The CFTC is alleging that Monex and Monaco Rare Coin is the single largest consumer investment fraud in the history of the agency.
Investors have lost an incredible $360,000,000 through a fraudulent gold and silver trading scheme.
The fraud was simple. And very effective. Consumers were introduced to the company through fear-based media channels and right-wing propaganda websites that promised safe and secure investment returns against “an imminent collapse of the US government.”
Consumers were convinced to invest in a fraudulent gold and silver bullion scheme that systematically drained investment accounts to zero. An outrageous and truly sickening fraud.
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On September 6, 2017, the United States Commodity Futures Trading Commission filed a complaint and civil injunction against Newport Beach, California based Monex.
According to the CFTC, this is the largest consumer fraud case that the CFTC has ever prosecuted. In total, the alleged fraud encompassed an incredible 12,000 trading accounts and $290,000,000 in customer losses.
In spite of the massive size of this fraud, there was nearly zero reporting through mainstream financial media channels. Not a peep at CNBC, Fox Business, or CNN.
Apparently, a $360 million fraud that affected over 12,000 investment accounts was not deemed newsworthy. Instead, the majority of us were fed the same, tired old news about a puppy rescue in storm-ravaged Houston. Or a lame tempertasm from a little fingered President with soft feet and thin skin.
In my opinion, this fraud is newsworthy. And investors should be aware.
What is Monex and Monaco Rare Coin?
Monex is a gold and silver dealer that was established in 1967 by Louis Carabini. The primary business function is buying and selling precious metals bullion as well as gold and silver coins.
Monaco Rare Coins was established in 2010 by Michael Carabini. The primary business function is selling what are called numismatic rare coins. What is a numismatic coin? Essentially, it is the perceived value between the base metal and a highly subjective “collectibles” value. So if you purchase a circa 1880 1 ounce gold ‘Double Eagle’ then you can expect to pay more than the 1 ounce of actual gold contained within the coin. This spread is called the numismatic value.
Both Monex and Monaco Rare Coins are located at the same address: 4910 Birch Street, Newport Beach CA 92660.
Most people are probably envisioning some sort of coin showroom. Where a consumer walks into a retail environment and expects to see coins and bullion on display.
However, with Monex and Monaco Rare Coins, this is not what you will find. Instead, what you will find is more resembling of a “boiler room” type environment. Lots of people packed into a cramped office, wearing headsets and frantically calling hundreds of prospects each day.
Monex and Monaco Rare Coin are not selling precious metals. They are selling, or rather ‘hyping’ numismatic value as well as operating an unlicensed electronic trading venue.
What do I mean by ‘unlicensed trading venue?’ Think of it as the Chicago Mercantile Exchange, but without any of the investor safeguards. Imagine a private trading exchange, located within a boiler room, where the investor is always trading against the broker. When the customer loses, the broker wins.
Many readers are not familiar with how this ‘confidence fraud’ actually works. Let me explain the typical scenario of how an average consumer gets caught up in one of these frauds.
Right Wing Media: the Elites of Demagoguery
The first step in this fraud usually occurs with the victim being lured into clicking an advertisement through one of the various rightwing media channels. For instance, the Glenn Beck show, Rush Limbaugh, or Info Wars serve as the informational ‘launch pad’ for many of these precious metals scams.
Consumers tune into these fear-based media channels and gorge on what I consider a steady diet of unrealistic fears and conspiracy theories. A fear that the government is going to take something from them; guns, religion, gold, devalue the dollar, crash the economy, start a war, etc. Consumers work themselves into a panic and begin to lose hope in our institutions, ie FBI, SEC, Federal Reserve, CFTC, banks etc.
The fear-based media then begin advertising and recommending an odd assortment of fringe items like survivalist seed kits to grow your own food, a waterproof Bible, plenty of ammunition, a Rambo knife, and most importantly….GOLD and SILVER. Because in the coming apocalypse, the only thing of real value will be gold and silver.
Yes, gold and silver make a lot of sense. Its pretty, its valuable, rare, girls like it, and it serves as a defensive buffer. However, many folks fall into the trap of believing the zombies will soon be roaming our streets, professional athletes will burn our flags and rape our white women, and perhaps those “thugs” will break out of prison and overwhelm our noble police.
In a crazy apocalyptic world…the only thing of value will be those that have pure gold and silver in which to exchange for food, water, ammunition, maybe even their very lives!
At this point in the article, you are probably wondering if I am dumping on the idea of owning gold and silver as an investment. Which I am not! Actually, I believe that owning some gold and silver is a great idea.
However, the best way to buy and sell gold or silver is through either an ETF like GLD (SPDR Gold Trust) or SLV (iShares Silver Trust). Both of these ETF’s are backed by the hard asset itself. In other words, when you buy either of these ETF’s then you own a portion of the physical gold or silver that is held in actual vaults.
