The Washington State Attorney General’s Office is known for safeguarding consumers, protecting seniors and taking on big corporate players.
But then why did the state’s attorney do seemingly nothing to protect consumers against Northwest Territorial Mint, despite the agency receiving hundreds of complaints against the company prior to its April 1 bankruptcy filing? The Federal Way-based mint filed for bankruptcy after a federal judge ordered the company and its owner, Ross Hansen, to pay $12.5 million of a $38.3 million judgment in a defamation lawsuit.
The bankruptcy has left an estimated 3,500 creditors picking up the pieces.
“Why wouldn’t the attorney general’s office pursue this diligently?” said Auburn resident Artis Smith, a Northwest Territorial Mint customer who filed his complaint in July 2014. “I haven’t heard nothing from them. It’s not an error on their part, it’s something other than an oversight. It’s a deliberate oversight because there’s too many complaints against the company.”
Like Smith, most complainants wrote to notify the attorney general’s office that Northwest Territorial Mint was taking too long to fulfill online orders for bullion. An estimated “eight to 10 weeks” often turned into six months, a grievance that is reported repeatedly across thousands of complaint documents the Mirror obtained from the attorney general’s office. The documents further show that consumers who asked for their money back during the extended wait periods would then wait for their refund demands to be resolved, a process that could take up to a month.
“They invest the money and grow interest and make money on your money before you’ve got your order,” said Smith, who spent $10,000 on silver and waited four months for it to ship. “Something’s wrong with this picture. After I quit going to them and ordering silver, I went to a different company and got my silver in four days.”
Attorney general’s office spokeswoman Alison Dempsey-Hall said she is aware of the complaints against Northwest Territorial Mint and the information presented in those complaints, but said, “To protect the integrity of our investigations, our office’s general policy is not to comment on a non-public, ongoing investigation – including to confirm whether or not a particular investigation is underway.”
The attorney general’s office settled with Northwest Territorial Mint in 2008 after the agency filed a lawsuit alleging the company and its owner, Hansen, had failed to deliver bullion and other products by the promised dates.
The mint was ordered to pay $20,000 in civil penalties and $38,000 in attorney costs in the settlement. Although they didn’t admit fault, Northwest Territorial Mint entered into a consent decree in which they agreed to disclose delivery and refund policies, deliver products on time and offer refunds for delayed shipments. Per the decree, if they did not give the customer an estimated delivery time, the company agreed not to ship goods after 30 days from the receipt of customer funds unless they notified the customer and offered the option of a refund. Customers who requested refunds would also be compensated at the market price or purchase price, whichever is higher, and it agreed to tell consumers about the risks associated with buying bullion.
Dempsey-Hall said that if the attorney general’s office receives complaints about a business they’ve sued in the past, officials may investigate the business to try and determine whether or not there are grounds to file an action to enforce the court order. Another option, she said, is to bring a new lawsuit if the more recent conduct is different from the conduct that was the subject of the earlier suit.
“If we were to bring forward a lawsuit, it would be up to the court to determine the remedy,” Dempsey-Hall said. “The court has the discretion to impose a $25,000 penalty for any prior injunction the business violated.”
No such lawsuits have been filed.
Joshua Gibbons, a private citizen who has been closely following Northwest Territorial Mint’s bankruptcy, said of the 22 Proof of Claim forms he’s acquired, 13 reflect that Northwest Territorial Mint exceeded the 8-10 week delivery period as well as the 30-day extension.
As attorney general’s office officials close consumer complaint files, they make it known that the closing “does not mean that we will not investigate or take future action pursuant to the Consumer Protection Act if the circumstances indicate that further action is warranted.”
This was the response complainant Tim Manatt received back in 2013.
Manatt, of Iowa, ordered $26,000 worth of silver on Nov. 12, 2012, and was told he would receive it by Jan. 21, 2013 – 11 weeks later. When that date passed with no delivery and no communication, Manatt became frustrated and called the company. The woman who answered told him they would not be shipping then because they were “behind.” Northwest Territorial Mint put Manatt into a 30-day extension window and estimated he would have his product by Feb. 20, 2013, but that date also came and went without notification of a further delay. Mannat called the mint again and this time was told he would receive his order on Feb. 25, 2013.
He did not receive his silver until March 4, 2013.
“I finally got the product and it wasn’t what I ordered,” he said. “I contacted them and complained about that and they said they didn’t have the other product. I ordered $26,000 of silver and I expected to get what I ordered.”
Manatt said he started researching Northwest Territorial Mint and found that there had been numerous other complaints against the company.
“So at some point you would think the attorney general’s office would do an investigation against them,” he said. “What they did was just send a letter to Northwest Territorial Mint with a copy of my complaint and they responded, and that’s all that they’ve done.”
In the response from Northwest Territorial Mint, an employee admitted the company was unable to ship by the original quoted time and had put Manatt into their 30-day extended shipping window “pursuant to the terms of the Consent Decree we entered into with the Washington Attorney General’s Office.”
“Mr. Manatt contacted our office before we had a chance to notify him of the delay,” reads the mint’s response to the attorney general’s letter about Manatt’s consumer complaint. “And his silver was shipped to him in a timely manner. Due to a shipping mistake – a mistake which we take full credit for and have apologized for – Mr. Manatt was sent the wrong silver product.”
The attorney general’s office handled nearly all of the Northwest Territorial Mint complaints in this manner. If customers were lucky enough to get a response from the mint, the attorney general’s office closed the complaint without verifying that Northwest Territorial Mint had actually resolved the complaint. If the mint didn’t reply within their allotted time frame, the cases were still closed.
