More fake gold scandalizes New York dealers

Submitted by cpowell on Sun, 2012-09-23 14:49. Section: Daily Dispatches

Fake Gold Hits NYC

Diamond District Finds 10 Tungsten-Filled Bars

By Michal Gray
New York Post
Sunday, September 23, 2012

http://www.nypost.com/p/news/business/fake_gold_hits_nyc_ECXVP5WQOvYwMVT...

Federal agents are investigating the peddling of bogus gold bars in Midtown.

The Post has learned as many as 10 fake gold bars -- made up mostly of relatively worthless tungsten -- were sold recently to unsuspecting dealers in Manhattan's Midtown Diamond District.

The price of gold has risen more than 600 percent since January 2000, while the S&P 500 index is down 0.6 percent over the same period.

The 10-ounce gold bars are hugely popular with Main Street investors, and it is not known how many of the fake gold bars were sold to dealers -- or if any fake bars were purchased by the public.

One gold dealer discovered that four of the 3-inch-by-1-inch gold bars he bought, worth about $72,000 retail, were counterfeit.

"It has the entire street on edge," said Ibrahim Fadl, 62, who has been the owner of Express Metal Refining, a Midtown gold-refinery business, for the last 11 years. "I and the others on the street work off of trust. Now that trust is strained."

Fadl, a Columbia University graduate with a master's degree in chemical engineering who has more than 40 years in the industry, purchased the four fake bars from a well-known Russian salesman with whom he has done business.

A second 47th Street refiner who wished to remain anonymous said he was burned recently when he bought six gold bars that turned out to be mostly tungsten, with just a gold veneer. He would not comment, though, on who sold him the bogus bars.

Fadl became suspicious when he offered the salesman a deep discount for the investment-grade gold bars and he quickly accepted it, a source tells The Post.

Fadl said he did his due diligence "by X-raying the bars to ascertain the purity of the gold and weighing the bars, and the Swiss markings were perfect."

Tungsten is an industrial metal that weighs nearly the same as gold but costs a little over $1 an ounce. Gold closed Friday at $1,774.80 an ounce.

To quell his suspicion, Fadl then drilled into the bar and discovered the tungsten -- whose silver color is distinctive from gold's bright yellow hue.

Raymond Nassim, CEO of Manfra, Tordell & Brookes, the American arm of the Swiss firm that created the original gold bars -- with their serial number and purity rating stamped clearly into them -- said he reported the situation to the U.S. Secret Service, whose jurisdiction covers the counterfeiting of gold bars.

He said his company "is supporting and cooperating with authorities any way we can."

Nassim thought the culprit must be a professionally trained jeweler to have pulled off the caper.

The forger had to slice the original bar along the side, hollow out the gold and insert the tungsten ingot, and then reseal and polish the bar, Nassim said.

At an industry dinner Thursday night hosted by Comex, the New York-based metals exchange, the room was abuzz with talk about the bogus gold bars, according to Fadl.

Numerous calls to the Secret Service were not returned.