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ConsumerWatch: Ex-Employees Of Gold Buying Operation Reveal Tactics

SAN FRANCISCO (CBS 5) -- Former employees of a gold buying firm are revealing tricks of the trade they say are meant to rip off customers, following a CBS 5 undercover investigation.

Last month, THR and Associates were operating 120 hotel gold buying shows a week. Then, the CBS 5 investigation spanning five states revealed some managers were lying to customers, and writing bad checks.

One morning, Kenny Birdsall, a traveling gold buyer with THR, was a guest on a TV show, promising he would write fat checks to viewers who came to his show with gold. The next day those checks he wrote bounced and Birdsall was wanted by police.

"It was very embarrassing," he said.

Birdsall said the company didn't tell him the checks were bad until it was too late. And he's not alone.

"I said I feel sick, I have wrote checks for two days," said Dolly Dubard, another former employee.

Like Birdsall, Dubard resigned after discovering she had been writing bad checks. They are just two of many THR employees from across the country who agreed to reveal what they say is a culture of deception within one of the nation's largest gold-buying operations.

Many attribute the bounced checks to CEO Jeffrey Parsons' extravagant lifestyle.

Court documents show he owed the Internal Revenue Service more than $3 million and used corporate accounts to purchase things such as luxury homes, even jet planes.

Dubard said she wasn't surprised by the findings of our six station undercover investigation, in which some employees repeatedly lied about the quality of our gold.

"I think a lot of managers did think it was ok to lie," she said.

Dubard said many felt pressured to take advantage of customers, and knew Parsons might spy on them at any time with remote cameras and secret shoppers.

"You just never knew when they would be watching you through your computer. And Jeff Parsons, he would just snap and go off on people," she said.

Dubard said Parsons instructed employees to buy gold at less then 10 percent of value, a practice confirmed by a THR back pocket buying guide. The incentive: Big bonuses.

CBS 5 questioned company spokesman Matt Enright about the practice following our initial investigation. The sign on his desk promises up to $200,000 a year.

"Don't you think that would encourage them to lie or be dishonest to make more money?" CBS 5 asked him.

His response: "No, absolutely not."

"Where you are not lying, you are absolutely lowballing?" CBS 5 asked Enright.

"It's not illegal," he said.

But Enright admitted, "Do some of our managers maybe feel guilty? You know, I am sure they do."

Dubard said that is also true. "I was always feeling guilty," she said. "Especially when the older people came in and they had no idea."

She said employees were taught to use tactics such as "lot buying."

"What they wanted us to do was basically lump it all together," Dubard said. The practice allows buyers to hide their knowledge about the value of certain items.

It was something a CBS producer caught undercover at a show in Dallas. We were told some of our items were 14 karats, when they were actually 18.

In spite of Enright's assertion that THR is not in the business of lying to people, Dubard said lying about gold content was certainly condoned.

"It can be plainly marked and they can make something up and say it was actually filled," she said.

Birdsall agrees. "I saw your previous segment and that's straight up proof there are still people lying," he said.

But Birdsall said many employees were honest and unaware of what was going on behind the scenes. That is, until the checks started bouncing.

The employees said that's when Parsons instructed them to immediately ship back all gold in spite of laws that required any gold purchased at a traveling show to be held in the county for 30 days.

Birdsall said he brought it up with management right away. He said, "I called my District Manager and said 'So they're asking me to break the law in California to ship this stuff out of state before the 30 day hold is up?' And he goes, 'Well when you put it that way then yes.'"

It was the final straw for many. As Dubard put it, "I am not going to jail for Jeff Parsons. I'm done doing that man's dirty work."

Employees told CBS 5 there are currently warrants out for some of the road show buyers who issued those bad checks. And other employees have now filed complaints with the Illinois Attorney General's office.

THR did not respond to CBS 5's request for comment about the allegations from employees. According to company emails, THR has moved out of its corporate headquarters and is downsizing due to the economy.

(Copyright 2012 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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