Kevin DeMeritt established Lear Capital, a key player in the precious metals industry. While the company’s primary activity is to sell gold and silver coins and related financial services, the more intriguing aspects of the organization emerge when one analyzes its legal history and ownership among several challenges.
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Ownership and Leadership
Kevin DeMeritt launched Lear Capital in 1997 with the purpose of making precious metals investing more accessible to a wider audience. DeMeritt, the company’s founder and majority owner, has helped shape its strategic direction and operational approach. Over the years, his leadership has seen the corporation grow while also becoming entangled in a number of legal challenges that call into question the ethics and transparency of its activities.
Legal Battles and Controversies
The multiple lawsuits and regulatory proceedings brought against Lear Capital show a pattern of alleged misleading techniques that have hurt the company’s reputation. Here’s a closer look at the controversy:
- Deceptive Transactions: Tactics and Undisclosed Fees: In a historic case in 2021, the New York Attorney General charged Lear Capital with failing to disclose millions of dollars in fees, with certain rates reaching 33% on transactions. This led to a $6 million settlement. Similarly, in 2019, the Los Angeles City Attorney brought a lawsuit against the corporation for allegedly defrauding senior citizens regarding the costs associated with acquiring gold and silver coins, which was settled for $2.75 million.
- Bankruptcy & Financial Struggles: In 2022, Lear Capital filed for Chapter 11 bankruptcy protection following a series of court disputes and financial fines. This action was seen as an attempt to reorganize following financial difficulties caused by more than $8 million in penalties imposed for misleading sales practices.
- Targeting Vulnerable Investors: One particularly troubling aspect of Lear Capital’s methods was the purported targeting of elderly investors. The lawsuits alleged that the corporation took advantage of these clients by selling expensive coins without adequate disclosures, capitalizing on their desire to protect their retirement funds.
- Operational Misconduct: In addition to hidden fees, Lear Capital was accused of deceptive marketing, limiting documentation to evade accountability, and even bullying clients who protested publicly. Furthermore, it operated without the necessary authorization in some places, raising questions about regulatory compliance.
How Lear Capital defrauded West Virginians
Lear Capital tricked a client into signing a dubious deal and collected one-third of her investment in fees.
Teresa Evans had sued Lear Capital, alleging that the corporation was running a fraudulent operation to entice West Virginians to invest in precious metals. She filed the complaint in Jackson Circuit Court.
In October 2015, Lear called Teresa at her home and office to persuade her to buy gold. They informed her that the price of gold was rising and that it was a more reliable investment than others.
Teresa stated that she had never invested in gold or other metals and was unaware of the importance of gold as an investment. She was also unfamiliar with the business of gold value, including the lingo and how it was marketed and maintained. Teresa discussed her concerns with a company representative named Koonce.
She’d warned Koonce that Lear would have to teach everything about gold and silver. Koonce committed to explain these details.
Teresa notes that on October 26, 2015, Koonce sent her an email outlining the fee Lear Capital would charge for investing in gold through them.
The corporation continued to pursue Teres, convincing her that she would lose money in stocks or due to the dollar’s devaluation.
Teresa believed Lear’s personnel and signed a form designating them as her IRA administrator, allowing Scottrade to wire $300,000 from her IRA account to SDIRA.
However, from March 2016 to October 2016, SDIRA transferred her money to Lear without her permission and failed to give her with any accounting information or evidence.
She asked Lear Capital to give her an accounting statement, but they refused. So she inquired again in October and received an email with instructions for logging onto her account.
When Teresa got into her account, she discovered that the value had plummeted by almost $100,000. It was only worth $200,000.
The corporation informed her that she had misread the statement and that Lear had collected all of the money up front. Teresa demanded that they email her any paperwork explaining why they had to withdraw $100,000 from her account during this chat.
She reminds out that Lear Capital has never disclosed its fees. Lear’s legal counsel at the time, Jeremy Jason, informed her that they couldn’t help her because she had already signed the agreement. They also assured Teresa that the deal was binding and could not be broken.
According to the agreement, she was required to pay them a one-third fee.
Teresa claims that Lear willfully set up a nefarious strategy to deceive West Virginians through television and radio advertisements.
Misleading a client into signing a dubious deal is already a questionable practice. Furthermore, the corporation deducted one-third of her investment as “fees”. It’s a textbook example of fraud.
Misleading advertisements and fear-mongering
Kevin DeMeritt’s unscrupulous actions began on television and radio. Their advertising are some of the most suspicious and deceitful you can imagine.
In one advertising, a Lear Capital official warns viewers that US inhabitants face a quick and devastating end, with a “debt clock” running in the backdrop. According to the advertising, the question isn’t ‘whether’ but ‘when’ the Americans will crash.
