Officials warn that gold parties bypass laws

By Darrell Clem • OBSERVER STAFF WRITER

• April 20, 2008

Cash-strapped people struggling to survive a merciless economic slump are making fast money at so-called gold parties, where they buy and sell everything from grandma’s heirlooms to high school class rings.
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But Westland authorities and jewelers are warning that many parties are illegal and could lead to police raids and criminal charges, particularly against those who organize or host them.

Gold parties are siphoning money from reputable, licensed jewelers who buy gold and sell it for a profit to combat hard times when rings, necklaces and other luxury items simply aren’t selling.

“They’re taking food out of every jeweler’s mouth in town,” said Gary Dillon, owner of Dillons Jewelers in Westland. “This is the only way for us to really survive the economic storm.”

Jewelers and authorities also fear that gold parties, often advertised to draw larger crowds, could lure uninvited guests – potential gunslinging thieves who could scoop up the goods and be on their way. With gold going for nearly $1,000 an ounce, it’s lucrative.

“Imagine a bunch of housewives getting together for a party and having somebody bust in the door and rob them,” Dillon said.

Oftentimes, an organizer will pay a commission to a gold party host, buy the jewelry and sell it for a profit. But Westland Police Chief James Ridener cited a state law, the Precious Metals and Gem Dealer Act of 1981, that requires a license for anyone dealing in gold, silver, platinum, gems and jewelry.

The problem is, some party hosts might not even know they’re doing anything illegal, although ignorance of the law is no defense.

“If a housewife decides to have some of her friends over for a gold party, we might not even know it,” Ridener said.

If authorities get a tip and bust an illegal party, there could be a hefty price – even jail time – to pay. Penalties can range up to two years in prison. Fines can be as high as $5,000.

One organization, MichiganMoms.com, even issued a warning that gold parties typically don’t bring the best value for jewelry.

“Take any gold or gemstones you want to sell to a reputable jeweler,” one member wrote in a Web site posting.

Places like Dillons Jewelers follow the law and become licensed through the local police department. A customer who sells gold and other jewelry has to provide a driver’s license or state identification, address, phone number and thumb print. Dillon said licensed dealers have to hold the gold for nine days, provide a fingerprint to their local police department and fax a copy to the department where the seller lives.

“People who have these gold parties bypass all the legal issues,” he said. “It hurts jewelers who are paying taxes, paying salaries and donating to the youth sports teams in town. If I don’t make money, I can’t support these teams. It hurts the entire community.”

dclem@hometownlife.com | (734) 953-2110

Source:HomeTownLife.com