Lear Defrauded New Yorkers Out of a Third of Investments
NEW YORK – New York Attorney General Letitia James today filed a lawsuit against Lear Capital (Lear) and its founder, Kevin DeMeritt, for cheating nearly 1,000 New Yorkers out of approximately $10 million . In the petition, Attorney General James alleges that Lear persuaded investors — including many elderly residents of Western New York who were seeking to safeguard their retirement savings — to invest tens of millions in precious metals, primarily coins. Lear did this while fraudulently charging undisclosed commissions — up to 33 percent — on more than $43 million in sales. Lear targeted New Yorkers’ individual retirement accounts and other savings, and charged hidden commissions that instantly reduced New Yorkers’ investments by as much as one-third — unlawfully profiting approximately $10 million at the commencement of these investments. Lear also perpetrated its scheme while not being registered as a commodity broker-dealer, commodity investment advisor, or a telemarketer — all as required by New York law.
“When it comes to protecting New Yorkers’ life savings, we will not hesitate to do everything in our power to protect their investments and their ability to retire with dignity,” said Attorney General James . “Simply put, Lear Capital’s business plan relied heavily on cheating nearly 1,000 New Yorkers who were afraid of losing their hard-earned retirement savings out of approximately $10 million. Lear’s promises of safe investments in precious metals only ended up defrauding New Yorkers out of up to a third of everything they invested through hidden commissions. Our office will not allow fraudsters and cheats to raid retirement savings and leave New Yorkers’ scrapping to get by, which is why today’s action not only seeks to immediately halt Lear’s illegal scheme, but return millions of dollars back into New Yorkers’ wallets.”
To earn trust from prospective investors at the start, Lear falsely told them that Lear’s success was directly related to the investors’ success and that investors’ financial security was Lear’s main concern. The truth, however, was that Lear’s success was inversely related to the investors’ interests; Lear largely profited by charging a hefty, yet hidden, commission of up to 33 percent that caused investors to instantly lose up to one-third of their investment. The language detailing the exorbitant commissions was hidden among boilerplate legal terms — in the middle of a recorded confirmation — and presented in such a way that investors either missed it completely or did not understand it to mean that Lear was taking up to a third of their investment for itself.
In an effort to further its scheme, Lear also coached investors on answers to questions, made up financial terms that are not accepted as industry standard, and sent investors invoices that omitted or made information on commissions hard to read.
Lear additionally committed these frauds while failing to register in New York as a commodities broker-dealer, investment advisor, or telemarketer.
To this day, Lear and DeMeritt continue to fraudulently market and sell commodities in the form of precious metals and coins to New Yorkers, which is why — in addition to the lawsuit filed in Erie County State Supreme Court today — Attorney General James also seeks a temporary restraining order to immediately halt the company’s illegal activities.
Attorney General James seeks an order permanently barring Lear and DeMeritt from operating in New York, restitution for investors, disgorgement, damages, penalties and costs.
The matter is being handled by Assistant Attorneys General Tanya Trakht and Kenneth Haim, with support from Legal Assistant Eddie Aguilar — all under the supervision of Investor Protection Bureau Chief Peter Pope and Deputy Bureau Chief Shamiso Maswoswe; as well as Assistant Attorney General Christopher Boyd, with support from Senior Consumer Fraud Representative Karen Davis — both under the supervision of Assistant Attorney General-in-Charge of the Buffalo Regional Office Michael Russo. Additional assistance was provided by Senior Data Analyst Akram Hasanov and Data Scientist Gautam Sisodia, under the supervision of Deputy Director Megan Thorsfeldt and Director Jonathan Werberg of the Research and Analytics Department. The Investor Protection Bureau is a part of the Division for Economic Justice, which is overseen by Chief Deputy Attorney General Chris D’Angelo. The Buffalo Regional Office is a part of the Division for Regional Affairs, which is led by Deputy Attorney General for Regional Affairs Jill Faber. Both the Division for Economic Justice and the Division for Regional Affairs are overseen by First Deputy Attorney General Jennifer Levy.