The advertisement fails to indicate that Lear is not an SEC-registered investment counselor. As a result, it cannot offer you financial advice.
Their fearmongering does not end here. Their advertisements also claim that China is making its move right now, and that it will break the US bond bubble and smash the currency. Such misleading adverts are designed to prey on inexperienced and elderly investors, encouraging them to contact Lear Capital.
You already know what happens when Lear speaks with a client over the phone: they swindle them.
Lear’s pricing is horrible.
The coins on Lear Capital are pricey, since a $10 circulated Liberty gold coin weighing half a punch costs $753, discounting shipping fees of $24. On eBay, such coins retail for as little as $666 with free shipping.
Typically, Lear costs 20% more than eBay.
Lear’s coin pricing are around 37% more than the spot price for gold. Their silver coin values are 250% greater than the current spot price of silver. Precious metals ETFs are a superior investment option since they are more closely tied to metal spot prices.
The sole distinction is that investors in precious metals ETFs do not have physical custody of the commodity. On the other hand, purchasing from Lear allows you to obtain physical gold or silver coins, but you must pay for their storage.
Unreliable Calculator
They feature a portfolio comparison calculator on the site, which allows you to compare your portfolio with one that is 100% allocated to the Dow to these options:
20 percent gold, 80 percent Dow.
10% gold, 10% silver, and 80% Dow.
20% Silver, 80% Dow.
However, Lear does not disclose that it uses the Dow without dividend reinvestment. As a result, their findings demonstrate that portfolios that include precious metals beat the Dow.
Dow would outperform precious metal portfolios if their calculation used the appropriate index that incorporated dividend reinvestment. In addition, their calculator calculates returns from 1997 to 2007. Gold prices during this time were extremely low. If you use a date before 1997 or after 2007, even the Dow without dividend investments will produce greater returns.
Lear is clearly attempting to deceive clients into thinking gold and silver.
Steps Towards Transparency
In response to these claims, and as part of various settlement agreements, Lear Capital has worked to increase its transparency. These include providing clear pricing schedules and consenting to changes that will improve customer awareness and happiness. However, these procedures are reactive rather than proactive, resulting from a legal need rather than voluntary ethical action.
Investors should approach Lear Capital with care. Despite changes, the company’s history of aggressive sales tactics and a propensity for targeting the most vulnerable investors casts a long shadow over its current operations. Customers should carefully review Lear Capital’s current policies, fee structures, and conditions of any investment agreements to ensure they fully understand what they are signing.
NY Attorney General Letitia James sues Lear for defrauding clients
In July 2021, New York Attorney General Letitia James filed a lawsuit against Lear Capital for defrauding around 1,000 New Yorkers. Similar to the case of the Los Angeles City Attorney, AG James alleged that Lear had made almost $10 million in illegal profits by charging up to 33% in concealed commissions.
The AG claimed that Lear Capital’s business model was based on defrauding over 1,000 New York residents who did not want to lose their retirement funds. According to her lawsuit, Lear has not registered as a telemarketer, commodity investment adviser, or commodity broker-dealer.
The NY AG’s court petition includes 13 affidavits from state citizens. For example, a 78-year-old New Yorker stated that he received phone calls from Lear during 2016. He informed the business that he was only interested in investing in metal, and after receiving calls from Lear for over two years, he handed them 900 ounces of silver bullion and $20,000 in cash.
In exchange, he received 36 platinum bars. Then, Lear Capital convinced him to liquidate the gold and silver in his IRA and invest the proceeds in platinum bars through them.
Later that year, the Akon guy traded Lear 640 ounces of silver bullion for more platinum. He eventually learned he had paid around $42,300 in cash and silver bullion for approximately $28,000 worth of platinum. Furthermore, he sold gold and silver from his IRA valued roughly $29,000 to buy platinum worth around $19,640.
The AG’s lawsuit also details how Lear defrauds naïve investors. After several unrecorded discussions, Lear Capital informs customers who had agreed to acquire coins that they must make a recording to validate the terms of purchase. The corporation would then instruct them to answer “yes” to all questions on the recording, claiming that it was merely a formality.
Furthermore, they would inform the customers that if they replied incorrectly, they would have to start over.
The lawsuit claims that the recording is how they dupe investors. They bury a deadly question amid many benign ones: “Do you understand that the ask-to-cost fee is 33%, yes or no?””
Kevin DeMeritt, the founder of Lear Capital, created the term “ask to cost fee”. The corporation uses this term as proof of approval for their unethical fees.
Each of these Lear Capital lawsuits demonstrates how dangerous this firm is. These are examples of why you cannot trust this bullion broker.
are superior investing possibilities to all others.
