Idaho Falls coin dealer sued for alleged Ponzi scheme

[Arizona Coin Collector]

FROM:
http://www.idahopress.com/news/?id=22078

Idaho Falls coin dealer sued for alleged Ponzi scheme

Idaho Press-Tribune Staff
news...@idahopress.com
Friday, April 3rd, 2009

BOISE - The Idaho Department of Finance has filed a civil
lawsuit in Bonneville County District Court against Idaho
Falls resident Gene E. Hinsley and his company, Galaxy
Coin, LLC, in what appears to be a classic Ponzi scheme.

The complaint alleges violations of the registration and
anti-fraud provisions of the Idaho Uniform Securities Act.
Officials believe that investors have suffered principal
losses of $1.5 million-$2.0 million and that the
investment scheme has been going on since at least early
2004.

The department's complaint alleges that the defendants
sold more than $4 million in silver-related securities
that promised annualized returns of nearly 80 percent
to area investors, and that misrepresentations and
omissions of material facts occurred in connection with
the securities sales. More specifically, the defendants
are alleged to have:

* Misrepresented that the investments were safe or
otherwise backed by silver or other precious metals-
Misrepresented that investors' funds would be applied
to the purchase and resale of silver, when significant
funds were used to make Ponzi payments to earlier
investors and to further the business and personal
interests of Hinsley and his family, and

* Failed to disclose that the defendants used falsely
inflated bi-monthly investor account statements as a
means of keeping investors from asking for their money
back, and as a means of luring in new investors through
positive word of mouth.

The State's suit seeks a permanent injunction and a
court order that investors be repaid, while placing
restrictions on the defendants' future business activities.

..