Feds: $100,000 in Krugerrands shows fraudsters’ taste for gold

This post is one in a partnership between the Rochester Beacon and veteran reporter Gary Craig, featuring articles published on his Substack site.

You want a sure sign that the value of gold is on the rise: Scamsters are getting their targets to convert assets to gold.

Dhruv Patel, now facing federal trial in Rochester for allegedly scamming older residents out of millions, is a prime example. When his BMW was searched in September, authorities found $3,500 in cash and 28 one-ounce gold South African Krugerrand coins.

Through the years, I’ve read a lot of search warrant affidavits – the case made to a judge to justify a search – as well as documents detailing what was seized in searches. Before now, I don’t think I’d ever read of Krugerrands among the money. (Some defense lawyers say they have seen it, but in small amounts.)

According to court papers filed in February, the 28 Krugerrands are valued at about $100,000. Each coin would be valued at about $3,600.

Patel, a New Jersey resident, is alleged to be a “money mule,” an individual who picks up and transports the cash or gold from fraud targets.

“On at least five occasions, he either personally collected or conspired to collect cash and gold from elderly victims in New York, Pennsylvania, Colorado, and Connecticut,” court papers allege. “He then either personally transported that money across state lines or conspired to have the money transported across state lines.”

Prosecutors allege that a fraudster convinced a Rochester-area woman that her bank accounts were tied to child pornography and drugs. She then was directed to withdraw her funds and, according to court papers, “convert them to gold, and give the gold to a courier for ‘safeguarding’ in a ‘security locker.’”

The FBI was alerted by a Rochester jewelry and gold exchange business that called to say a woman planned to buy $587,000 in gold. She planned to use the money taken from her banks for the purchase, prosecutors say.

Working with law enforcement, the woman did as directed by the fraud contact and left the gold bars in a box on the hood of her car at her home. Patel showed up for the pick-up.

He is alleged to have then told law enforcement “that his co-conspirators instructed him to drop off the package with someone in Jersey City, New Jersey, and that, in return for picking up and dropping off this package, he would have approximately $3,000 to $4,000 of his gambling debt forgiven.”

Patel was criminally charged in early September. He allowed his BMW to be searched on Sept. 16 when the Krugerrands were discovered.

Targets asked for gold, not cash

Just last summer, an older area resident was the target of a fraud. The criminal, never found, made away with $740,000 in gold, according to Dan Lyon, the manager of Lifespan of Greater Rochester’s fraud and scam program. Lifespan provides services for older residents and caregivers.

“No one was arrested,” Lyon says. “It was somebody’s life savings.”

A popular fraud, according to Lyon, originates with a call claiming the target’s bank is under investigation.

A judge’s gag order prohibits the caller from giving too much information, the fraudster claims, and the target is encouraged to take money from the bank, convert it into gold, then hand it to someone who will pick it up for safekeeping.

The targets are told, “You’d better move your money to protect your money,” Lyon says.

This was the foundation of the Patel scam, court papers allege.

“The perpetrators of this scheme fraudulently represented to their victims that their (the victims’) bank accounts and/or funds were threatened or compromised in some manner,” FBI Special Agent Bradford Price wrote in an affidavit for Patel’s arrest.

“The perpetrators then told the victims that they needed to send their money (in the form of wire, cash, cryptocurrency, and/or gold) to ‘law enforcement’ to secure the money and aid law enforcement in identifying and arresting the criminals who had compromised their accounts and funds.”

Targets sometimes are told to convert money to the lightly regulated cryptocurrency because it too is hard to trace.

The scams have become increasingly more sophisticated, and the criminals often work within networks, Lyon says.

“These guys are beyond professional,” Lyon says. “These are organized crime rings.”

Patel allegedly said, in a conversation with an informant, that he was part of a criminal courier organization which had handled his legal fees and defense when arrested previously for fraud-related crimes.

In an October 2004 conversation with an informant, Patel allegedly said he had “13 people that (were) working for him,” and that since he started doing this work, he earned more money than he “earned in his 21 years being in America.”

He allegedly said that he earned “about $80,000 to $90,000” in the past “eight months.”

Many of those allegedly targeted by Patel turned their cash into gold before relinquishing it, according to court papers.

“Like land, it holds it value for years to come,” Lyon says.

But gold – and crypto, for that matter – are difficult to track down once handed over to a criminal.

“It’s very difficult to trace once the exchange has been made,” Lyon says. “The window is beyond small. It’s less than 24 hours.”

Gary Craig is a Rochester Beacon contributing writer. A retired Democrat and Chronicle reporter, he now writes on Substack.

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