A Costa Mesa-based coin and precious metals dealer and his company pleaded guilty to wire fraud in federal court Thursday for defrauding more than 400 customers of more than $15 million, a statement from the U.S. Attorney General said.
Newport Beach resident Hannes Tulving Jr., 60, the owner and sole shareholder of The Tulving Co., sold coins, bullion and other metals online.
In pleading guilty, he admitted to a U.S. magistrate judge in North Carolina that he induced customers to place orders for coins and other merchandise he knew could not be fulfilled. From August 2013 to January, Tulving used payments from new customers to complete orders for older customers, pay company debts and return money to previous customers who had not yet received their orders.
One San Diego man ordered $39,000 in American Eagle gold coins from The Tulving Co. He was promised the shipment would arrive in seven days. Four months later, he still had not received the coins. Another customer in South Dakota filed a lawsuit after the company failed to deliver 240 gold coins, for which he paid more than $318,000. A Phoenix man had not received the 80 Gold Maple Leaf coins he paid $107,000 for when he filed his lawsuit months later.
The company closed in March 2014.
The Secret Service began investigating Tulving last year. In addition to protecting current and former U.S. Leaders and their families, the agency investigates financial crimes, such as major fraud and counterfeit currency.
The company, which had been described as a major player in the industry, had also filed for Chapter 11 bankruptcy protection. The business owed $1 million to $10 million to as many as 49 creditors, according to bankruptcy documents.
The California Department of Business Oversight also launched an investigation into the company. The Better Business Bureau received more than 5,600 inquires into the Tulving Co. since 2010, when gold prices began to rise as part of the recovery from the Great Recession.
More than 20 years ago, Tulving was accused by the Federal Trade Commission of overpricing rare coins and going back on return guarantees through another Newport Beach-based company he owned, Hannes Tulving Rare Coin Investments.
He was suspected of defrauding clients out of more than $40 million. He settled with the FTC in 1992 and agreed to pay $1.3 million.
Tulving faces up to 20 years in prison and $250,000 in fines. He is required to pay restitution to customers as part of the plea agreement. The Tulving Co. faces at least $500,000 in fines, at least one year of organizational probation and is required to pay restitution.
Tulving was released on bond. No sentencing date was released.
