Nickeled, Dimed and Screwed

1st American Reserve and Universal Coin & Bullion sell rare coins as investments, whereas First Fidelity Reserve and 1st National Reserve sell rare coins as collectibles. The distinction is significant. Collectible coins, like art, jewelry or sports memorabilia, can be sold with huge price markups, whereas coins marketed as investments cannot.

In the early 1990s, the FTC prosecuted a string of cases against coin dealers in California and Florida for deceiving customers about the investment potential of coins and charged a large coin-grading service with misleading investors in ads and promotional materials.

But the FTC has been silent since then, not bringing a single case against a coin dealer anywhere in the country for 15 years, says Lois Greisman, associate director of the commission's division of marketing practices. "We have not publicly sued any member of this industry in a while," Greisman says. "There is no one [at the FTC] with expertise in the industry."

Fuljenz says the FTC had received virtually no complaints against the four companies he either consults for or owns. In fact, an open records request revealed more than three dozen complaints filed with the FTC against those companies since 2000.

These complaints echo the ones from plaintiffs in pending lawsuits. Many were from customers ages 70 to 90 who claim they were pressured and conned by his salespeople into frittering away tens or even hundreds of thousands of dollars.

Fuljenz dismisses the volume of complaints as insignificant. "It's a feather," he says.

In fact, Fuljenz claims he is the true victim, targeted by a predatory lawyer. Last month, he sued Gibson for libel, slander and business disparagement.

"They're trying to create another story to take the heat off themselves," Gibson says.

Neither the FTC nor state attorneys general offices will confirm whether they are currently investigating the Beaumont coin companies. "We do not make potential targets aware," says Paco Felici, a spokesman for the Texas Office of the Attorney General.

While leafing through the pile of complaints against the coin companies from her office in Washington, D.C., Greisman offers some "general comments" on why a company might use names such as First Fidelity Reserve or 1st National Reserve, which sound like financial institutions.

"Companies can use names that try to deceive consumers about their government affiliation," she says, "or that they're a different type of entity than they are."

Greisman also suggests a reason why closely related companies like the ones in Beaumont may use different business names. "It's to mask their true identity," she says, "so that when complaints come in, it looks as if there were complaints against 20 different, wholly unrelated companies."

The total client base for all four companies, estimated at 175,000, was built by direct advertising, in which customers such as Maureen O'Neill mailed coupons in response to coin ads, Fuljenz says. The ads contain disclosures, in tiny print, informing consumers that "we may contact you from time to time regarding items of interest."

The ads are vetted by Barry Cutler, former director of the FTC Bureau of Consumer Protection. Cutler confirms he has earned more than $20,000 as an hourly consultant for Fuljenz.

Fuljenz says he does not target the elderly since he advertises not only in places such as AARP The Magazine but also in several mainstream national publications, including National Geographic, Newsweek, Parade, Smithsonian, Time and U.S. News & World Report.

All the companies offer a 10-day refund policy, he adds. And since May 2006 they have operated a phone recording system to provide double verification on sales, meant to protect customers against unauthorized credit card charges made by "rare rogue salesmen," he says.

The majority of complaints, Fuljenz says, are the result of miscommunication or buyer's remorse. "Most clients are wonderful people," he says. "Once in a while they lie; once in a while they puke."

In 2005, Rollins sold $4.6 million in coins, earning him $366,000 and the title of top salesman at Universal Coin & Bullion. He was the first person ever at the company to exceed $1 million in sales during a single month. He was 27.

The key to his success, he said, was following orders handed down by management under the direct supervision of Fuljenz and his business partners.

In depositions taken last summer, Rollins and several other former salespeople provided a description of the inner workings of the Beaumont-based coin companies that contradicts Fuljenz's claims and provides support for the scores of former customers seeking redress.

(Many of the former employees who have given depositions, including Rollins, were sued by Fuljenz and his business partners for allegedly breaking their employment agreements, which prohibit them from disclosing any confidential company information.)