Bullion trader dumped after fraud charges

Gus Geldman. Photo / Supplied

An Auckland bullion company is reassuring its customers it has no concerns about its finances, following a Herald investigation which has prompted the resignation of one of its key executives.

Bullion Buyer dumped its sole bullion trader this week, after learning from the Herald that Gus Elijah Geldman - an American preacher based in Florida - had seven weeks ago been charged with fraud by US federal authorities.

The company says it was also unaware that Mr Geldman had his registration as a broker revoked in 1994, and was in 2002 charged with stealing a car.

Director Simon Bratley said he was "shocked and disappointed" to learn about the charges, which were of a "serious nature", but stressed that he was unaware of any complaints from any of its customers here.

The company, which claims to be "New Zealand's trusted name in bullion trading", has been advertising heavily on radio and television.

Mr Bratley, who is a West Auckland lawyer, said he was unaware of exactly how many clients the company had. However, business had been booming, he said.

The company was founded less than a year ago and also has links to an Auckland accountant, Robert Kairua.

US federal authorities have accused Mr Geldman, together with another man, of "participating in a conspiracy", including forging signatures and falsely identifying themselves as a securities broker and a "comptroller of a legitimate company" to entice investors to give them money.

The pair are said to have falsely advertised in a US newspaper that they could deliver a 12 per cent annual return on investors' money. According to the Florida Sun-Sentinel, they face up to five years in prison if convicted.

When confronted about the charges last week, Mr Geldman told the Herald they related to things he had done "many years ago" and now regretted. He said he had turned himself in to the authorities after becoming a Christian, and would resign from Bullion Buyer if the company wanted him to.

Four days later, Bullion Buyer confirmed he was leaving "by mutual agreement".

Mr Bratley said the company was determined to stay in business and was in the process of hiring a new bullion trader. At no stage did Mr Geldman have personal access to clients' money, and all their investments were safe.

However, rival bullion traders fear the publicity will revive public concerns about the unregulated industry, more than 20 years after the collapse of 80s high-flyer Goldcorp.

The Financial Markets Authority said it was aware of complaints about precious metals dealers, but has noted that the industry does not come under its jurisdiction.

However, proposed legislation that is currently before Parliament may give it new powers that would enable it to "call in" investments it has concerns about.

Uncertainty about the future of the US and European economies has pushed the price of gold to record levels this year, prompting a surge of interest in precious metals as an investment.

Demand has been so great that one local company, New Zealand Mint, has been struggling to meet orders.

New Zealand Mint's head bullion dealer, Mike O'Kane, said he was keen to see stricter regulation of the sector.

In the past few weeks, the industry had gone "absolutely nuts", he said.