A 70-year-old former golf professional who invested some $700,000 in rare coins with a coin dealer, only to lose more than $400,000 of the investment, won a small but significant victory in the U.S. District Court for the southern district of Florida June 19 when a judge kept the case alive in the face of a powerful call for summary judgment in favor of the dealer.
The case is logged as Robert Shave versus Stanford Coins & Bullion, Inc. The allegations made, and the motion, were heard by U.S. District Court Judge James I. Cohen, who said in a written opinion that the “complaint contains claims for violations of the Florida Investment Protection Act, common law negligence, breach of fiduciary duty, and Elderly Financial Abuse.”
Stanford is a Delaware corporation with its principal place of business in Houston, Texas.
Shave claims that Stanford’s employees “abused his trust in them and repeatedly sold him rare coins as investments over a three-year period.” The court document went on to say that “These transactions resulted in large commissions for [Stanford] while nearly always resulting in substantial losses to [Shave], even when [Stanford] bought some coins back.”
A jury trial is set for Oct. 5 in Fort Lauderdale Division before Judge Cohn.
One of the coins involved was a 1932 eagle (condition unspecified) that Shave bought on Nov. 28, 2005 for $4,950. Later, the complaint says, Stanford sold the $10 gold coin for $5,450, giving Shave a $500 profit, but, his lawyers claim, a commission going in, going out, and onto the next sale exceeded that profit.
On one large trade, the complaint says, Stanford sold Shave an 1879 flowing haired Stella or $4 gold piece for $250,000 plus a $26,000 commission. Overall, Shave claims that he paid over $120,000 in commissions, and charges that the sum is excessive.
A significant claim by Shave is that the Florida investment protection act was violated and that the sale of rare coins constituted a security which requires a special disclosure and creates a fiduciary relationship. Cases go both ways as to whether or not rare coins are a security, and it depends on how they’re marketed and sold.
The court noted that Stanford asserts “that the rare coin investments are not ‘securities’ under the Florida Securities and Investor Protection Act,” but contrasts that with Shave’s claim that the Florida statutes allow “actions related to the sale of securities or “the rendering of any investment advice,” and that the sale of coins in this case represents an “investment” covered under the Act.”
After reviewing of the statute and allegations in the complaint, the court “agrees with [Shave] that he has sufficiently stated a claim under Fla. Stat. § 517.301. Plaintiff has alleged that Defendant has engaged in misrepresentations with regard to advising Plaintiff concerning his investments in rare coins with Defendant. The allegations as to this claim are not conclusory and not subject to dismissal.”
In looking at some of the additional claims, “The Court notes that at this point, the record indicates that Plaintiff has no coin collector experience, but rather is just a 70 year-old looking for a safe investment who was solicited by Defendant’s agents, as opposed to a coin collector dealing with a coin dealer.”
The court analyzed the claim that the Florida adult protective act, asserted in the fourth cause of action, just didn’t apply. What the court found is that the facts presented by the plaintiff were insufficient to arrive at a conclusion on the law and that that claim should be dismissed.