Gold-Coin Dealer Enters Bankruptcy

A little short on change and customer promises, Minnesota coin dealer International Rarities Corp. turned to bankruptcy.

The Minneapolis firm filed for Chapter 11 protection Friday with a debt load of about $3 million—roughly twice the size of its assets. Its 55-page bankruptcy petition shows that the company did business with clients spread across the country.

The company’s website seeks out the financially wary investor, offering to help find shelter in the solid precious metal markets.

“We are in the midst of a frightening world economy,” the company said. “But there is safety amidst the chaos and IRC can help. Precious metals are one of the surest bets around and IRC makes investing in gold coins easy.”

Despite the sales pitch and undeniable market turmoil, the firm’s business slowed last year to only $15.7 million in revenue, a drop of more than 30% from the prior year, according to documents filed with the U.S. Bankruptcy Court in Minneapolis. And newspaper reports suggest that its troubles run deeper.

The Minneapolis Star Tribune reported that a trial was scheduled to start this week in Florida over allegations that the company scammed an elderly man out of more than $335,000. The article also said that the company is under investigation by the state’s attorney general office on allegations of consumer fraud.

Meanwhile, a separate investigation by the newspaper found that International Rarities and other firms in the industry have a history of hiring salesmen with criminal records—including records that feature coin scams.

International Rarities’ bankruptcy petition said that additional lawsuits that allege similar wrongdoing have untold value for its bankruptcy estate. One line hinted that it could pursue claims against officers and employees “for violation of applicable state or federal securities laws, breaches of fiduciary duty, professional malpractice, and similar claims.”

Among its creditors, the company also lists nearly a dozen investors who put money into a separate holding company, International Rarities Holdings Inc., thinking it would go public and make them profitable returns.

Creditors who foresee recovering money from International Rarities’ coin collection will be disappointed to know that the company doesn’t have any coins to offer. The coins held in its possession, worth a total of $97,955, have already been sold to customers and have yet to ship, according to court documents.