returned).

    It is interesting to note that an anonymous group of investors bought large online bullion dealer Provident Metals recently, and they have a management agreement in place with Dillon Gage.

    Other information gleaned from the motion are that Cheryl Huseman (Charles McAllister's mother) is President of Platform Universe, C. Jack Murph (her husband) is Vice President, and that they have been providing financial reports to the Trustee.
    Last edited by valerb; 26th October 2017 at 20:36.
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  6. #126
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    It's about time someone else goes to prison


    On Tuesday, federal prosecutors arrested Charles McAllister


    The mystery of what happened to millions of dollars’ worth of gold and silver bullion that vanished from a downtown Austin vault 2˝ years ago just got a little less puzzling.

    On Tuesday, federal prosecutors arrested Charles McAllister, the founder and former majority owner of Bullion Direct, charging him with three felony counts of fraud and misusing money customers gave him to buy gold, silver and platinum on their behalf.

    The indictment also said the government would seek more than $16 million from McAllister under U.S. criminal forfeiture statutes. In civil court filings, Bullion Direct’s customers have placed the value of their disappeared money and metal at $25 million.

    The American-Statesman detailed the case of the missing bullion in 2015. In late July of that year, hundreds of investors in Texas and across the country learned that the bullion they thought they’d purchased as a tangible hedge against an untrustworthy U.S. economy had disappeared from a pair of safes on the 14th floor of an Austin office building.

    Some customers lost hundreds of thousands of dollars. The cumulative weight of the missing treasure represented dozens of standard-sized gold bullion bars and hundreds of silver ones, according to civil court filings. An estimated 1,400 ounces of platinum and palladium its owners thought was safely locked up was also unaccounted for.

    In documents filed in U.S. District Court that were unsealed late Tuesday, federal prosecutors alleged that instead of buying the precious metals ordered by Bullion Direct’s customers, McAllister used their money to keep the business afloat, and for himself.

    “Customers were lulled into the false belief that precious metals had been purchased and were stored in (Bullion Direct’s) vault, when, in truth and fact, customer funds were used to pay for corporate expenses, investments in other entities, or applied by McAllister for his own and his family’s personal use and benefit,” it said. The indictment said McAllister had been illegally misdirecting the money since 2009.

    “I’m not surprised,” said James Hoeffner, an Austin attorney representing a now-deceased Florida physician missing an estimated $250,000 in cash and metal from the company’s vault. “The whole theory was that (McAllister) was going to hold the gold in trust, and he obviously did not do that. And that sounds like a crime to me.”

    Attorneys said the criminal case was unlikely to influence creditors’ efforts to recover their money through federal civil court.

    McAllister’s Houston attorney, James Ardoin III, did not respond to phone and email messages.

    Some of Bullion Direct’s customers were collectors. But, as a mostly unregulated business, precious metal markets also appeal to those who distrust currency systems and the governments that back them. So for many of Bullion Direct’s investors who believed that wealth they could touch and see would protect them from an economy they viewed as increasingly unpredictable and unfair, the loss of their gold and silver was world-shattering.

    McAllister and a partner incorporated Bullion Direct in August 1999. That same year, they also patented software allowing metals customers to buy and sell to one another in a virtual marketplace. The company earned money by taking a 1 percent cut of each sale from buyer and seller.

    Dealers said Bullion Direct started off as a reputable company, paying on time and in full. For 15 years, Bullion Direct’s public face was one of success. Buyers and sellers said their orders were processed without a hitch. Those who requested delivery of gold and silver received it on time.

    Over the years, Bullion Direct served an estimated 60,000 customers and handled transactions worth hundreds of millions of dollars, court filings said.

    Behind the scenes, however, the company was foundering. One attorney later described it as “a slow-motion Ponzi-like scheme.”

    Auditors later discovered Bullion Direct had filed only a single tax return. In 2009, it was carrying $17 million in losses. Yet McAllister paid himself hundreds of thousands of dollars in salary.

    Bullion Direct declared bankruptcy on July 20, 2015. While some customers received email notification of the filing, others said they learned about it only after logging onto Bullion Direct’s website and finding a message that said the company was insolvent.

    Bankruptcy trustee Gregory Milligan did not return phone and email messages.

    A year later, in what officials acknowledged was an unusual arrangement, what remained of the company — primarily proprietary software — was purchased by McAllister’s mother. She agreed to turn over most future profits from the new venture, Platform Universe, which does business under the name Bullion Universe, to her son’s more than 500 creditors.

    Although Bullion Direct’s restructuring attorney at the time said the trading platform forming the basis for Platform Universe would be a viable business, creditors said the company has yet to generate any profits for them.




    Charles was arrested, released on bond, and has pleaded not guilty.


    In Austin, 47-year-old Charles McAllister, owner of Bullion Direct, Inc. (BDI), faces federal wire fraud and money laundering charges in connection with a scheme to defraud customers out of millions of dollars announced United States Attorney John F. Bash, Federal Bureau of Investigation (FBI) Special Agent in Charge Christopher Combs, San Antonio Division; Internal Revenue Service-Criminal Investigation (IRS-CI) Acting Special Agent in Charge Andy Tsui; and, Texas State Securities Board Commissioner Travis J. Iles.

    A federal grand jury indictment unsealed on Tuesday charges McAllister with two counts of wire fraud and one count of engaging in a monetary transaction with criminally derived property.

    McAllister, who is currently on bond, has waived formal arraignment and entered a plea of not guilty to the indictment. No further court dates have been scheduled. Upon conviction, he faces up to 20 years in federal prison for each wire fraud count and up to ten years in federal prison for the money laundering charge.

    Agents with the FBI, IRS-CI and the Texas State Securities Board conducted this investigation. Assistant United States Attorney Dan Guess is prosecuting this case on behalf of the Government.


    Last edited by valerb; 27th January 2018 at 22:34.
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  7. #127
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    It doesn't sound like Charles will have to wait very long for a plea deal or a jury verdict


    Hearing March 1, 2018 - Trial March 18, 2018

    January 31, 2018 7:00AM EST

    Yesterday, U.S. District Judge Lee Yeakel filed an order, which sets a March 1, 2018 9:00AM "Hearing on all Pending Pretrial Motions and Docket Call."

    He also stated that the case is set March 12, 2018 9:00AM for "Jury Selection and Trial."
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  8. #128
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    Charles has gotten another six months before finding out where his future will be located


    Trial Date Set for September 10, 2018

    March 20, 2018 7:50AM EST

    Judge Yeakel has set a date of August 27, 2018 9:00AM for the Docket Call, and Jury Selection / Trial are set for September 10, 2018 at 9:00AM.



    Quote Originally Posted by valerb View Post
    It doesn't sound like Charles will have to wait very long for a plea deal or a jury verdict


    Hearing March 1, 2018 - Trial March 18, 2018

    January 31, 2018 7:00AM EST

    Yesterday, U.S. District Judge Lee Yeakel filed an order, which sets a March 1, 2018 9:00AM "Hearing on all Pending Pretrial Motions and Docket Call."

    He also stated that the case is set March 12, 2018 9:00AM for "Jury Selection and Trial."
    I'm a proud member of Eggshellman's Liar, Shill, and bully club and a new member of the Super Jew Defense League!!!

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