Manatt said he isn’t happy with his correspondence with the attorney general’s office. He speculated that Northwest Territorial Mint didn’t have the silver he ordered on-hand despite advertising online that they did.
Neither Hansen nor anyone else from Northwest Territorial Mint would respond to the Mirror’s numerous requests for comment.
Vivek Murari of Olympia bought $18,000 worth of gold from the mint in October 2012. He, too, was given a delayed shipping date after he didn’t get his gold on time.
But Murari’s extended shipping date was 31 days, not the 30-day time period per the consent decree.
Thinking he would get a full refund if they did not ship by that estimated date, Murari called the mint.
“I asked for a full refund and they declined,” Murari wrote in his complaint. “They were rude and said that they have problems with people of my background and hated us. When I asked them to identify my ethnic background, Mr. Hansen declined to do so. He called me a whiner and people of my ethnic background the same.”
Murari said there is something “not quite right” about Northwest Territorial Mint’s business practices and their inability to deliver on time.
“This organization routinely takes substantial sums of money from people and keeps it and does not fulfill its end of the deal,” Murari wrote.
After the attorney general’s office emailed Murari that Northwest Territorial Mint said his order was shipped on time and he received his order in full, he responded to the attorney general’s office that the reply was “non specific” and wanted to discuss the matter further.
Murari told the attorney general’s office in an email that Northwest Territorial Mint first delays delivery for about four months while they keep the customer’s money.
“There is absolutely no reason for this kind of delay,” he wrote. “If the price of the metal goes down, he uses this time frame to purchase the metal at a lower rate to maximize profits. If the price of metal goes up, he may not deliver the metal and just refunds the money.”
If the customer wants to cancel the order, he loses more money, Murari added.
According to attorney general’s office documents, employees suggested Murari’s complaint be assigned to “Chris, since he was the investigator on the Northwest Territorial Mint case in 2010.”
It’s not clear who “Chris” is – the last email Murari received was an email from Consumer Protection Division staff informing him that they would close his complaint because they had received Northwest Territorial Mint’s response. The message suggested Murari contact the Thurston County Bar Association.
“The primary function of the Consumer Protection Division is to enforce the Consumer Protection Act, RCW 19.86,” the email states. “The Washington State Attorney General’s Office serves as legal advisers for state agencies, boards and commissions and is prohibited by law from advising private citizens regarding personal legal matters, rendering opinions or interpretations, or conducting research for individuals or businesses.”
Additionally, it stated that Murari’s complaint had been resolved to the fullest capabilities of the attorney general’s office.
Gibbons said he hopes the attorney general’s office checked Northwest Territorial Mint’s finances in 2008 when they entered into the consent decree.
“Looking at the attorney general’s complaint from February 2008, it looks very similar to what seems to be happening here,” Gibbons said. “If the attorney general didn’t bother to make sure that Northwest Territorial Mint had assets backing the float, I cannot see how that would not be negligent.”
Jason Hommel, the author of Silver Stock Report, a 13-year-old newsletter that reports on precious metals and mints, said Hansen runs his business on the “customer float” model.
“In the United States, it’s very typical for companies to be in debt,” Hommel said. “In the bullion business, some people who don’t think debt is unethical don’t mind floating on customer money.”
Hommel said a way to do that is by taking an order, estimating “two to three months” for shipment, and using that money to buy other customers’ orders.
Hommel, who has owned a mint himself, said it doesn’t really take months to manufacture a bullion product.
“I never had trouble delivering anything in more than a week because I always sold what I had in inventory,” he said. “If I didn’t have it, I wouldn’t take the order.”
What’s worse, Hommel said, is if Northwest Territorial Mint sold approximately $2 million of bullion a month, a conservative estimate, and waited months to deliver, not only is the business taking a multi-million dollar loan interest-free, but they’re also making money because once outstanding orders are fulfilled, the price of silver may have dropped and the customers are getting cheaper product.
“Now, I explain that because the converse is also true, of course, and this is why companies that have a silver [customer] float can go bankrupt,” he said, adding that if the price of silver goes up and the orders haven’t been fulfilled, the company would start to lose money “big time.”
The Federal Way Police Department has a detective assigned to handle cases that allege fraud against Northwest Territorial Mint for orders that were taken after the judgment in the defamation lawsuit. The agency and prosecutor’s office would look into whether the cases filed with the police department constitute as “theft by deception,” according to police spokeswoman Cathy Schrock.
As for the cases filed before the judgment? Schrock said that “the pre-judgment cases are a different story, as it would be hard to prove in court that Northwest Territorial Mint took the money for orders from customers with the intent to deceive and not fill the orders.”
Schrock said it’s legal for a business to take money from a customer and use that money for other things, such as to fill the order of a second customer or use it to pay bills or lower overhead expenses.
“This is generally the case unless it is specifically noted in the contract that the money from the customer should only go toward the customer’s order,” she said, adding that it would be hard to show the mint took the money from the customer with the promise to fill the order but with no intent to deliver.
Rob Matuszewski of the FBI Seattle Division said their investigation into Northwest Territorial Mint’s activity is ongoing and they couldn’t provide details at this time.
“That said, if someone feels they have been a victim in this matter, they should contact their local FBI office,” Matuszewski said.
Customers who think they’re a victim or creditor in Northwest Territorial Mint’s bankruptcy can visit existingbullionorders.com for information.