Business

The Dallas Links to an Alleged Gold-Smuggling Scheme

How the Florida operation of a local precious metals conglomerate was allegedly involved in a South American gold-smuggling operation.

It looked like business as usual the other afternoon at the Preston Road location of Dallas Gold & Silver Exchange Inc., a newish, cement-sided building just north of U.S. Highway 635. Inside the publicly traded retailer’s spacious showroom, where customers are offered cash for gold, silver, and jewelry, there were rows and rows of glass cases containing a dazzling array of rings, watches, necklaces, and rare coins for sale.

Many of the customers, it’s probably safe to say, had no idea that DGSE’s largest shareholder and biggest customer—a private, Dallas-based precious-metals conglomerate called Elemetal LLC—had been mentioned recently in criminal complaints in connection with an alleged, multibillion-dollar money-laundering scheme involving gold smuggled from South America to Miami.

While Elemetal itself has not been charged with any crime—but is under investigation, according to the Miami Herald—three former employees in Miami of an Elemetal-owned company called NTR Metals Miami LLC have been charged in the money-laundering operation by U.S. prosecutors in southern Florida.

According to a criminal complaint submitted in March in U.S. District Court for the southern district of Florida by Francisco Maderal, an assistant U.S. attorney there, the scheme revolved around an NTR Metals Miami employee named Juan P. Granda, then the director of operations for NTR Metals Miami, and two other men who also were NTR Metals Miami employees.

Beginning in early 2013, the complaint alleges, Granda and the others “conspired to commit money laundering by sending billions of dollars from the United States to Latin America with the intent to promote the carrying on of an organized criminal activity, including illegal gold mining, gold smuggling, and the entry of goods into the U.S. by false means and statements, and narcotics trafficking.”

Illegal gold mining, the complaint said, is a “significant problem” in Latin America, where it can destroy rain forests, expose workers to mercury contamination, and promote sex trafficking, drug smuggling, and even terrorism. As a result, the complaint went on, “Several Latin American countries have initiated illegal gold, money laundering, and smuggling investigations, many of which involve gold being sold to NTR.”

All three defendants have denied the allegations and pleaded not guilty, and a trial in the case has been set for January. According to news reports, Elemetal shuttered the NTR Metals Miami operation after the charges were disclosed, and said in a press release that it was cooperating with the government investigation.

Asked to comment for this article, Dallas-based DGSE said in a statement that the allegations “concern activities of former NTR Metals Miami LLC employees in South America. None of those individuals has ever had any affiliation with DGSE, and DGSE has never conducted any business with them or NTR Metals Miami.”

But a person knowledgeable about the company’s operations says, “NTR is Elemetal, [the majority shareholder of DGSE]. It’s all one company.” The criminal complaint put it this way: “‘NTR,” or ‘NTR Metals,’ or ‘Elemetal,’ is the brand name of what is now Elemetal LLC.” Elemetal LLC appears to control a number of affiliates or divisions. Among core holdings under the Elemetal umbrella are Elemetal Direct, a wholesale dealer of precious metals; Elemetal Capital, a “market maker” in bullion and precious metals; Elemetal Recycling; and DGSE.

According to DGSE’s amended 10-K filing for the fiscal year ending December 2016, Elemetal is DGSE’s primary supplier of bullion products—including all forms of gold, silver, and platinum—and its principal refiner of recyclable precious metal. Elemetal owned more than 20 million shares of DGSE’s common stock, the filing said, or about 72 percent of the company. Elemetal also accounted for 25 percent of DGSE’s sales and 27 percent of its purchases in fiscal 2016, the filing said. Another holding of the Elemetal conglomerate, according to the 10-K, was Elemetal Refining LLC, an Ohio-based refiner of so-called “good delivery” gold and silver that once was called OPM Metals.

Shortly after the criminal complaint was filed, two major precious-metals exchanges took Elemetal off their “good delivery” lists for gold dealing, and Elemetal ceased its high-grade-metals refining business, reports say. Elemetal did not return email requests seeking comment for this story. And John Loftus, chairman, president, and CEO of DGSE Cos., did not return calls.

According to Bloomberg, Loftus is the founder of NTR Metals LLC and, from 2012-2015, was the CEO of Elemetal LLC. (Texas Secretary of State office records indicate he was still CEO of Elemetal LLC as of August, and a shareholder/owner of NTR Metals LLC as of April.) In a June 2015 document filed with the Florida corporations division, Loftus also was listed as the person with managing authority over NTR Metals Miami LLC. And, NTR Metals Miami listed the same mailing address in the Florida filings as the address for Elemetal and NTR Metals LLC: 15850 Dallas Parkway.

DGSE, meantime, seems to have been struggling. Its revenue decreased nearly 21 percent in fiscal 2016 from the prior year, to $48.3 million. (In fiscal 2012, its revenue was nearly $128 million.) The company’s number of full-time employees has also shrunk—to 76 in ’16, down from 166 in fiscal 2013. And, in April, DGSE was No. 2 on a research firm’s list of the 10 U.S. retailers most likely to default in the coming year. The list was compiled by S&P Global Market Intelligence

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