If you are looking to short-term speculate on the price of gold or silver, then the best option is opening a futures trading account and speculate if the price (in the short term) is heading higher or lower. The advantage of opening a futures trading account is that you are protected through a series of consumer protections and regulatory bodies that guarantee that your funds are held in a safe place, and the trades are being executed on a fair and highly regulated venue.
The right-wing fear mongers never recommend that investors open regulated brokerage accounts and trade on regulated exchanges. Why? Let me explain.
Unregulated Exchanges and The Fleecing of the Flock
The typical victim will travel through a clearly defined, primrose path. The beginning step is usually through a fear based media channel–typically right wing.
The victim then “takes the bait” by clicking on an advertisement that leads to the precious metals vendor.
The victim is fearful, usually elderly, angry at the government, suspicious, and is looking for a safe alternative to stocks.
The slick talking, boiler room salesman is only too happy to talk conspiracy theories, how the US economy is doomed, how hordes of lawless “thugs” are now roaming our streets, and that civilization will fall at any moment.
The slick talking salesman then recommends that the investor open a trading account that will specialize in the short-term price movements of gold and silver.
In the case of Monex and Monaco Rare Coins, the consumer was enticed into investing into something named the Atlas program.
The Atlas Program
Essentially, the Atlas program was an electronic exchange created by Monex which allowed consumers to open highly leveraged trading accounts and speculate on the short-term price movements of gold and silver.
However, what made the Atlas program different than a typical regulated exchange was that the counterparty to every trade was Monex. In other words, and let me repeat…when the customer loses, then the owners of Monex and Monaco Rare Coin win.
How did customers fare on this highly illegal gold and silver trading exchange? Not well. According to the CFTC, of the 12,000 customers, over 90% of the customers lost all of their investment.
Between 2011 through March 2017, the owners of Monex and Monaco Rare Coin realized more than $360,000,000 million in illegally obtained profits. An average of over $1,000,000 per week.
Many readers are probably wondering, “how in the heck did investors lose so much, so fast?” Let me explain…
Once the customer opened the trading account, they were encouraged to give fiduciary responsibility to the salesman within the boiler room. Once the boiler room salesman had obtained permission to execute trades on behalf of the customer, they would then begin aggressively buying and selling gold and silver on the illegal exchange.
The customer had no idea that each time a trade was executed on their behalf…they were being charged an average of $2,550 per trade. Yes, you are reading this correctly…consumers were being charged an average of $2,550 for each and every trade.
In addition to this exorbitant fee…Monex also had the audacity to charge interest fees, processing fees, and a slew of “junk fees.”
The apparent goal of the boiler room salesman was to quickly trade the account to zero. For every dollar the customer lost, the boiler room salesman was incentivized with a profitable commission.
Example of Victims
The following are just a few example of the people that were scammed by the owners of Monex and Monaco Rare Coin:
Customer A, a 61-year old woman with limited English skills residing in Charlotte, North Carolina. After her son was killed while serving in the U.S. Military in Iraq, she received $400,000 for her son’s government issued life insurance policy. She was convinced by a Monex/Monaco Rare Coin boiler room salesperson to open a $173,500 Atlas trading account. After a short period of time, the Monex boiler room salesperson lost the entire balance.
Customer B, a 77-year old man residing in Texas. He contacted Monex seeking a way to protect his wife’s life savings from a downturn in financial markets. He was convinced by Monex/Monaco Rare Coin in invest $400,000 into an Atlas trading account. A short time later, his account balance was reduced to $8,900 through “churning and burning.”
Customer C, a 45-year old woman residing in Los Angeles, Ca. She contacted Monex seeking a low-risk investment in precious metals. The Monex/Monaco Rare Coin boiler room salesman recommended an Atlas trading account. A short time later, the account balance had dwindled to $29,000.
Customer D, a 54-year old woman residing in California. She contacted Monex seeking a low-risk investment in gold and silver bullion. She was convinced into investing her entire life savings of more than $1,000,000 with Monex/Monaco Rare Coin. A short time later, her account had lost more than $760,000.
Customer E, a 69-year old U.S. citizen residing in Italy. She contacted Monex seeking a low-risk investment for her $175,000 inheritance. A short time later, her account had dwindled to $37,700.
These are just a few examples. It is truly mind-boggling when you consider that Monex/Monaco Rare Coin opened a staggering 12,000 of these supposedly safe investment accounts.
Wrapping Things Up
This was a long post. Congratulations for making it this far!
Before I sign off, it’s important to have some compassion for the thousands of people that were ripped off by Monex and Monaco Rare Coin. Many readers are probably quick to point the figure at the financially illiterate that got suckered into dealing with this company.
Many more readers might be exasperated that anyone could be foolish enough to be taken so easily. But I disagree. Monex and Monaco Rare Coin are an extremely slick operation that has invested a tremendous amount of money into portraying themselves as a wholesome and trustworthy company. The video below is a perfect example…
Thanks for reading! And don’t forget to leave a comment below. Love to read your comments and opinion.