Is Lear Capital Legitimate? A Detailed Look
Lear Capital is headquartered in Los Angeles, California. Their address is 1990 S Bundy Dr #650, Los Angeles, CA 90025, US, and their office hours are 7 AM to 6 PM on weekdays.
The hotline for their office is 800-576-9355. While the company has been in business since 1997, it has generated a lot of controversy, complaints, and litigation.
Kevin Demeritt owns Lear Capital. He is the firm’s founder and chairman, and John Ohanesian serves as its CEO. They provide bullion and quality rare coins in gold and silver.
This company sells physical precious metals and ships them to your address. In addition, they provide storage choices if you wish to open a precious metals IRA.
The organization provides a variety of investment materials, including market analysis, personalized coin searches, and comparative data. However, there is a disclaimer on the website stating that none of the information presented there is investment advice and is solely opinions. They do not provide any financial advise to their clients.
It’s the first of several problems with this precious metals merchant.
As you continue on, you’ll learn about the most recent Lear Capital lawsuit, as well as the countless complaints they’ve received as a result of their unscrupulous business methods.
There are numerous reasons why I do not advocate dealing with this company, as you will see below:
Lear Capital Lawsuits
This Los Angeles-based bullions trader has received a lot of unwanted press as a result of its lawsuits. However, many additional lawsuits went unnoticed simply because the plaintiffs were ordinary citizens.
The majority of these people filed fraud complaints against LC. I’m presenting their brief details below to help you understand how many people have suffered as a result of this firm.
Patterson Vs. Lear Capital
Patterson sued Lear Capital in September 2020 for tricking him into signing the purchase order. He said that the staff made false promises to him, assuring him that the agreements they negotiated over the phone and via email would be final.
Patterson spent $377,375 of his retirement money to buy Lear’s gold and silver coins. Later, he exchanged them for platinum bars worth around $197,000.
Prior to these trades, he signed the Shipping and Transaction Agreement. He said that the corporation encouraged him to sign the agreement online while he was on the phone with an employee. They refused to enable him to ask questions regarding the arrangement and misrepresented its nature. They told him it was just a shipping agreement, but it was actually the ultimate purchase contract.
People of the State of New York versus Lear Capital
On July 14, 2021, Lear Capital filed a lawsuit alleging 370 fraud. Such cases are based on fraud involving personal property that does not come under other types of claims.
The plaintiffs in this action were the citizens of New York, while the defendant was Lear. On July 30, 2021, the court approved the remand application to state court.
Trautwein versus Lear Capital
This is another example of fraud. Gary Trautwein filed a fraud complaint against this precious coin dealer in May 2019. The corporation had settled the case outside of court.
Ireland versus Lear Capital
Evelyn Ireland sued Lear Capital for misrepresenting the value of the precious coins they sold to her. She filed the complaint in the United States District Court for the District of Minnesota.
Evelyn sought damages from the coin dealer.
Scammed a client and misled them again in order to avoid liability (client review)
Lear Capital has acquired approximately 40% of this individual’s investment. They learned about this when they checked their deposit. When they called their agent to clarify the situation, he informed them that the account was for rare collectible coins, and the dollar figure just represented the spot price.
The corporate representative further explained that their investment was safer this way because the government could not seize it. A few months later, the reviewer received notice of a class action arbitration settlement against Lear Capital.
The reviewer believed that the firm agent still had their best interests at heart. They were mistaken.
The arbitration settlement documents stated that three groups would be ineligible for compensation. However, because the reviewer did not fit into any of these categories, they did not submit any documents.
Later, while making a withdrawal from their account, they realized that the arbitration documents said that Lear pocketed approximately 40% of its clients’ deposits. They reread the papers and discovered that there were actually four categories who would not receive compensation.
The fourth category included individuals who did not file an eligibility claim. Lear maintained their notice form misleading, ensuring that the majority of eligible investors would not get compensation from the settlement.
This review is one of numerous complaints filed against Lear Capital. I discovered countless unfavorable reviews and have included a few of them here to assist you in understanding what their consumers are saying:
Lear Capital Reviews and Complaints You Should Read:
Conclusion
Lear Capital, led by Kevin DeMeritt, is an intricate example of a company functioning in a high-risk business. While the organization offers real precious metal investment opportunities, its history of legal problems and questionable sales techniques suggests that transparency and client protection were not always prioritized. As things stand, as Kevin DeMeritt and his team work to navigate Lear Capital through choppy waters, the greater investor community must remain vigilant and educated in order to make informed decisions regarding the company’s future.
Investors should consider the lessons learned from Lear Capital’s legal troubles, as well as the importance of doing thorough due diligence before engaging with any financial institution, especially in volatile and complex markets like precious metals.